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Dear Sir or Madam,


These comments are submitted on behalf of the Home Builders
Association of Northern California (HBANC).  HBANC represents about
500 member companies and thousands of employees in the building and
construction industries in the San Francisco Bay Area.

CARB jointly sponsored a Public Workshop (with MTC and ABAG) on
March 10, 2010, on the process/methodology for establishing a GHG
reduction target under SB 375 for the Bay Area.  A CARB staff
person gave the introductory remarks and stated that a principal
purpose from CARB's perspective was to hear from the public on the
state of the Bay Area economy and whether the weakness of the
economy should be a consideration in the target setting process.

HBANC made oral remarks to the effect that the current economic
climate (the Great Recession) must be part of the process by virtue
of the requirement in SB 375 and federal transportation planning
requirements that the SCS and the goals on which it is based must
reflect realistic economic and social data and assumptions, and the
projected land use pattern must reflect a realistic assessment of
future development--which in turn is heavily influenced by the
economy, job growth, market preferences, etc.

HBANC would like to supplement its oral testimony with this
additional written information.  The Bay Area, like the rest of
California, is in a dire recession.  And among Bay Area economic
sectors, none is suffering more than the building industry.

The numbers tell the story.  In 2007, the Bay Area's cities and
counties issued 22,843 building permits--down 24% from an average
of 29,978 issued from 1999 through 2006 (ABAG).  These figures
plummeted further still in 2008 and 2009.  In 2008, permit issuance
plunged to 12,583; and in 2009 to 5,642--the lowest on record.

This drop in building activity has significant repercussions on
the entire Bay Area economy.  According to research by SSRI, every
dollar spent on new housing in California generates another $0.8 in
total economic activity, while each job created through residential
construction supports an additional 1.2 jobs.  According to a
November 2009 article in the SF Chronicle, about 25% of the San
Francisco region's 16,000 building trades workers had been out of
work since March 2006, according to the San Francisco Building and
Construction Trades Council.

This unprecedented weakness in the Bay Area building industry is
reflected in the overall Bay Area economy.  The following excerpt
from a summary of the recently released Silicon Valley Index by
Joint Venture:  Silicon Valley of the state of the business climate
in Silicon Valley--historically a pillar of Bay Area job growth and
economic vitality--confirms this:

"SAN JOSE and MOUNTAIN VIEW, Calif. – February 11, 2010 – The
economic recession has stalled Silicon Valley’s vibrant innovation
economy and left its global competitive standing at risk as never
before, according to the 2010 Silicon Valley Index released today
by Joint Venture: Silicon Valley Network and Silicon Valley
Community Foundation.

The comprehensive yearly study on the economic strength and
overall health of Silicon Valley reveals that rapid economic growth
in other countries, coupled with California’s legislative gridlock,
is draining the lifeblood of funding and foreign talent from
Silicon Valley, leaving recovery in a “new phase of uncertainty.”

“Silicon Valley’s innovation engine has driven the region’s
prosperity for 60 years, but at the moment we’re stalled,” said
Russell Hancock, CEO of Joint Venture. “What’s hard to say is
whether we’re stuck in neutral, which has happened before, or
whether it’s time now for a complete overhaul.”

“This year’s Special Analysis is a call to action for all of us,”
said Emmett D. Carson, Ph.D., CEO and president of Silicon Valley
Community Foundation. “On the heels of the worst economic year
since the Great Depression, our region has entered a new era of
uncertainty in which our ability to attract top talent, fund
innovation and preserve a decent quality of life is no longer
guaranteed.”

The 76-page 2010 Index reports the latest data and trends in
economic development, workforce, housing, education, public health,
land use, environment, governance, arts and culture and other
sectors throughout Santa Clara and San Mateo Counties and portions
of Alameda and Santa Cruz Counties. An accompanying Special
Analysis section of the report each year takes a closer look at a
particularly significant topic.

Highlights of the 2010 Index and Special Analysis include:

    * Foreign Talent – With increasing global partnerships,
Silicon Valley grows ever more dependent on foreign talent –
particularly for filling science and engineering positions.
However, the actions of our nation in the wake of 9/11 and the rise
of other global regions have made Silicon Valley less accessible
and less attractive than it once was. Inflows from China and India
continue to rise, as does investment and collaboration between the
Valley and those two nations, but China and India are both
experiencing rapid economic growth. As they do, opportunities in
those countries will slow the flow of talent here.

    * Investment Capital – Silicon Valley’s traditional ways of
funding innovation – through locally-raised venture capital and
public offerings – can no longer be taken as a given. Major
structural shifts are underway in the funding community, and the
federal government has re-emerged as the major investor in
innovation and basic research. However, Silicon Valley is not
attracting significant shares of federal funding, and has not for
some time.
    * Venture Capital – Investment is shifting away from software
and semiconductors and into biotechnology, energy, medical devices,
and media. The level of investment continues to decline, and
venture capitalists generally have not realized significant returns
for the past decade.

    * California Government – Silicon Valley is “slammed” by
forces beyond its control, most notably the “malaise” in our state
government. California’s budget crisis and the political
dysfunction in Sacramento has direct and debilitating effects on
the region’s ability to prepare the workforce, provide crucial
infrastructure, maintain quality of life, and keep pace in the
talent race with other regions.
    * Higher Education – U.S. and California investment in higher
education is declining at a time when talent becomes still more
important to Silicon Valley.
    * Jobs – Between November 2008 and November 2009, employment
in Santa Clara and San Mateo Counties dropped 6.1 percent, compared
to 3.8 percent nationally. Silicon Valley lost 90,000 jobs between
the second quarter of 2008 and 2009, bringing total employment down
to 2005 levels. The “green” economy accounted for 12,000 jobs in
the region.
    * Housing – Residential foreclosure activity dropped by 39
percent in 2009 yet in some cities more than a third of sales are
foreclosures. Housing affordability for first-time homebuyers is
improving. New affordable housing units in the region doubled from
2008 to 2009. Average rents declined six percent from 2008, the
first drop in rents since 2005.
    * Commercial Real Estate – Office vacancy rates are at an
all-time high since 1998 and were up 33 percent in 2009 over
2008."


In sum, the Bay Area economy, like the rest of California, is in a
Great Recession.  This dire economic reality must be an important
consideration as CARB assigns a GHG reduction targets to the Bay
Area pursuant to SB 375.

Thank you for the opportunity to comment,

Sincerely,

Paul Campos
Sr. V.P. & General Counsel