CHAPTER 6 : REGIONAL LINKAGE: ECONOMIC, ACADEMIC, CULTURAL, AND ENVIRONMENTAL CONNECTIONS "Regions are the geographic units in which we create our goods and services. We hire from a regional labor force. We count on a regional transportation system to move the people and the materials involved in their production. We rely on a regional infrastructure to keep the bridges and roads intact and our sewers and pipelines functioning. We live in a regional environment whose water and air do not recognize political boundaries." Theodore Hershberg Fifty years ago, cities were the center of regional economic and social life. Today, regional resources have become more dispersed — forming a network of economic, academic, cultural, and environmental connections. Cities remain at the heart of the network — as centers for employment, tourism, transportation, arts and culture, and academic learning and research. This chapter examines the nature and extent of current and evolving regional linkages. Cities as Regional Employment Centers Commute Patterns Although suburban areas have grown in population, employment and importance since the end of World War II, cities remain important regional employment centers. Many suburban residents commute to jobs in the central cities. These commute patterns show that the Bay Area's labor force is increasingly both mobile and regional. In the Bay Area, the average commute to work is more than 24 minutes. Table 6-1 shows the growing percentage of Bay Area residents that commute outside their counties of residence. Table 6-1 shows the county of residence for commuters into the 3 largest cities in 1990. While San Francisco’s relative share of regional jobs has declined over the past few decades, the absolute number of jobs has increased substantially — from 386,000 in 1960 to an estimated 567,000 in 1990. Although San Francisco's population has remained steady over the past 35 years, employment has increased, bringing more commuters. Most commuters to Oakland come from within Alameda County. However, almost 29,500 people commute from Contra Costa County, illustrating Oakland’s role as an employment center for the East Bay. Resident and Commuter Labor Force To examine the role of central cities as employment centers further, it is helpful to compare the number of people working in a city or county with the number of people living there (see Table 6.2). The number of people working in San Francisco, for example, far exceeds the number of employed San Francisco residents. This results in a large number of additional jobs for people who reside outside San Francisco. Oakland also provides a modest number of additional jobs to workers from beyond its borders. In contrast, Contra Costa and Solano counties and the City of San José have a significant number of people residing there who must commute elsewhere for work. Santa Clara County is the second largest employment center in the Bay Area. The employment center within the county consists of the cities of Palo Alto, Santa Clara and Sunnyvale — rather than San José, the historic job center. Each of these cities contributes more than 40,000 jobs to the regional job pool, however with the recent strong industrial and commercial development in north San José, this picture has been changing. Net Flow of Employee Earnings Another way of looking at this information is to compute the net flow of earnings — the earnings of residents minus the earnings of those working, but not living, in a particular place. San Francisco’s significance as an employment center is shown vividly in Figure 6-2. The combined earnings of people working in the city exceeded the combined earnings of city residents by $10 billion. Santa Clara and Alameda are the only other counties in the region where earnings flow outward to other locations. In contrast, the earnings of Contra Costa residents exceed those of commuters who live outside the County, but work in Contra Costa by more than $5 billion. The counties of Marin, San Mateo and Solano are also significant beneficiaries of the earnings brought home by commuters. Secondary Employment Commuters bring earnings home and spend dollars in their home economies and thereby generate jobs.i The primary industries affected by this income are retail, personal services, and medical services. Table 6.3 shows that secondary employment generated by commuter spending at home has the largest impact on the counties of Alameda, Contra Costa and San Mateo. Bay Area Ports Link the Region to the World The Bay Area’s sea and airports provide an essential link between local product manufacturers and international markets. International exports are increasingly important to the regional economy. In fact, the San José metropolitan area is now the nation's third largest export area in dollar value, following only Detroit and New York.ii The value of international exports exceeds that of goods sold domestically. In 1993, the value of goods from Bay Area exporters was more than $30 billion. Seaports The region’s seaports form a nexus of regional rail, truck and ship lines, as goods from across the region funnel through on a daily basis. The Bay Area is home to a number of active shipping ports: Oakland, San Francisco, Richmond, and Redwood City. Oakland is the dominant port, ranking fourth in the nation. The Port of Oakland accounts for 62% of the tonnage, and over 90% of the value, of exports transported by ship through the San Francisco customs district (which covers Northern California). The Port of Oakland is also a key exit point for goods produced in the region. A Caltrans study of truck traffic going into the Port of Oakland showed that 75% of those trucks originated inside the Bay Area. Figure 6-3 estimates the dollar value of international exports from each county for 1993 based on Commerce Department data. Exports from each county reflect the character of each local economy. Thus, Santa Clara County’s exports are primarily electronics goods. Napa and Sonoma’s exports include substantial agricultural and food products. Contra Costa exports include significant petroleum and chemical products. Production for export also creates a significant number of jobs. Table 6.4 presents direct and indirect jobs, for each county, related to the manufacturing of goods for export. Air Cargo The San Francisco International Airport is the center for regionally-produced exports that rely on air cargo. Industrial machinery and electronics are two of the top three regional exports, accounting for close to 60% of the value of total regional exports. High technology manufacturing firms, predominantly located in Santa Clara, San Mateo, and southern Alameda counties, are critically dependent on transportation through the San Francisco International Airport. Air cargo operations are co-located with passenger service because of the capacity available to shippers in the baggage holds of airliners. As a result, 90% of industrial machinery, and computer and computer-related exports are sent from San Francisco International Airport. Oakland International Airport, however, dominates the Bay Area's domestic air cargo market, transporting more than 500,000 tons per year. Business Location Decisions in a Regional Market In 1995, Fortune Magazine named San Francisco the top location in the United States for business. While San Francisco was specifically cited, the amenities and resources named are located throughout the region. Clearly, it is the combined features of the region that give it prominence. Site Selection Criteria As Fortune Magazine noted, national and international businesses looking to relocate do not just want a city — they want a region that can provide business necessities as well as quality-of-life amenities. Site selection criteria are both regional and highly localized (site-specific). Many of the regional criteria (such as world-class arts and cultural facilities) are located in cities. Thus, even when a business locates in the outer edges of the region, they may be drawing upon strengths in the region’s cities. Coupled with the role they play as corporate and financial centers, cities contribute to the overall attractiveness and image of the region. Competition for Highly-Skilled Workers A survey of 500 East Bay high technology company executives identified the most important factors in attracting high technology companies to an area.68 These included both business-related and quality-of-life factors such as: proximity to academic and research institutions, work force preparedness, world-class arts and cultural activities, and good schools. A full complement of local and regional amenities is particularly important for businesses that compete for highly-skilled workers. These workers are often highly mobile and can afford to make job decisions based partly on the geographical desirability of an area and its quality-of-life features. Geographic Concentration as a Location Incentive The geographic concentration of like-businesses in an area is also a location incentive. Businesses continue to cluster in areas such as Silicon Valley for high technology and South San Francisco or Emeryville and Berkeley for biotechnology. Reasons include ready access to a large pool of skilled workers and the fact that business concentration also facilitates the development of specialized inputs and services.68 Educational Resources The Bay Area’s academic institutions provide important economic linkages across the region. The major research universities — U.C. Berkeley, U.C. San Francisco, and Stanford — make a particular contribution as major employers (employing more than 48,000 people combined), incubators to new businesses, and providers of a highly educated work force. The combination of research and development performed by the Bay Area’s leading universities and private organizations provides a significant slice of the region’s economic activity. The National Science Foundation estimates that California leads the nation in research and development, spending $33.7 billion out of the national total of $166 billion in 1993.31 ABAG estimates that the Bay Area accounted for $13 billion of that spending. While the universities and national laboratories are an important part of the region’s research and development, 75% is performed by private firms in electronics and biomedical companies. It is no coincidence that the Bay Area is a leader in these two industries — a position enhanced, if not facilitated, by their historic ties to the universities. Direct Expenditures A 1989 Peat Marwick study of U.C. Berkeley’s total economic impact estimated university and student expenditures at $1.23 billion in the Bay Area. This total includes $356 million in Berkeley, $385 million in the rest of the East Bay, and $489 million in the rest of the Bay Area. An upcoming study estimates Stanford’s contribution to the local economy at $1.9 billion. Links to Business and the Regional Economy Graduates of the major research universities are also part of every community in the Bay Area, providing both formal business linkages and informal information networks. In an area known for its highly educated work force, over 12% of those with a Bachelors degree attended either Berkeley or Stanford. For example, three quarters of the Ph.D.s who join industries in the five southern counties of the Bay Area are Berkeley graduates. The largest employers of Berkeley Ph.D.s are: Hewlett-Packard, IBM, Xerox, Chevron and Bechtel. Business incubation, and the encouragement of entrepreneurship have been particular hallmarks of the Bay Area’s major research institutions. Stanford has the longest history of business incubation as the birthplace of Silicon Valley in the 1940s. One survey indicated that while business incubation begins near the campuses, as companies mature they typically migrate to the surrounding community.9 Over time, businesses with original ties to research institutions have located in almost every county in the region. The major research universities are also important for the commercialization of research. For example, surveys rank the computer science and electrical engineering programs at U.C. Berkeley and Stanford among the top four programs nationwide, and U.C. San Francisco and Stanford are recognized as the leading institutions in biotechnology. Research in these programs has resulted in early computer products, recombinant DNA, and the computer language development underlying the Internet. Also, programs at Stanford allow small companies to attract top talent by providing flexible graduate education to workers in the computer industry, and by promoting research collaboration between individual faculty and private companies. For example, Stanford and U.C. San Francisco have licensed the basic patents for recombinant DNA to hundreds of companies and have shared over $125 million in royalties.18  Tourism and Travel San Francisco is renowned as a favorite tourist destination. This is evidenced by its recent ranking as the number one destination in the country.iii Each year more than 16 million people visit San Francisco, and more than 50 million visit the region. Of these regional visits, over 2 million are international, and 48 million are from within the region (see Table 6.5) and the rest of the United States.58, iv Travel and tourism represent billions of dollars to the region’s economy every year, and directly and indirectly support almost 200,000 jobs. San Francisco San Francisco plays a critical role not only as the primary tourist and business destination but as an important link in attracting travelers to the rest of the region. A recent survey by the San Francisco Convention and Visitors Bureauv indicates that 41% of visitors to San Francisco also visit the Sausalito/Tiburon/Muir Woods area; 27% visit the wine country; and 17% visit the Oakland/Berkeley area. Because visitors to San Francisco make up such a large percentage of the region’s total, visitors to that city who subsequently travel to Marin exceed the number of travelers who make Marin their primary destination. San Francisco travelers to the wine country equal 65% of those who make Sonoma and Napa their primary destinations, and equal 54% of those who make Alameda County their primary destination. Economic Impacts of Tourism The economic impact of tourism is substantial. ABAG estimates that tourists directly contribute $5.8 billion annually to the Bay Area economy. The direct and indirect effect of traveler spending (all spending except air travel) results in 124,000 jobs in the Bay Area. It is possible to quantify, for example, the economic impact of day trips of San Francisco visitors to other regional destinations. ABAG estimates that Marin County’s economy gains an additional $546 million and 10,700 additional jobs, the wine country in Sonoma and Napa counties gains an additional $359 million and 7,100 jobs, and Alameda County gains an additional $226 million and 4,500 jobs from travelers whose primary destination is San Francisco. Air Travel Nearly one-third of all Bay Area visitors fly into one of the region’s three major airports. San Francisco International (SFO) was the entrance to the Bay Area for 10.4 million international and domestic visitors in 1994. Survey information indicates that international visitors account for 25% of visitors traveling through SFO.vi Oakland International Airport was the gateway for 1.9 million visitors to the Bay Area.vii And, San José International Airport served as the transit point for 2.1 million visitors in 1994.viii Since travelers to the region represent approximately half of the passengers at the three area airports, it is also noteworthy to consider the economic impact of the airports. Airlines and airport services at SFO, for example, including the United Airlines Maintenance Center, generate about $5.1 billion annually for the region’s economy. San José and Oakland International airports are conservatively estimated to contribute an additional $1.5 billion annually to the region’s economy. Arts and Culture Historically, San Francisco played an important role as a regional center for arts and culture. Today, artistic and cultural institutions in the urban centers remain vitally important to regional identity. A recent Bay Area Economic Forum8 report discusses the strength of this region’s eclectic cultural resources and performing arts companies. The cultural resources mentioned include: Asian Art Museum, de Young Museum, California Palace of the Legion of Honor, San Francisco Museum of Modern Art, Oakland Museum, Stanford’s Rodin collection; the Technology Center of Silicon Valley, Exploratorium, and San José’s Discovery Museum. In addition, the report cites San Francisco’s position among only a handful of cities in the world with internationally-recognized resident companies in all major performing arts: opera, symphony, ballet, and theater. A striking feature of the above list is that all but one of the facilities or institutions mentioned are located in the 3 largest cities. Clearly, the major cities command a disproportionate role in the region’s standing as an artistic and cultural center. This does not, however, diminish important regional and community art, theater, and cultural venues outside these cities, which also contribute to and benefit from urban-suburban arts and cultural linkages. Visitor Statistics Demonstrate Regional Linkage Visitor statistics for arts, cultural, and entertainment facilities strongly demonstrate regional linkage. Patrons from around the region attend these facilities, indicating that are truly regional institutions (see Figures 6-4, 6-5, and 6-6). For example, while 24% of visitors to San Francisco's de Young Museum came from San Francisco, 35% came from other Bay Area locations.42 Suburbanization of the Arts As the suburbs mature, central cities have begun to lose their monopoly on art and cultural facilities. Examples of major regional facilities which have located in the suburbs and which represent a kind of “coming of age” include the Walnut Creek Regional Center for the Arts and the Luther Burbank Performing Arts Center in Santa Rosa. Santa Clara County is also noteworthy for the relatively recent blossoming of major arts and cultural facilities in San José, Palo Alto, Mountain View, and Cupertino. Questions regarding likely impacts of the suburbanization of arts and cultural facilities, particularly on city facilities, have recently been studied by Norman Schneider and Matthew O’Grady at San Francisco State University.55 The study addressed regional identity and also looked at financial health issues (particularly for those venues which rely on more affluent institutional benefactors and patrons - both of which are increasingly located in the suburbs). The following research question was also posed: “Has the development of regional arts in the Bay Area contributed to a narrowing or broadening of the suburban dweller’s sense of community?” The study points out the importance of linking urban and suburban institutions to contribute to “...a wider sense of community, one that constructively links central city and edge city....” It suggests policies to encourage greater collaboration and interaction, rather than accepting a competitive approach. Also, each area has different strengths — central city venues have established companies and reputations, while suburban locations have growing populations and (sometimes) greater financial resources. The Regional Environment Land, air, and water resources together make up a dramatic environmental setting for the San Francisco Bay Area. Yet, waterways and airsheds know no jurisdictional boundaries, and polluted conditions, whether air from suburban commute traffic, or soil from an old urban manufacturing plant, affect the quality of life and competitiveness of the region as a whole. Regional recreational, aesthetic, cultural, and economic opportunities are all tied to these resources, and the preservation and enhancement of the physical environment has been, and will continue to be, crucial to the long-term sustainability of the Bay Area economy. Land Resources More than 200,000 acres of open space — including parks, gardens, zoos, golf courses, and other recreational facilities — are available to Bay Area residents and visitors.ix Agricultural land in the region totals just over 820,000 acres. This vast resource provides the residents of the Bay Area with proximity to rural lifestyles, additional open areas, and is also an important food source. Demand for developable land for commercial and residential growth is an inevitable component of a vital economy. Nearly 60,000 acres of open space and agricultural land have been developed for urban and suburban uses between 1985 and 1995. This constitutes an average loss of undeveloped land of approximately 1% per year. If construction of additional housing, commercial buildings, and industrial facilities could be directed to existing urbanized areas, open space loss would occur more slowly. To address this demand, many jurisdictions are establishing planning efforts to create greenbelts. Greenbelts, or other growth boundaries, can channel growth within cities as infill development and assist in creating a more orderly development pattern in growing communities. Toxic Sites Toxic sites, or brownfields, are abandoned or underutilized facilities or areas where soils and/or groundwater have been contaminated. The cost an uncertainties associated with cleanup often make cleaner, less dense areas on the fringes of the region more attractive to businesses — resulting in pockets of underutilized industrial land in the urban core. These sites are primarily commercial and industrial, and their cleanup and redevelopment is important to urban economic development. The cleanup of former military bases which are being converted to civilian use will also be important to the region. The goal of the Environmental Protection Agency's (EPA) Brownfields Action Agenda (BAA) and local brownfield initiatives is the cleanup and redevelopment of toxic sites. The BAA funds pilot projects which promote environmental cleanup, assist in removing liability and other barriers to cleanup and redevelopment, and build public participation and community involvement in the decision making process for local brownfields. Thus far, four communities have been designated by EPA for cleanup and redevelopment: Emeryville, East Palo Alto, Richmond, and Oakland. Regional collaboration among government, redevelopment agencies, local communities, financial institutions, developers, and industry is an important component in the economic revitalization of these sites. Air Quality The Bay Area’s airshed is defined by geographic and climatic conditions unrelated to political boundaries. Many rural or suburban residents see or feel the effects of automobile emissions, much of which is generated in the more urban corridors. When air quality standards are not met, public health may be endangered in cities and neighborhoods throughout all or parts of the region. In the region as a whole, nearly 100 million miles are traveled by vehicles on a daily basis.x Based on the quantity of fuel used regionally, it is estimated that 26 million tons of CO2 are added to the atmospheric load from Bay Area vehicles every year. The nature of development in the Bay Area fosters driving which has accelerated the consumption of fuel, exacerbating air quality problems. Concentrating development and/or reducing single-occupancy auto travel could reduce miles traveled, thereby lowering mobile source emissions. Water Quality The San Francisco Bay and Delta is an inescapably strong environmental asset of the region. Each of the nine counties includes some bay frontage, as do 41 of the region’s cities. From all perspectives — resource, economic, and recreation — the Bay ties the region’s communities together. Discharges impact aquatic life and the health of this unique water system. Over 60 toxic pollutants are conveyed to the Bay and its surface waters, affecting fishing and consumers of fish and shellfish, local and migrating birds and waterfowl, and recreational activities. Economic concerns are tied into water quality as well, since agriculture and industry rely on clean water from the estuary for irrigation and processing. A clean bay and estuary depend on minimizing runoff from developed areas. In addition to effluent and runoff to the Bay, sedimentation from construction sites may cause turbidity and algal growth throughout the region. Finally, many water agencies supply their customers from reservoirs fed by watersheds in rural areas of the region; thus many communities depend on high quality water from storage some distance away. Conclusions This chapter examined ways in which urban and suburban areas are economically, academically, culturally, and environmentally interconnected. It also explored the critical role cities play as hubs within this regional network. Commute patterns clearly show the increasingly mobile and regional nature of the Bay Area labor force. Suburban residents, many of whom commute to these urban centers to work, spend their wages in their home economies, resulting in suburban revenue and job generation. Goods are produced throughout the region, and cities house the air and seaports that transport those goods to domestic and world markets. The Bay Area is also an attractive location for business, and cities provide many quality-of-life amenities, such as arts, culture, and recreational activities, which enhance the economy, as well as the image and marketability of the region. Colleges and universities provide the Bay Area's growing "brain-based" economy with a talented labor pool, and also fuel the commercialization of private sector research and manufacturing throughout the region. Overall, the combination of university research, development, and academic training provides a significant contribution to the region's economic activity. Tourism is also important to the Bay Area economy, and San Francisco plays a crucial role in attracting travelers to the rest of the region. North and East Bay communities, in particular, benefit from tourism flowing into San Francisco. Finally, the Bay Area's natural environment crosses jurisdictional boundaries and affects the quality of life and competitiveness of the region as a whole. Maintenance of shared resources will require coordinated effort by both urban and suburban leaders.