Original post: Model City Monday 9/4/23
Ecorche writes:
The Public's Radio article has a map in it that gives a better idea of the location. It looks like most of the land is closer to Rio Vista and does include a good stretch of riverfront. The land close to Travis is probably intended as industrial park rather than residential.
Steve Sailer writes:
The car commute from Montezuma Hills in roughly the geographic weighted center of the land purchases to San Francisco looks like roughly 3 hours and ten minutes round trip on the average working day […]
A couple would definitely need two cars. And over three hours of commuting per day to San Francisco would mean it's not that much more desirable of a location than existing downscale exurbs like Stockton, which could depress the quality of residents who'd be attracted by it.
It would nice to have a rail commute: commuting by passenger rail, like in "Mad Men," is the most pleasant way to get to work during rush hour. In the Chicago suburbs, for example, the most desirable suburban locations are within a reasonable walks of train stations: 15 minute suburbs.
There's a train track between Sacramento and San Francisco that's about 10 or 20 miles away, but most railroads in the U.S., other than specifically commuter railways in places like NYC and Chicago, prioritize freight over passengers, so schedules for passenger trains are often fictional, with passenger trains being sidetracked to let freight roar by. (America, by the way, has very efficient freight trains in return for having terrible inter-city passenger rail.)
An alternative would be to extend the Bay Area Rapid Transit rail line from Antioch under or over the river/estuary to this new city. But that would cost many, many billions and would probably require the new city to have a population of, say, a half million. Also, BART raises fears of Oaklanders or some of the exurban slum dwellers (e.g., Pittsburg) riding mass transit out to the new city to raise havoc. If you can only get to this new city by a long car trip, it will have low crime rates.
In sum, there are good reasons of geography why this piece of land is so empty. On the other hand, this coalition of billionaires is not unimpressive. I wish them well.
We need a bigger map:
The pink area is Flannery’s land for the new city (it doesn’t own all of it; their holdings are scattered throughout the area). It’s a 30 minute drive across several inconveniently-located bridges from the center of the city to the nearest BART (Bay Area transit) station in Antioch (orange circle). And from Antioch it’s a 1 hour drive (or 1 hour BART ride) to San Francisco City Center (at the far southwest of this map).
Steve says it would make things easier if there were a bridge from the southern tip of the Flannery land straight to one of the two nearby BART stations. But maybe not much easier. From the center of Flannery to Antioch BART in a straight line over a hypothetical bridge is twelve miles; it will be hard to get peak transit times below 20 minutes.
If you built a bridge and extended the BART line there (politically hard!) you could maybe get driving and commute times down to 1:10 each way.
Steve is right that many working-class people with SF jobs commute from Stockton (2:00 drive, 3:00 public transit each way), so this could still be an improvement.
(the three hour commute from Stockton involves some painful public transit connections; I wonder why there’s no commuter bus).
Michael worries about the air force base (marked Travis AFB on the map above)
Oh ... shit. I know what this means.
Travis AFB is a MAC base, Material Air Command. They fly freight, and its really loud. When its foggy, which it is often in the delta region, the foggy air really carries the sound. Flying freight is done with really big heavy aircraft, and they're very loud.
What these schemers do, is 'model the noise level' so ... basically all models are wrong, but some models are useful. So they model the noise level in a manner which allows development on the property. Then they build, then the residents complain, then the federal government gets involved, and starts to regulate the air traffic out of the air force base. The developers have long since absconded with their , and the shit-storm, its all SEP (Somebody Else's Problem).
Look, we have to have air force bases, and we intentionally put them in God forsaken out of the way places, where they can make shit-tons of noise, drop the occasional airplane, and do it in some out of the way place where the only casualties are the air crew. But then NOPE, some schemer sees a scam, and this is it, the taxpayers are being had yet again.
Auros is a planning commissioner, and discusses how authorities think about these kinds of air noise problems:
At least in the last forty years, what the federal authorities have done about airport noise is not reduce the airport noise. It's to tell cities that they can have some assistance with residents' noise insulation improvements, _if_ they alter zoning to prevent any further construction. See for instance the Comprehensive Airport Land Use Compatibility Plan for the Environs of San Francisco International Airport:
https://ccag.ca.gov/plansreportslibrary-2/airport-land-use/
I am a Planning Commissioner in San Bruno, and I live less than a mile from the airport, in the Belle Air neighborhood, just across 101. Basically under the deal that the local cities (South San Francisco, San Bruno, and Millbrae) made with the airport some decades back, we're not supposed to let anyone add housing too close to the flight path. (The technical term is "noise contours".)
South San Francisco has recently been trying to build some apartments just at the northwest tip of the area affected. They had thought they were going to be able to reach an agreement where they told the ALUC "hey we know the airport exists, we will build to high noise insulation standards and we agree we can't sue you". But the ALUC so far seems to be saying they don't want to grant an exemption.
https://everythingsouthcity.com/2020/09/planning-commission-approves-338-units-at-former-century-plaza-on-noor-avenue/
https://www.smdailyjournal.com/news/local/agencies-differ-on-south-city-development/article_b9be346c-14e0-11eb-917d-db7d806758f9.html
It's not exactly clear yet what's going to happen with this, because it's bringing state law (which has been changed to push for more housing) into conflict with a quasi-federal authority. If the ALUC really stands firm, I suspect they'll win in federal court, but maybe they'll change their mind. (I've talked with my Congressman about this, I'm hoping there may be some action from Congress to get airport commissions generally to lighten up on blocking housing; it's kind of a wonky issue where you might be able to get bipartisan interest. Call it "deregulation / preventing frivolous lawsuits" for the Republicans, and "dealing with the housing / homelessness crisis" for Democrats.)
If I lived about 2-3 blocks further northeast, I would've been personally affected by this issue. I'm _just_ outside the 75 dB noise contour, and it's unclear whether the state ADU-streamlining laws would apply there. (I have just broken ground on an ADU, the design of which is taking advantage of some brand new rules letting you build at a slightly smaller setback if you're within half a mile of transit.) Our city planning department is kind of unsure what they should do with ADU applications under the contour. My impression is that they are inclined to just go ahead and approve stuff, because they're more afraid of Rob Bonta and YIMBY Law than they are of the ALUC. They'd just see if the ALUC notices / complains, but so far it hasn't come up.
YIMBYs already prepped a lawsuit against San Bruno once:
https://www.strongtowns.org/journal/2019/7/24/approaching-peak-housing-dysfunction-in-california
Ultimately the suit was dropped because the city came back and approved the project, although by the time they did we'd hit COVID, and then rising rates and construction material inflation, so the project has never broken ground. We extended their permits another couple years, earlier this year. I am skeptical it will ever happen, I think it is more likely we'll get the featureless seven-story concrete towers that were threatened under SB 35 in the immediate aftermath of the original rejection.
https://www.sfchronicle.com/bayarea/article/San-Bruno-rejected-plan-for-425-homes-Now-14698779.php
But Brinkwater has a different perspective:
Having been to Vacaville, I don't think noise will be a problem.
But wait! I can do better! I took the map of plots purchased from the NYTimes (https://www.nytimes.com/2023/08/29/business/economy/california-land-solano-county.html) and combined them with the Travis Air Force Base Sustainability Study (https://www.solanocounty.com/civicax/filebank/blobdload.aspx?blobid=36198 or page 41-42 here https://oldcc.gov/sites/default/files/mis-studies/Travis%20Air%20Force%20Base.pdf), to get a map of the overlap.
See the combined map on twitter here:
https://twitter.com/brinkwatertoad/status/1698887068506546393?s=20
(zoom in to see better)
My takeaway: some of the plots are in the Noise Military Compatibility Area (MCA), which is unsuitable for residential (without significant noise attenuation), but could be used for office/retail/industrial. Most of the plots are outside the Noise MCA, and are fine for residential: No change in Travis Base's Noise MCA would be needed to develop there.
You'll hear planes, but it will be like living in Vacaville.
C1ue writes:
I would be shocked in Proposition 13 related tax shenanigans are not underlying a major part of the Solano "new city" development. Having valuations increase is great - but having to pay almost no taxes on it is a major force multiplier. As I have noted before: people who bought property in Pacific Heights in the late 70s and early 80s now pay annual property tax that is less than 1 month's rent for a 1 bedroom in SF - and there are many ways to make this intergenerational.
I don’t know enough about how Proposition 13 works to contradict this, although my understanding is that if they sell the land (eg to developers or homeowners) that negates this benefit.
A friend refers me to Thesis Driven’s (subscriber-locked) post on the city. It mostly repeats the publicly available knowledge, but I appreciated some of the commentary, especially this part:
While California Forever’s announcement fumbled the bag, they weren’t exactly set up to succeed. Since Flannery Associates started buying land six years ago, public opinion has swung dramatically against Silicon Valley, the technology industry as a whole, and (in particular) people who got rich building technology companies.
Flannery started purchases in 2017. Presumably Sramek came up with the idea and pitched the company sometime before then, let’s say 2015.
I find myself confused about how people feel about Big Tech / Silicon Valley. My impression on the ground is that everyone hates them, including Democrats, Republicans, Californians, Bay Areans, and tech workers themselves. But polls show that they are among the most trusted US institutions. The Edelman Trust Barometer, a group that monitors this sort of thing, constantly tries to raise alarm that people are trusting tech less, but eventually admits that 76% of people say they trust “the technology sector” and that it leads all other sectors of the economy.
Given this confusing situation, I don’t know what to make of claims that trust in tech is “declining”, but it seems like it probably is:
My model - which I won’t justify here - is that non-tech elites have hated tech since about 2015 and tried to build a consensus against it, part of which involves using the media to convince everyone that everyone else hates tech. Ordinary people continued to trust tech a lot until about 2020 but are starting to waver.
In 2015, Sramek might have reasonably expected that “tech leaders are founding a city” would have positive connotations - the Sustainable High-Tech Progress City of the Future! But it took him the better part of a decade to actually buy the land, and by now the story is Evil Billionaire Elites Attempt Land Grab And Will Probably Use Their City To Spread Misinformation And Violate Your Privacy.
Thesis Driven’s conclusion is that trying to build a tech city in California was arguably a reasonable plan in 2015 but a bad plan now. Since Flannery is locked into it, they might as well see if they can pull off a miracle. But if they were starting this today, they should have tried working in Texas or Florida, just like everyone else who doesn’t want local government to ruin their lives.
Shaked Koplewitz (blog) writes:
>> “Once 10,000 people live in their town, what’s to stop those people from becoming NIMBYs and voting against further growth?”
Part of it would probably also be which people you have. Palo Alto nimbys are mostly people who moved to Palo Alto because they like having one-story houses with big yards and lots of roads. Presumably the sort of people who move into smaller high-density apartments in an area advertised as high-density would be more okay with keeping that level of density?
(Or even if they eventually change their minds and start objecting, this takes time and within a decade or two you've already probably built or at least zoned for a lot of the density you want).
Commenter Tristan said he did his PhD thesis on this topic about found that “people who move to a place based on marketing for a walkable community are more willing to accept density than people who moved to the burbs with the goal of not being downtown”. You can read the thesis here.
Hyolobrika asks:
» “According to this article, the mayor of nearby Suisun City, Princess Washington, worries that it will be “a city for the elite”. Although her concerns seem misplaced, her name makes her sounds like a powerful and majestic opponent.”
Why [are they misplaced]?
Just because the city is founded by elites doesn’t mean it will be inhabited by them. Mark Zuckerberg is an elite, but that doesn’t mean Facebook is “a website for elites”. No elite wants to live in Solano County (unless it’s their summer ranch home or something). The natural demographic is people priced out of the Bay.
So it’s not going to be for billionaires. Might it be skewed to professional class people as opposed to working class people? Maybe, maybe not. Even if it is, is the professional class so evil that building them decent houses where they can afford to raise families is worse than leaving the land fallow for cows to graze on? Exactly how much lose-lose class warfare are we committing to here?
But also, there have been plenty of studies showing that if you build more houses for elites, then elites move into those houses instead of gentrifying other people’s neighborhoods, and the price of other people’s neighborhoods go down. So even if you build “a city for elites”, it’s about as good at lowering statewide housing costs as anywhere else.
And again, if you’re gunning to be the spokesperson for a new anti-elite movement, you should probably not be named “Princess Washington”.
DamienCh writes:
I am an international lawyer, expert in investment arbitration, and write for the main news source in that field; hopefully I can clarify a few points here.
The first thing to understand is that all investment arbitrations involve independent, one-off tribunals, whose arbitrators are appointed by the parties. For a tribunal to rule, it needs jurisdiction, typically under an investment treaty (here, the multilateral CAFTA-DR, but most cases take place under bilateral investment treaties, or BITs). These treaties basically says: "investment disputes can be arbitrated".
In this context, some tribunals are overseen by an administering institution, which provides some logistical services, a set of procedural Rules, and appoint arbitrators when a party does not participate - that's what ICSID is. But the final decision (the award) is not rendered by ICSID (let alone the World Bank): it's rendered by the BIT tribunal, under the ICSID Rules.
Now, ICSID is a very special administering institution: not only is it associated with the World Bank, but it has been set up by its own multilateral treaty, the ICSID Convention. A tribunal administered by ICSID needs to have jurisdiction not only under the investment treaty, but also under the ICSID Convention. Respondent states ALWAYS argue that the tribunal lacks jurisdiction under either treaty, to toss the case out before it reaches the merits, and there are many arguments that can be made in this respect. A good third of investment arbitrations fail for lack of jurisdiction. (This being said, the article linked above is right that the arguments made by Honduras so far are non-starters.)
As for why the 100x in penalties, I regret to say that international lawyers have not waited for the developments of behavioural science to discover anchoring. You typically ask for an enormous amount (as "lost profits"), with the hope of securing a big pay-out. "Lost Profits" is indeed a basis for compensation, if you can prove it, but most tribunals in the jurisprudence tends to be very sceptical of big amounts, and would tend either to award the investor its sunk costs, or to land on something more reasonable given the parties' submissions - but that's again why you want to anchor them high.
As for enforcement, the ICSID Convention notably provides that ICSID awards should be recognised as judgments of the highest jurisdictions in every state party to the treaty (in exchange, ICSID provides a dedicated, high-quality challenge mechanism to ICSID awards). That's how the investors will hope to collect on whatever award they obtain. Although the respondent state will typically find a reason to ignore their ICSID obligations to enforce, the play is to find non-immune sovereign assets in friendlier jurisdictions. Enforcement lawyers can be very creative.
Final note: other arbitral Rules and institutions exist, and investment treaties typically provide options, so denunciating the ICSID Convention is often done more for domestic headlines than anything else. (Rejoining it, as Ecuador recently did, is done for international headlines, as in "we are open for business".) As the article notes, the ongoing arbitrations would not be impacted by the denunciation.
Now, given all that, what to do of the Prospera case ? In my view, and having not seen anything else beyond what's publicly available, it's a typical investment dispute, could fare relatively well (they have good lawyers), but they won't get 11 billion USD (though that depends a lot on the arbitrators).
I also heard from Niklas Anziger, who’s in touch with Prospera’s leaders and legal team including technical secretary Jorge Colindres, and who was able to give me more clarity on the situation. Remember, the last government passed a constitutional amendment allowing ZEDEs. The new government has to repeal the amendment in order to ban them. The repeal process requires winning two votes in Congress within ~2 years. They won the first in spring 2022. Their deadline to win the second is January 2024. They’ve made no attempt to start the second vote and Niklas thinks the political climate has shifted and they wouldn’t win. So legally the ZEDE regime is still in place, so much so that people can even apply to start new ZEDEs (although the government would refuse the application).
The government’s other option is to have the Supreme Court declare ZEDEs unconstitutional. This would be a bold strategy, since they were passed through constitutional amendment and it seems like the constitution should be constitutional by definition. But the new government has “packed” the Supreme Court with its allies (to be fair, so did the last government) and might be able to pull this off. But so far they haven’t tried this, and Prospera thinks even if they succeeded it would ban new ZEDEs but not affect existing ones.
The legal battle matters only insofar as it gives the government cover to send in police to break up the ZEDEs by force. The government would like to do this, but doesn’t feel like they have enough legal justification yet. There might be some amount of legal victory which might not be enough to genuinely make the ZEDEs illegal by the letter of the law, but which would make the government feel like it could get away with doing this. Prospera is trying to prevent this amount of legal victory (which is a harder problem than preventing ZEDEs from genuinely being illegal) while also signaling to the government that they would get in lots of international-investment-law-trouble if they tried this.
Prospera predicts that the socialists won’t be able to establish a legal fig leaf for shutting them down before the political winds shift again and Honduras elects a different government. According to a May poll, “43.3% of those surveyed consider that the Castro Government represents a negative change for [Honduras], 35.5% see it as positive and 19.9% think that it is more of the same.” The next election is in November 2025.
Erusian writes:
There's multiple lawsuits in Honduras, not just from Prospera but from multiple corporations. Prospera is demanding that the government not proceed with disestablishing them. They said it could be billions of dollars if they lose all of their investment or if the disestablishment proceeds. But they are seeking to block the disestablishment, not to get paid. The logic behind the $11 billion is they're calculating over the original 50 year agreement.
Meanwhile several other companies which have suffered similarly have collectively asked for about half a billion with more on the way. But these are mostly normal companies. The largest is a Mexican firm, JLL Capital, which is suing for $380 million. Previously some Scandinavian firms sued for even more.
If you ignore the World Bank then you get suspended from the World Bank which makes getting loans and international aid harder. Honduras has paid in the past. As Honduras receives between $500 million and $1 billion in aid each year it's doubtful they could do without. But perhaps the left wing governments of the US and so on will ignore it? Not entirely sure.
See also this subthread about how Argentina’s creditors made its life miserable after they defaulted on international debt.
Christophe Biocca writes:
>> “Building progress: last I heard Duna Residences were supposed to be ready Q2 2023, but a recent video shows them still under construction.”
Yeah, they're delayed a bit, but deliveries are happening over the next 4 months (they're doing it in phases as they get them finished), starting with the commercial units this month and finishing with the top floor in December.
Trey Goff writes:
Just FYI Gabriel published some more updated pictures of Duna this morning, here:
Cramz writes:
Beyabu won't look like that. They have decided against building in the swamp. I got this from talking to Trey a year ago. He said that the costs of building on the river would have been prohibitive, and the decision was made to move the residences to a different place. Confusingly, the old designs are still featured on the beyabu website, but only as decoration - the more detailed renders show houses standing on a hill, looking quite different from the old circular design. See also the real-time configuration tool demo featuring new designs.
Too bad! I figured the original pictures were too beautiful to ever become real, but it’s sad to hear it confirmed.
Romeo Stevens on Neom’s loan:
WRT the 2.7 billion: the most important thing to understand about large piles of wealth is that they always have a huge imaginary component, money that can't be withdrawn without crashing the value of the rest of it. So loans are taken out against the assets instead of just spending the money. This is also the reason for the weird behavior you see from the wealthy. There can be 100 fold difference in how liquidity constrained two billionaires with the same nominal wealth are. If you nominally had a billion dollars but could only do anything with 10 million you'd feel pretty poor compared to your buddies.
Rob on Neom’s loan:
On Neom wanting loans - I have a guess. Part of why Aramco IPOed was to create proper financial records - not because selling a few percent of Aramco meaningfully diversified the holdings of the Saudi royal family. By being a publicly traded company, there were forcing mechanisms to get the company to do proper financial reporting.
Throwaway Commenter on Neom’s loan:
Just on the Saudi Arabia loan - it's something that companies do all the time, probably for some combination of (1) cash flow reasons; (2) maximising leverage; and (3) the pricing works out.
Pricing: If Saudi Arabia's existing investments give it a return of 6% a year, and the interest it owes on the loan is 4% a year, then it can pay off the interest using its investment returns and keep an additional 2% of profit. It wouldn't want to liquidate its existing investments and lose out on those returns.
Sarah Constantin (blog) on Praxis:
I've spoken to the Praxis people and it doesn't seem mysterious to me.
It's fundamentally a real estate development. "Let's build a new town in your country, bring lots of foreign investment and high-human-capital expats, and maybe you'll give us some kind of limited business-friendly perks or help us fast-track things somewhat." That's it.
The "innovation" is that they've done some community building and are trying to get "preorders" from people making a (not legally binding) commitment to move there, and they think that this can be used to get more favorable financing.
They are still in the process of working out agreements with host countries (i.e. they've had any meetings but nothing has been secured to the point they're ready to announce it).
I think this is the kind of thing where it's not obviously dumb that well-known VCs invested a few million dollars...but also maybe a <20% chance that it gets as far as Prospera (a real place with buildings where at least some people actually live full time).
Arbituram on France selling Kerguelen Island:
I'm pretty sure the Kerguelen islands thing isn't real? I can't find any legitimate sources repeating the claim.
Thank you, I’ve looked further and it is, in fact, false.
The original source seems to be this Chinese news site. It doesn’t look like it’s a Babylon-Bee-style satire site (some of the other articles seem real, and none of them are funny) so I’m not sure what their angle is in making it up. Still, aside from a few China-aligned sites that picked it up from them, nobody else says anything about this, so it must be fake. Here is a subthread about whether France selling Kerguelen would even be constitutional.
Chris D’Angelo (blog) on Hammer City (featured in the first Model City Monday post):
A belated update from our friends in The Black Hammer Party bodes poorly for the prospects of Hammer City. Apparently their leaders were arrested and are facing charges for “kidnapping, aggravated assault, false imprisonment, conspiracy to commit a felony, and taking part in street gang activity,” and one of them for sexual assault.
Wildly, they also are under fire from the Justice Department for spreading Russian propaganda in exchange for payments from a Russian influencer, who has since been arrested by the FBI and was allegedly bankrolling Hammer City.
https://www.axios.com/local/tampa-bay/2022/08/22/gazi-kodzo-black-hammer
