Positioning the Bay Area for Success

The Bay Area is a global economic powerhouse driving global innovation. The region’s diverse business community employs the vast majority of the region’s workforce and supports educational institutions and other philanthropy in the region. The Bay Area’s business leaders value the region’s distinctive assets, but they also feel the negative impacts of the region’s housing crisis and strained transportation systems. The high cost of housing is dampening recruitment efforts, and under-developed transit systems have forced some employers to create their own busing operations. Deeply integrated into the global economy, the region’s business leaders also see how other places in the world are catching up with the Bay Area and learning quickly how to prepare for the future through investments in education, infrastructure and quality of life.

“The Bay Area relies primarily on local sales taxes to fund infrastructure but has little funding at a regional scale to deal with regional projects. The region would benefit by identifying additional funding sources to facilitate needed infrastructure programs at the regional level.”
—Ian Parker, Managing Director, Public Sector & Infrastructure Banking, Investment Banking Division, Goldman Sachs

In order to ensure the Bay Area’s economic vitality and resilience despite increasing boom and bust cycles, public and private sector leaders must come together around pragmatic solutions to persistent issues and barriers to success. The centerpiece of the Regional Economic Strategy Roadmap is the compilation of recommendations from the Bay Area business community that is presented in this section. Over the course of 12 months, the Bay Area Council Economic Institute engaged with business and other leaders in a series of 11 interactive meetings to identify the top opportunities for growing broad-based prosperity in the region and the requirements for success.

Overwhelmingly, the gathered leaders demonstrated a regional perspective in addressing the challenges and opportunities facing the Bay Area. There was a fundamental assumption that the Bay Area is a regional economy that requires coordinated regional solutions. Five major areas of recommendations are presented below:

  1. Secure the Future through Critical Regional Infrastructure Investment
  2. Change the Math for Housing Development in the Bay Area
  3. Form the Bay Area Regional Economic Development Partnership
  4. Create an Adaptive Regional System for Workforce Development: Producing World-Class Skills and Expanding Opportunity
  5. Drive Greater Efficiency in the Bay Area’s Transportation System

Many of the following policy recommendations fit the framework of Plan Bay Area and can help inform regional planning agencies as they develop an updated plan by 2017. Other recommendations are presented as key strategies that can be pursued to support the Bay Area’s long-term economic resilience and prosperity. Together, the five policy areas represent the central themes that emerged throughout the in-depth engagement with the region’s business leaders.

But first, some thoughts on regional governance.

The policy recommendations outlined in the Regional Economic Strategy Roadmap provide important steps for growing the Bay Area’s economic resilience and broad-based prosperity. Repeatedly surfacing in the meetings with regional leaders was the fact that the Bay Area economy is regional in scope, extending even beyond the nine-county definition, and requires regional solutions.

While the Bay Area has no formal regional government with broad powers delegated to it, regional governance exists in the multiple regional agencies with policy-making power. Dating back to 1970, the Metropolitan Transportation Commission (MTC) has authority over regional transportation planning, and the Association of Bay Area Governments (ABAG) has land use authority. Even with their regional missions, these organizations often protect the influence of cities and counties in the region through their deliberative processes. In MTC’s case, its governing commission is largely composed of supervisors from the Bay Area’s nine counties, while ABAG was created by local governments and has an executive board composed entirely of locally elected officials.

Finding the appropriate balance between maintaining the influence of local governments while inserting a greater degree of pragmatic regionalism into the Bay Area’s governance structure can be a first step in tackling many of the regional policy issues identified through this research and engagement process. This approach, where local priorities give way to regional thinking, has been successfully implemented by Portland and Minneapolis-St. Paul.

Portland’s regional government, Metro, is responsible for land use and transportation—much like the Bay Area’s existing regional agencies—though with one major difference: Metro is the only directly-elected regional government in the US. Metro’s authority covers three counties and 25 municipalities, and its seven-member board has representatives elected from six districts and a council president elected region-wide. Unlike other regions that have councils of governments made up of representatives from each municipality, Metro’s council members do not actively advocate for the interests of any one city or county. Minneapolis-St. Paul has a comparable system with its Metropolitan Council, which is the region’s metropolitan planning organization, the operator of a regional transit system, and the regional housing and redevelopment authority. The governor appoints its 17-member policy-making board, with elected officials playing a role only within advisory committees.

The models utilized in Portland and Minneapolis-St. Paul provide examples of non-traditional regional governance structures that have been sustained for decades. However, both Portland and Minneapolis-St. Paul are relatively small regions in comparison with the Bay Area, and their constituencies are fairly homogenous. Even with their success, these models have not been replicated elsewhere.

Looking across the country, regional governance takes many shapes and forms, and is often a complicated balancing act between the interests of local governments, state government, and regional stakeholders. The Bay Area governance structure is even more complex due to its fragmented system of 26 independent transit operators and individual planning departments in over 100 cities across nine counties. While MTC and ABAG do provide a measure of consolidation at the regional scale, there is need and opportunity to develop a stronger regional approach to addressing critical needs related to infrastructure, housing, workforce training, and economic development.