- Effects of income inequality
- Demographics
- Population decline, number of children in school, seniors/healthcare
- Conversion of commercial real estate space:
- Adaptive refinancing: in which situations does it work?
- US DOT through Build America programs to expand other conversions
Transcription:
Karen Daly (00:12):
Yeah. Okay. We're going to get started. Hi everyone. I'm Karen Daley with Crow Bond Rating Agency. Welcome to How Cities Are Changing The Commercial Real Estate Vacancy Question. Today we're going to be discussing the status of downtowns, neighborhoods and their knock on effects with respect to host cities. We're also going to discuss what is going to happen to distressed commercial real estate. Will it be repurposed? How so? And of course, the eternal question is work from home cast in stone. So let's get started. Our panelists today are Ted Egan, Chief Economist, City and County of San Francisco. Lori Treviño, AVP Analyst, Moody's Ratings, and Monika Suarez, Managing Director Western Alliance Bank. Let's start with our first question, and that's going to go to Ted. Ted, what is the status of neighborhoods in San Francisco?
Ted Egan (01:22):
Well, San Francisco is many neighborhoods and their performance has been different, I would say since the pandemic. The city overall has seen a bit of an economic reversal. Work from home, which we'll talk about, has been more prominent in San Francisco, most likely because we have so many tech jobs, and that's the industry that's adopted work from home most aggressively. When you look across the city, for example, it's something like taxable sales. We're seeing the biggest declines in downtown where we don't have the office population and we don't actually have as many hotel guests. And it's also hard hit on the residential side, but we're really seeing it across the city. Actually, Presidio, I think, is the only neighborhood of San Francisco that is up in terms of sales tax since the pandemic neighborhoods are generally doing better, but not great. So everything is connected to downtown in San Francisco, economically speaking.
Karen Daly (02:22):
Lori, would you like to weigh in on that question and then we're going to go to the effect on neighborhoods and surrounding cities?
Lori Treviño (02:33):
Sure. So I think the one thing I would add is we are seeing that the vacancy rates and the highest vacancy rates and the greatest drop in rents are in the south of market area in Yuba, Buena areas, but they're pretty much consistent otherwise through other parts of the city. And I think the high vacancy rates in class A office space is going to present an opportunity for businesses that want to consolidate into better office space. And you may see that that'll really result in some shifts between some of the neighborhoods, but overall, I think it's, we do see those vacancy rates being high, I think for quite a while.
Karen Daly (03:25):
So let's switch a little bit to the status of downtowns today. So we're going from neighborhoods to downtowns in the San Francisco metro area. And Lori, can you address that one?
Lori Treviño (03:40):
Yeah. So in thinking about this, I think the important thing to understand is that cities are still thinking about the same issues they've always thought about, but it just now has a different twist, which is thinking about how the move to hybrid work affects the behavior of residents, employees, employers, and how they need to change the way they serve those residents and employees. People are now thinking, where's the most convenient place for me to live workshop? How affordable is the housing here? How much does it cost me to commute, whether that's in terms of time or money, and does that calculus change if you can work from home? So those are the questions that I think cities have to think about. And what you're seeing is that the cities that have more of maybe an institutional presence or some sort of a place making aspect to it that gives it some synergy.
(04:50):
Those are the places that are still doing relatively well relative to the rest of the bay area. And those with more kind of spec space, big offices that are mostly leased as opposed to owner occupied, those are the ones that are having more difficulties in terms of maintaining their lower vacancy rates in their downtown. So for example, Emeryville, San Ramon, Concord, those are places that have pretty high vacancy rates where Berkeley, Alameda, San Leandro, places where maybe there's a little more walkability, there's some other reason to be there, or maybe there's a real ease of work from home from those places. Those places have pretty low vacancy rates in the South Bay. Some of the highest are Menlo Park, San Jose Campbell. Not surprisingly, those are places with technology companies that have had the greatest adoption of hybrid work, and the lowest are Cupertino and Sunnyvale, which are places where owner occupied office spaces are dominant, and those are just less likely to be moving out, and they may be consolidating even within that space. Vacancies aren't necessarily an indicator of whether there's hybrid work, more hybrid work going on, but it is sort of an interesting indicator.
Karen Daly (06:14):
So all of this empty office space and commercial real estate office space is obviously going to have a knock on effect on the revenue structure of affected cities. So Ted has the decrease in Workday foot traffic affected sales tax revenue. What about hotel taxes and what's been the impact on service delivery in San Francisco?
Ted Egan (06:47):
I mean, I think the short answer to your question is yes, but the biggest impact we've seen so far is actually in our business tax. We have about a billion and a half dollars in revenue annually from various gross receipts taxes, and those employers owe less tax to the city when their employees are working from home if they live outside of San Francisco. So we estimated in 2021, we would've had an additional about $500 million in that revenue. The loss in a budgetary sense has not been that high because we have a good set of companies that we're growing and adding a lot to the top line. So that's an impact. We've seen hotel taxes, definitely down hotel revenues in August. Were 60% of their 2019 levels, so quite a weak recovery in hotels. That's tied to the loss of business travel. It's absolutely tied to remote work as well as to conventions, which before the pandemic were all about tech and scientific associations and very much also tied to the tech industry.
(07:56):
Sales tax is also down, but sales taxes may be, I don't know, 15% of our business tax. The big one that we haven't seen yet that we are planning for, that we're expecting to see is property tax. We're seeing office buildings in San Francisco sell at a 60 to 70% discount to pre pandemic levels that will have an impact on our property tax, not as big as 60 to 70% because of prop 13 and offices are only about 17, 18% of our property tax total. So we have quite a diverse revenue stream, but we are getting hit by remote work in lots of different ways directly or indirectly.
Karen Daly (08:38):
So Lori, what can you tell us about the revenue structure in San Francisco and the other cities that you follow?
Lori Treviño (08:46):
Yeah, so I think, I'm not sure that I have a whole lot to add to what Ted has said about San Francisco. We certainly have been following closely the appeals on property taxes to make sure that we understand the degree to which those valuations may be dropping and ultimately start affecting the property tax revenues. I think that's a very good indicator of the potential for the decline. And the city has had a pretty sharp increase in the number and valuation of those appeals over the last several years. I think the valuation appeal is probably the highest it's ever been for fiscal 24, 2024. And in terms of other cities, I think that the loss of foot traffic for cities that have retail in close proximity to their office core, they're definitely suffering losses in sales tax. And I think it's important to remember though that brick and mortar retail was already in decline prior to the pandemic. So that effect is lost a little bit within the trends that were already happening as sales taxes were shifting towards online sales, and to some degree, cities actually were being saved by the Wayfair decision that happened just immediately before the pandemic. So any online sales that were taxed in California, the state would collect and put in the county pool, which would be distributed to local governments within the county.
(10:29):
One nuance to that that is kind of specific to California is in California, if an online retailer has a physical presence in the state, the revenues on sales within the state will go to the jurisdiction where that distribution center is located. And so as Amazon has been building more and more distribution centers, that is creating shifts in the way that sales taxes are being distributed. So for example, whereas San Francisco might've gotten more sales tax from an online sale five years ago, if there's a new distribution center opening up somewhere, say the one in Richmond, Richmond's now getting that sales tax instead if it was delivered from that location. So those are the kinds of things that are also affecting sales tax. And then there's also things like utility users, taxes, parking taxes. I think it really depends on residents are probably paying more in UUT businesses are paying less. It sort of depends on what the mix of your taxpayers is, how much the effects of those things are on all those other different kinds of taxes, and then maybe the degree to which somebody might choose to drive and park somewhere where they have to pay versus taking transit. Those are the kinds of decisions I think are affecting cities differently.
Karen Daly (11:50):
Thank you. So I'm going to switch gears a little bit and ask our panelists about this phrase, the urban doom loop, and it is a post pandemic phrase. It was bandied about a lot and right after the pandemic, so do you buy into the thesis of the Urban Doom Lo? I'm going to start with Ted.
Ted Egan (12:26):
Well, I'll preface my answers by telling people that I grew up in Buffalo, which had 70 years of population loss from 1950 to 2020. So I do believe in the idea of a doom loop. The problem with the current discourse about it is that San Francisco is supposed to be the poster child of the post pandemic urban doom loop, and I see doom, but I don't see the second round effects you're supposed to see. I mean, we saw a big drop in population in 2020, then we saw a very small drop in population, and now our population is growing again. We had obvious big shock associated with work from home. It's still rippling through the economy, but I'm not seeing, for example, tech workers fleeing the Bay Area because of work from home. In fact, the hybrid office probably cements tech workers to the Bay Area.
(13:22):
And when you look at the census data, they're way more tech workers in the Bay Area today than there were in 2019. So yeah, I don't really see any of those second round effects. And so somebody asked me, what's the risk? I think it's maybe like 5%. And it's really the issue like, okay, you're going to have a fiscal shock. It's a one-time thing. You're planning for it. It's built into your forecast, but somehow you won't be able to adjust the budget and you'll make decisions that cut services so severely, everyone wants to move out of San Francisco. I guess you could take that position, but it isn't what San Francisco's managed budget crises in the past, and I just don't think it's very realistic.
Karen Daly (14:08):
So Lori, an intellectual construct or is it the real deal?
Lori Treviño (14:14):
Yes and no. So I think I come from this, I from my prior experience in city government working in real estate, real estate is very slow and sticky, so to speak. So cities are slow to approve developments. Investors are very careful about making decisions about funding new development because they're making an expensive long-term decision. And once something is built, we don't just tear it down because it didn't work out quite as expected. So you end up, we have to start from that vantage point. So if demographic and economic conditions are changing really fast faster than that, real estate can be adapted. I suppose a doom loop is theoretically possible. I'm on Ted's camp there. It's certainly a possibility, but I don't necessarily think it's likely either. And we've seen like buffalo, we've seen urban areas that go through cycles of decline and rejuvenation that take decades to work through.
(15:22):
And it's just really incumbent on local leaders to anticipate what changes are needed in terms of zoning, infrastructure services, whatever sort of policies and decisions that they need to make in order to reinvent their communities. As these kinds of economic shifts happen when conditions change, and sometimes even if there's just a perception of a need of change, I think they need to be aware that perception can sometimes become reality. I do think that we may see the rise of some of the enhanced infrastructure financing districts as cities maybe try to think about ways to do different things differently in their communities, and certainly are going to see a lot of changes in terms of zoning and that kinds of thing if you find that your real estate is just not being utilized in the way that it was originally intended.
Monika Suarez (16:17):
And as a lender in the space, I'll just give our viewpoint as a lender in the commercial real estate space, we kind of view this issue in California as being really dependent on housing policy and the availability of what I call lower a affordable housing for young workers entering the workforce and the impact that is having on the recovery here specifically in California.
Karen Daly (16:54):
I'm going to introduce the next question by quoting some statistics. Our CMBS team recently published a report on metro level CRA loan distress, the top five MSAs with the highest distress rates. This is just unbelievable to me. San Francisco, 22% Chicago, 21% Philadelphia, 16% Houston, almost 14%, and Washington DC 13%. So here we are, we're in San Francisco, and a critical issue for downtowns is empty office space and the leases that are about to expire or will expire the near term. So Monica, what will be the fate of overvalued buildings as a slow moving issue continues to play out? Will cities have vast pockets of empty office buildings and distress scattered over their landscapes for the foreseeable future? How are lenders thinking about this issue?
Monika Suarez (18:10):
Well, I think the positive thing that I can say here is that it appears that the office market is nearing the bottom for prices. We've just experienced three consecutive quarters of year over year increases in office sales, which is encouraging coming off a period of virtually no sales. We've all seen the news stories of the high profile sales this year, particularly in New York City in the second and third quarter of this year with price declines of over a hundred million compared to the prior sale prices for these office buildings. This is allowing the whole kind of office commercial real estate lending and ownership to get a better sense of the potential losses that we're all facing.
(19:03):
On the lending side, most lenders are working with their borrowers to extend maturities on loans with pay downs from the owners, but investors are taking note of these bargains at prices, which improves the potential for reuse going forward. I think there's very little expectation or there's expectation that there will be very little new office construction for the next decade. So as I was mentioning before, we're viewing that in markets that are experiencing growth like Phoenix and Denver, they'll grow back more quickly into the vacant space than some of the markets that you mentioned, which those urban markets are definitely facing a longer recovery period.
Karen Daly (19:58):
And I think we're, as I understand it's still going to see the effects of this over the next several years. But Ted, do you have thoughts on this particular topic?
Ted Egan (20:11):
Well, I think I would just stress that there's a difference between distress and commercial real estate and distress in the economy. Distress in commercial real estate is the product of an economic shock, but urban economies are adjusting to shocks all the time, and I would agree it points to a mispricing of the value of office assets, which makes perfect sense when companies are saying, we only need half as much space as we did only five years ago. I mean, it's a massive shift. Nick Bloom who studies this at Stanford University says this is the biggest peace, time shock to the US economy related to labor since women entered the labor force in the seven. I mean, it's a very big economic change and a very short period of time. And of course there'll be disruptions to market, but I just think people need to focus on the fundamentals.
(21:13):
I think for us, we've become very much a tech driven town. I don't see any real evidence that we're losing our competitiveness in tech. I think tech is going to continue to grow absent this current cycle into the future. And I think we're well positioned for growth. And frankly, I would say, yeah, we have a risk associated with remote work. We had a risk in 2019 of not enough housing, not enough office space, crowded transportation infrastructure, and remote work makes all those problems better. So there's definitely a silver lining for us in the long run. I'm not disputing the short term adjustment pain that everyone is experiencing though.
Karen Daly (21:55):
Lori commercial real estate. What's going to happen?
Lori Treviño (22:00):
I was just thinking what I said earlier. I think you go back to people are making decisions about where they want to live, where they want to work, and it just takes time for all those things to work themselves through. It's not that the economy is necessarily weaker, it's that it's the transitions that are affecting real estate that will take time to work themselves out as people make new decisions.
Karen Daly (22:24):
So one of the questions that we always ask when we are in rating meetings with issuers is now we have this problem with commercial real estate. How do tax appeals work for overvalued assets? And how long does it take to move through the appeals process? Lori, I'm going to start with you on that.
Lori Treviño (22:49):
Oh, sure. Well, I mean, I think it's relatively straightforward. A property owner can file an appeal of their assessed valuation. Typically that would be by September 15th at 60 days after they receive their tax bill. And then each county has an assessment appeals board that has two years from the data that application to act on it with a hearing and rendering some sort of a decision. And then, I mean, the property owner has to provide information supporting their claim of what the value ought to be, that the market value is lower than the assessed value.
Karen Daly (23:27):
Part of the problem across the country is it just takes so long,
Lori Treviño (23:31):
It's a long time.
Karen Daly (23:32):
To work its way through. Everybody is wondering, well, when is this going to be over? And it's not going to be over for a while. Ted, any thoughts on?
Ted Egan (23:43):
No, I mean, I think that's exactly right. It's not going to be over for a while.
Karen Daly (23:50):
So we've all been reading a lot in the press about the conversion of commercial real estate to residential housing. And depending on the articles you read, you would think that somebody has a magic wand will wave their wand over an office billing, and then pronto, you're going to have apartments. Monica, how easy or difficult is it to convert commercial real estate to housing? And are there any specific financings that you can talk to the audience about?
Monika Suarez (24:31):
Yeah, so I've got a unique perspective on this because I'd say my viewpoint on this a year ago is very different from what it is today because I actually closed a financing for an office to residential conversion last Thursday that I've been working on all year. And when I first heard about the opportunity, I said, I've read all the news stories, I've seen it, this can't be done. How is this financially feasible? So in those conversations, first I just kind of want to highlight some of the challenges that I hear from developers, and it's mainly due to planning and building code requirements here in California. And the number one issue they point to are the seismic retrofit requirements when changing the use of a building from office to residential. So if there was more flexibility in those requirements, developers would be able to do partial conversions that would make more financial sense without having to move out all of the office tenants, which I think is a pretty interesting idea and would be very helpful. But due to those requirements, it may be more economically feasible to convert older concrete office buildings that were built in the 1950s and sixties without lateral supports rather than the newer office buildings that were built in the eighties and nineties. But unfortunately, it's a lot of that Class B and class C office space built in the eighties and nineties that is most ripe for conversion.
(26:21):
So let me get into specifics on this financing that I closed last week. It was a $60 million financing for an office to residential conversion in LA. It's a unique situation because the developer has already successfully completed several conversions and has fine tuned the process. And also the developer acquired the buildings, the office building in the 1990s, which helped with the financial feasibility of the conversion. But as we were mentioning before, as we're seeing these office buildings be revalued and sold at these significant discounts representing their real value, the feasibility of conversions does become more practical. So in this particular financing, the developer was able to achieve an all in rate of 623, 6.23% on a taxable financing through construction and lease up because of a program that commercial banks are able to offer when you're a member of the Federal Home Loan bank. And so Western Alliance Bank is a member of the Federal Home Loan Bank of San Francisco, which offers a community investment program, which provides credit enhancement for multifamily housing projects. Very excited that we were able to achieve that cost of financing for the borrower, which also added to the financial feasibility of the project because comparable traditional conventional financing from a commercial bank is significantly higher than that.
Karen Daly (28:18):
So I've read a number of articles both in the Wall Street Journal and the New York Times about the difficulty of some of these conversions. I mean, there's engineering problems, there's design of the building problems themselves. Nobody's going to buy an apartment where you can't open the windows, right? Just think about those practicalities. So I'm wondering, Ted, Lori, do you have thoughts on this?
Lori Treviño (28:46):
I think Monika has pretty much summed it up. I mean, the physical aspects of this are complicated. If a building doesn't have operable windows, it's going to be really hard. And the floor plates of most office buildings that are newer are too large, and you could never even create a floor plan that would give you the circulation that you need and the window access that you would want than anybody who would live there would want. But I think it was interesting, this idea of a partial retrofit there. That's an interesting concept. I can imagine that there's some ways you might be able to do that and make something that's really interesting and workable.
Ted Egan (29:27):
I mean, I think there are challenges, however you look at it. I think Moody's Analytics here did a paper last year that said maybe 10 to 13% of San Francisco's office stock could be feasibly converted without even looking at the financing. And then you've got issues, and this was raised to me when I was speaking about this in Sacramento, we're going to convert a lot of office buildings to housing. Where are the people going to go to school? Where's the fire station? Where's all the other residential things you think about when you're planning a residential neighborhood? Those are good questions. And then I think it's just different from different cities, and it just kind of goes to the economic structure of the downtown. In lower Manhattan, these things are happening on the natural because there's a lot of residential demand there. And San Francisco, a big piece of the residential demand that led to the downtown housing construction we've seen was, yeah, it's $1,500 a square foot, but look how close you are to your job. Well, now you can be close to your job online and not spend that kind of money on housing. So we are seeing depressed housing demand downtown because of remote work, and that's actually interfering, I think as well with the economics of conversion.
Karen Daly (30:50):
It just a fascinating topic, and after I've read these articles, I just was amazed that anything got done given the financing hurdles and then just the physical hurdles of these conversions. So thank you everyone
Monika Suarez (31:07):
In the project that we financed. What's interesting is office buildings do have great basements that are being used for common areas, so that lends well to repurposing for movie rooms and work from home office space. And this particular property is in the Koreatown neighborhood, and we'll have karaoke as well.
Karen Daly (31:38):
So luxurious laundry rooms as well, right?
Monika Suarez (31:40):
Yes.
Karen Daly (31:43):
Familiar with that. I live in New York City. Let's talk about the knock-on effects of the pandemic. Can you describe the overall economic effect of job losses since the pandemic? And what sectors have these losses occurred and what effect does this have on income inequality? I'm going to start with Lori for this question.
Lori Treviño (32:19):
Well, I would say most job losses actually have been more of the in-person jobs that support, we're supporting office work. So for example, in San Francisco, there's a big loss in retail, leisure, hospitality, and those are jobs that are hard to get back. So if your job is to work at a retailer and you relying on foot traffic that isn't there anymore, and you probably can't afford to live in San Francisco, you're going to go somewhere else, you're probably not going to come back for that job. You can't afford to come back. So these are all sort of, I think it's just exacerbating some of the income inequalities that we already were seeing in San Francisco. And to a certain extent, those knock-on effects are happening in other places, but maybe not to the same degree as San Francisco
Karen Daly (33:15):
Add job losses.
Ted Egan (33:16):
Yeah, I mean, I would generally concur with that until about mid 22, we had this very clear pattern in which the tech industry had grown a lot in the 2020 and 2021 to the point that we had 20% more tech jobs in San Francisco than we did at the start of the pandemic. No one would know that because they're working at home wherever, but at least their jobs were based in San Francisco, but we lost 70% of our leisure and hospitality jobs by the end of 2020. And as Lori said, if you are laid off in that sector, you're not going to stick. You can't afford to stick around in San Francisco without a job. The demographic shock that we experienced, the 7 to 8% loss in population appears to be heavily concentrated in the low wage workforce, although the kind of public perception was, well, all those tech workers just moved to Lake Tahoe.
(34:12):
That's not really what happened. It was the people who were laid off, who left. And paradoxically, we have a lot of rent control apartments in San Francisco, but if you leave a rent control apartment, you may have left an affordable housing situation, but it's not rent controlled when you try to move back. That's not how it works in California. And so we have seen quite a slow recovery in hotels, restaurants. Lori mentioned retail, and I think part of that is a labor supply problem. Part of it's obviously demand as well, but I think that that's why we are still seeing like 20,000 fewer jobs in leisure and hospitality than we saw before the pandemic.
Karen Daly (34:55):
Yeah. One of the interesting things on this article that I quoted from earlier is there seems to be quite a bit of distress in lodging across the country. And of course, the preponderance of those employees who are going to lose their job are precisely the people that you've been talking about. So that would just have the effect of exacerbating income inequality, or I'm going to get to my favorite question, which is work from home. So is work from home cast in stone. And the reason why I asked that is Amazon's decision, I don't know, let's call it a month ago. Is Amazon a bellwether company by calling employees back into the office five days a week? I've been hearing that some financial firms have been doing that. What are your thoughts on that, Ted?
Ted Egan (36:00):
Well, I can just look at the data and a couple pieces of data that I look at are the sway, which is the survey on working arrangements and attitudes that the Stanford economists I mentioned do every month. And that is showing absolute flatlining in trends on work from home. It hasn't changed since 2021, and there is a narrowing of expectations between what employees want and expect and what employers are willing to put up with, and it's not moving. We also look at the castle security swipe data, and that is showing office attendance, physical office attendance, anywhere from 40 to 65% of 2019 levels across metro's and absolute flat for the past year. Locally. There was a big announcement a few months ago that our largest private employer, Salesforce was going to require people to come back to the office starting this month, this October, and we haven't seen much of that yet in either the castle or our transit data. So I think we have to plan on the basis that work from home is here to stay.
Karen Daly (37:14):
I'm sorry. Go ahead, Monika.
Monika Suarez (37:16):
I just wanted to put in a question here, because this actually came up in conversations with office owners, is the difference between the public and the private sector, because some office owners point to the public sector as maintaining the work from home when the private sector is ready for people to be back in the office. And I think, I don't have any backup for this statistic, but that 20% of office space is used by the public sector. So I'd be curious on your thoughts on that.
Ted Egan (37:53):
I agree with the last statistic, but I don't think there's any data showing that public sector employees work from home more than private sector employees. In fact, the sway survey I mentioned said it's finance, tech, and professional services that do it the most.
Karen Daly (38:09):
So Lori is work from home cast in stone.
Lori Treviño (38:13):
I think it's becoming more and more solidified. I think people are very happy with the freedom that working from home gives them. And I'll just say anecdotally, I've had multiple people say to me in recent weeks, if I had to go back to commute every single day, I'd quit my job.
Karen Daly (38:34):
One of the things that, I'm sorry,
Lori Treviño (38:36):
I was going to say, so I think that there's some, Jeff Bezos may not like to hear that, but I don't know that everybody's going to say, yeah, I'm ready to go back. My last visit to Seattle, it looked pretty sparse and people liked working from home.
Karen Daly (38:55):
Well, to be continued, as I recall that I think the chief executive said to of Amazon, the people who were complaining there were other places to work. So certainly his point of view is cast in stone. That's for sure. Maybe a little bit about San Francisco in terms of what's going on, what's on the horizon, Ted, are there any major development projects or infrastructure improvements on the horizon? And San Francisco,
Ted Egan (39:32):
Unfortunately, there's a room full of my colleagues who are financing these things in various city departments who should probably be answering this question before me. The public sector is always doing its financing. We always have bonds on every election. I don't recall the specifics of these things. I think a lot of the investment from the private sector is, we're not seeing it at the moment because of all the reasons we've talked about.
Karen Daly (40:02):
Lori, are you seeing anything out there in terms of the metro area?
Lori Treviño (40:07):
No, not particularly. I do think that I think there will be expectations of people that they want to live in a place that has access to certain things, but I don't know that we're necessarily seeing projects happening based on that yet.
Karen Daly (40:27):
Well, I mean, cities are feeling the pressure from a multitude of factors, not the least of which is the spend down of federal stimulus monies. And then again, depending on what city you're in, you've got the cost of asylum seekers, et cetera, et cetera. So it's going to be an interesting period for cities in the near future. Our final question is what's going on in neighborhoods and local services? And Ted, I know you alluded to this a little bit earlier in your remarks with more people spending time in their neighborhoods, the demand for local services such as parks, schools, healthcare facilities, has risen residents are looking for amenities closer to home. Just spoke about that, placing demands on city infrastructure. What has been the response?
Ted Egan (41:35):
Well, I mean, I agree with that in theory, and I have seen data that says, for example, more in the suburbs than in San Francisco per se. You are seeing increased daytime population, increased taxable sales in San Francisco. It looks like we're seeing very little population growth anywhere. And in fact, one of the things that voters are going to be deliberating or voting on next month is whether we should close the Great highway, which is the arterial road at the very western edge of San Francisco. And part of that debate is there aren't as many people using it because it was a commuter road, and there aren't as many people commuting. Now, we have to remember that work from home means work from home. It doesn't mean work from a park or work from a public library or work from some other public service thing. So without having the numbers at my fingertips, I'd be kind of surprised if we did see a neighborhood, I mean, obviously people always want more amenities in their neighborhoods, but I'd be surprised if we've seen a real huge growth in demand from many of the neighborhood amenities.
Karen Daly (42:46):
Lori, what are you seeing?
Lori Treviño (42:48):
Yeah, I agree with that. The one thing I am seeing in some places is it seems that the traffic patterns are changing, and so that is changing the way that cities are thinking about traffic controls living very close to Berkeley. I'm always surprised by how many no left turn signs there are, and nobody's enforcing those anymore during commute hours because it's hardly, hardly anybody to, there's hardly any traffic conflicts in the way that there was five years ago. So it's just interesting, I think, to see how cities are going to be able to change the way they think about their traffic controls.
Karen Daly (43:34):
It's interesting, depending on where you are, we've seen a demanding for additional green space parks, the closing, particularly in New York, the closing of very busy thoroughfares to traffic to create more pedestrian walkways. So the pandemics effects are still being manifested in all sorts of interesting ways across cities. We have a few minutes left for questions for our panelists, so does anybody have any questions for our panelists? All right, thank you. Thanks for our panelists.