SPEAKING UP TO POWER-Every two years Anglenos have the unique opportunity to share their views on the future of LA’s energy policy during public comment on the Los Angeles Department of Water and Power (LADWP) 20-year Integrated Resource Plan (IRP). It may sound like the kind of dry process that would attract only the wonkiest of policy wonks, but in fact it is a crucial opportunity to pressure our leaders to chart a bold course towards the health and wellbeing of LA’s communities. 

LADWP says that the IRP focuses exclusively on three “Rs”: Rates, Reliability and Renewables. Given the health and climate change consequences of a 20-year energy plan, it is unacceptable that a public-owned utility does not focus on the human and environmental cost to our communities and future generations. Somehow LADWP understands we need renewables as a matter of costs, but it fails to acknowledge the bigger issue at hand, that they are key to solving our dependence on fossil fuels and the damage they inflict in our communities and our environment. 

After the SoCal Gas blowout near Porter Ranch disrupted thousands of families, Food & Water Watch and our partners pressured City Hall and LADWP to study transitioning Los Angeles to100 percent renewable energy to end the City’s dependence on dirty, fracked gas. We were initially encouraged to learn that LADWP’s IRP intended to study a 100 percent fossil-free scenario. However, the IRP seems like it will only contemplate reaching 65 percent renewable energy by 2035, at best. Worse yet, LADWP is planning to invest heavily in gas-powered plants. 

As Los Angeles moves off of coal by 2025, there are plans to reinvest in a whole new era of LADWP gas power plants. The gas power plants are located throughout Los Angeles County in Sun Valley, Wilmington, El Segundo, and Long Beach and disproportionately impact low income, communities of color. We are at a crossroads. DWP has a choice to reinvest in dirty, polluting gas power plants or move to clean, renewable energy. 

This is an opportunity to inject equity and justice in our energy plans and make smarter, more just choices. The City must clean up communities burdened with pollution from gas plants and infrastructure by decommissioning these facilities and transitioning to 100 percent renewable energy. 

Thanks to efforts by Councilmembers Mike Bonin and Paul Krekorian, Los Angeles has approved a motion to study 100 percent renewable energy for Los Angeles. But the IRP process is where the rubber meets the road. LADWP is making decisions this year about LA’s energy future that falls short of this 100 percent renewable goal. 

Affordable clean energy technology is here and has been for a while. LADWP must transition the city to 100 percent renewables by 2030. No excuses. We don’t need to just reduce our dependence on fossil fuels, we need to end it. Fortunately the technology to make the transition will also generate good, green jobs. 

Even without the pressing environmental and public health needs the case for renewables can be made in terms of hard costs alone. For example, an air-cooled gas generator can cost up to 10 times as much as solar power. Once human health and climate change are factored in, there is absolutely no reason to invest in old, dirty technology. 

It’s time for LADWP to break up with all fossil fuels and embrace renewables to generate power, to become an advocate for electric transportation, for both private cars and public transit. Some electric vehicles even have the technology to power homes in case of outages. More importantly millions of residents who live near freeways will no longer be exposed to tailpipe emissions. 

Additionally, as the devastating drought continues, it is undisputable that renewables have a much lower water footprint than fossil fuels. From extraction to transportation and refinement, fossil fuels cannot compete with renewables when it comes to water savings.  

It’s time for Mayor Eric Garcetti, the City Council and LADWP to take leadership. They can choose to do right by Angelenos or they can choose to keep sacrifice zones where people and the environment will pay a hefty price. Our communities have a huge opportunity to remind them of these obligations during the IRP, October 26 through November 14, whether by showing up at a LADWP meeting, submitting written comment or visiting City Hall. Help lead Los Angeles into a clean energy future. 

NEED TO KNOW--IRP Hearings 

First Hearing: October 26, 6-8pm; DWP Headquarters, 111 N. Hope Street, Los Angeles 90012 

Second Hearing: November 2, 6-8p; Wilmington Senior Citizen Center, 1371 Eubank Avenue, Wilmington, CA 90744 

Third Hearing: November 3, 6-8p; Pacoima Neighborhood City Hall Cultural Room, 13520 Van Nuys Blvd, Pacoima 91331

(Andrea Leon-Grossman is an organizer with Food & Water Watch focusing on a just transition to 100 percent renewable energy for Los Angeles.) Prepped for CityWatch by Linda Abrams.

PERSPECTIVE-Last Thursday evening, I had the pleasure of attending a debate between two gentlemen in the race to replace termed-out Fran Pavley in the 27th SD. It was sponsored by the American Association of University Women (San Fernando Valley Branch), NOW and the League of Women Voters. Representatives from four West Valley Neighborhood Councils were there. 

Henry Stern (photo above right), who serves on Pavley’s staff, and Steve Fazio, a long-time small businessman in the San Fernando Valley, faced each other at the Westfield Mall, fielding questions from a panel and the audience. 

The civility was refreshing. 

The 27th is not my district. My reason for being there was to hear where the two opponents stood on California’s misguided and bloated high-speed rail project, particularly Mr. Stern’s view. 

I met with him shortly before the primary. We discussed a number of issues, including HSR. I was impressed by his overall pragmatism, especially when it came to transportation priorities. 

He stated then that he was supportive of commuter rail in general, but the HSR project was poorly conceived and planned. 

I was wondering if he would stick to that position, especially when Lt. Governor Gavin Newsom recently flipped his stance. Perhaps Newsom buckled under pressure from the unions and contractors who stand to benefit from this financial debacle on rails, a project that is absorbing critical cap-and-trade funds. 

If anything, Stern doubled down and recommended that the plan be put before the voters again.

He emphasized that HSR was putting the cart before the horse. What good would it be if we did not first develop intra-city transportation? 

To be fair, Fazio also voiced strong opposition. 

But if we are going to kill HSR, it would die a quicker death if there were more Democrats behind the effort to do so. That’s why candidates such as Stern and Patty Lopez, who is running for re-election in the 39th Assembly District, could further nudge others within their party to stop it before there is too much more money wasted.

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Patty Lopez (photo above left) is engaged in a stalwart campaign, a rematch against party-insider favorite Raul Bocanegra. Despite her solid voting record along party lines, as well as getting several bills important to her constituents passed, the Democratic Party is supporting her opponent. 

It’s all about money. Bocanegra spent lavishly on his colleagues’ campaigns in the 2014 election. He was an ATM for established members of the legislature. You don’t mess around with one of the good old boys, especially when he raises dough. 

Yet, she stands a chance. 

Bocanegra garnered only 44% of the primary vote this time compared to 62% in 2014 – the same year Lopez upset him in the general election. Perhaps money doesn’t buy as many votes these days. A measurable majority of voters did not support him. 

A passage in a San Francisco Chronicle article about Lopez says it all: 

“It’s nice to have an outsider in Sacramento,” said Lea-Ann Tratten, political director for the Consumer Attorneys of California, one of the few interest groups that have donated to Lopez. 

“It’s refreshing. And frankly I think we need more of that. But that’s not how Sacramento works. It’s very much an insider game.”

(Paul Hatfield is a CPA and serves as President of the Valley Village Homeowners Association. He blogs at Village to Village and contributes to CityWatch. The views presented are those of Mr. Hatfield and his alone and do not represent the opinions of Valley Village Homeowners Association or CityWatch. He can be reached at: [email protected].) Prepped for CityWatch by Linda Abrams.

PLATKIN ON PLANNING--Los Angeles may have an aging, out-of-date General Plan, but it, surprisingly, does have a planning process. It might not be the one taught to professional city planners in graduate school, and it might not be the one required by the State of California, as formulated in up-to-date General Plan Guidelines from the Governor’s office of Planning and Research. Nevertheless, it is there, warts and all.  

The real planning process is totally ad hoc, and the best way to understand it is through the metaphor of a football field. At the line of scrimmage – which corresponds to real estate speculation -- are elected officials, for the most part hand picked by one of the teams. On one side of the officials is a team of professional football players, what seasoned observers call the urban growth machine.  On the other side is the junior varsity, which is corresponds to neighborhood and environmental groups. 

As they battle each other to move the line of scrimmage, at City Hall this translates to the permitted size, height, and use of buildings. The professional team usually wins, which means that the elected officials routinely approve their projects. 

Sometimes, though, the scrappy junior varsity pulls off a victory, and it is able to stall or even stop plans, zoning ordinances, and individual projects because they are out-of-scale, out-of-character, or out-of-synch with infrastructure and service systems. With the help of outsiders, such as lawyers, the junior varsity occasionally scores a big win, like AB 283, which puts the planning process back on track for several years.  

But, while the football game is played for control of privately owned land, the stadium itself is wobbly and on the verge of collapse. This means that even when the pros have a winning streak, which is most of the time, the stadium and its surroundings are still in bad shape. Failure, in fact, is only a question of time, as explained below. 

The major steps of this rickety process 

Macro-level Planning: The following is the logical sequence of events, but in Los Angeles many steps are conducted out-of-sequence. For example, the City is now redefining local zoning through re:code LA, prior to any official updates of the General Plan and local Community Plans. In a great sci-fi time-travel plot, City Hall is implementing plans that have not yet been prepared and adopted. 

• The City Council approves the General Plan, including its mandatory and optional elements. The mandatory elements are stipulated by State Law, while, optional elements, such as the General Plan Framework, are initiated by the City Council. 

• The General Plan is then implemented by zoning ordinances, municipal budgets, and Capital Improvement Programs. 

• Public agencies, both municipal and external (LAUSD), engage in their own sectorial planning, budgeting, and work programs in parallel to the General Plan. They each operate in a silo, independent of other City departments and outside agencies, oblivious to the City’s official planning process. 

• While State law has detailed General Plan monitoring report methodologies and requirements, they are ignored by the City of Los Angeles, which does not systematically monitor its General Plan, departmental and agency sectorial plans, and the City’s five year Capital Improvement Program.  

Micro-level push back against planning: In response to top-down macro level planning, at the level of private land use there are many forces pushing in the opposite direction. 

• On a lot-by-lot basis developers apply for parcel-level discretionary actions, such as the spot-zones and spot-General Plan Amendments that the Neighborhood Integrity Ordinance intends to stop. 

• Aggrieved parties, usually neighbors or local civic organizations, appeal these discretionary actions. The adopted discretionary actions then fold in many conditions of approval, most of which are beyond the authority of City Planning and the concern of Building and Safety. 

• Communities push back against over-development through local zoning overlay ordinances, such as Specific Plans and Historical Preservation Overlay Zones. 

• Developers also push back against adopted plans and zones with their own pro-development zoning overlay ordinances, such as Transit Neighborhood Plans.  

• Developers also push back against adopted plans and zones through bootlegged and illegal construction. When residents report these code violations to the Department of Building and Safety, the Department sporadically mails out notices to correct or issues citations. The buck usually stops at this point though since the City Attorney seldom pursues zoning and building code cases. 

One consequence of this convoluted planning process is that the city’s public infrastructure and services -- like the football stadium in our analogy -- are ignored. The Department of City Planning defines their day-to-day planning mission as the efficient processing of developers’ requests for discretionary actions. It is not comprehensive, rigorously monitored planning, but what the executive suite calls the “development process,” and what they publicly define as promoting foreign and domestic investment in quickly approved Los Angeles real estate projects.  

Because this outlook has been regularly shared with Neighborhood Councils and other community groups in recent years, they, too, have gradually accepted this truncated definition of city planning. Rather than holding City Hall’s feet to the fire to make sure that planning includes carefully monitored goals and programs related to air quality, public facilities, parks, streets and sidewalks, mass transit, libraries, climate change, emergency services, and the full spectrum of municipal infrastructure, they too often but unwittingly abet the real estate speculation agenda of the City’s elected officials, especially Mayor Eric Garcetti. 

Luckily, this minimalist approach to municipal governance is now peaking, like it did in the 1980s and 90s, because of public push back. The City not only regularly loses law suits over illegally granted zoning entitlements, but from March 2017 onward, the City’s voters will most likely force City Hall to start planning Los Angeles through the Neighborhood Integrity Ordinance. The era of market forces substituting for the planning process is finally coming to an end, and you can lend a hand to make it happen. 

(Dick Platkin is a former Los Angeles City Planner who reports on local planning issues for CityWatch. Please submit any comments or corrections to [email protected].)

-cw

PLAYING WITH CALPERS (PART 3)--Now that we have examined the who’s who of CalPERS Board and Staff in my previous CityWatch articles, how does the system function? On the one hand, we have Board President Rob Feckner; he chairs the general meeting. This is the guy who fatuously remarked upon Fred Buenstroso’s “retirement,” that “he was talking to us for a while about retiring and seeing about doing something else.” Yeah, like going to jail. 

Rob’s latest (August 3, 2016) has been a couple of videos and a PR piece entitled, “CalPERS is Well-Prepared for Market’s Ups and Downs.” Sure they are. His written commentary was printed in the Sacramento Bee in response to getting hammered in the press over a 1% return for last year, as well as questions about future returns. 

Clearly Mr. Feckner is either living under a rock or he simply functions as a front for the CalPERS staff. I vote for the latter, and that was the reason for my last article on the Executive Staff team structure and the staffing that Ann Stausboll created during her tenure. 

There are serious questions as to whether or not the CIO, Ted Eliopoulos, and his Private Equity staffer, Real Desrochers, are up to the job. My favorite blog, Naked Capitalism, has been calling them out for years. Check out this article from Fortune Magazine. 

Equally, there are substantive questions as to the legal advice given to the Board by their General Counsel, Matthew Jacobs. At a recent Investment Committee meeting, he gave seriously flawed legal advice about limiting public comment and whether or not it has to be allowed for each agenda item. 

The subject matter prompting the bogus advice couldn’t be more important -- dealing with the pitiful rate of return on CalPERS investments, which has formed the core basis of naysayers’ attacks on the pension system. To read about those into details, Naked Capitalism called him out on it in a lengthy and damning piece. 

Next, as I wrote some time ago in CityWatch, the hiring process that CalPERS followed in obtaining outside fiduciary counsel for the Board smelled to high heaven and resulted in the Board hiring a sleazeball Florida lawyer named Robert Klausner. He, by the way, isn’t even licensed in the State of California as an attorney, even though he’s been giving the Board legal advice! 

It was within this context that I raised the question at the end of last week’s article, as to why CEO Ann Stausboll would suddenly retire at age 59 1/2 -- with the caveat that I am not a part of the 1%, so I don’t know what goes on in the minds of CEO’s making $300,000 per year or above. However, unless you are a safety employee, whose pensions are mostly based on a retirement age of 50, few people in CalPERS or any other California public sector pension plan retire at age 59 1/2. The trade-offs between age and benefit amount are simply too high. The “sweet spot” is usually age 62 and the 100% gold standard is age 65. 

Finally, and we won’t know the answer to this question for some time, there is the fact that as her last major act prior to announcing her retirement, Stausboll brokered a real estate deal in New York City; a 51-story office building at 787 Seventh Avenue, to the tune of $1.9 billion. This in a frothy market. 

RIABiz, a financial services advisory industry blog, evaluated her tenure at CalPERS with a big question mark. 

Cracks and Attacks on CalPERS and Defined Benefit Plans in General 

Quite aside from CalPERS’ ability to shoot itself in its collective foot, there are fundamental issues here that go to the core of our society and public service. 

Remember, the cratering of our economy in 2007/08 by the financial services industry was not a one-off. If it were not for our government and the central bank (The Fed) handing out money at 0% like candy corn, and buying up most of their toxic assets, most of the financial services industry would have gone broke. And they are still being propped up by the Fed and our government, which has failed to jail a single one of the crooks that caused this catastrophe. 

Imagine if you and I had access to 0% interest “we don’t care about credit scores” money, and the government would buy up every one of our toxic loans. Wow! Never happen, of course. 

So the same forces that tanked our economy have to look around for targets other than themselves to blame. Otherwise, a lot of us might start asking why our 401-k plans that were for “retirement” suddenly lost half their value and were suddenly declared “not a retirement plan,” – so much so that a lot of people may never get to retire. 

Well, the last places that actually have tangible assets to strip away are the public sector defined benefit pension plans. So once they stopped playing with hedge funds and private equity scam artists, the relentless move to do away with them really began in earnest. 

Of course the end game is not pretty. First, you make these systems subject to ordinary bankruptcy processes. Then you go in, declare them insolvent, strip out the assets, and leave the empty shell and the troops to fend for themselves. After all, bonuses are once a year for the top of the food chain. 

Lest you think I am joking, look at private sector defined benefit plans from the big companies back in the 60s and 70s. Corporate raiders like Carl Icahn would go in with their Mergers and Acquisitions buddies, would use borrowed money to buy the companies, then strip the pension plans to pay for the deal, leaving the carcass to rot. Net result: no mas defined benefit plans in the private sector and no pushback from the U.S. government. 

Fueling the Attacks 

To be fair, public employees and public sector management bear a good chunk of the blame for inviting the demise of one of the last decent pension plans in the U.S. I posit two specific areas which offer free low hanging fruit for those who want to go after CalPERS. 

First, take the case of the “3@50” pension plan for public safety members -- essentially, police and firefighters. The formula provides that at age 50, these employees can retire with a pension based on taking 3% of their highest years’ earnings, and multiplying it by the number of years of service. With the minimum 10 years of vesting required for full benefits, and 50 years of age, that would mean that the officer/firefighter would receive 30% of highest year’s salary. If you were 20 when you hired on and had worked for 30 years at age 50, that percentage would rise to 90% of your highest years’ earnings for life. 

By a couple of other mechanisms, referred to as “pension spiking” and playing with what hours of “work” count towards salary, the dollar amounts for some individuals have reached fairly irrational levels. Take the police officer who suddenly gets “promoted” to Sergeant, or the firefighter who suddenly gets “promoted” to Battalion Chief, each a little more than a year before he or she retires. It all counts in their final compensation number for calculating the retirement amount. 

The articulated premise behind the “3@50” formula was that these are very arduous professions, and employees are just plain physically worn out by age 50. Of course, you could make the same argument for hard physical labor like construction or assembly line plant workers. 

Some individuals who have really gamed the system offer terrific photo opportunities to attack the entire CalPERS system, even though the average pension for the average employee is more like $3000/month at age 65. And, by the way, many of these employees do not receive Social Security benefits at all, for reasons too complicated for this article. 

My second example of low hanging fruit for the naysayers has to do with high level public sector managers. It is not unusual these days for the City Manager of a small city to make something like $300,000 per year or more. And that doesn’t count the brazen crooks like Robert Rizzo, the former City Manager of Bell, now sitting in jail for 12 years in a massive corruption scheme. 

When managers start to get paid like CEOs of large corporations, ordinary folks start wondering what the heck is happening to the concept of “public service,” and they have a point. Add to that a spate of corruption charges against high level public managers, and you once again have wonderful photo ops for those interested in taking the system down. 

The LA Times Series 

I truly believe that the Times series is ideologically based. Take a look at a revealing section of the first article on The Pension Gap:  

“In 2012, Gov. Jerry Brown, a Democrat, persuaded the legislature to raise the retirement age for new employees and reduce their benefits slightly. That will save money decades from now, when those employees retire, but it will not reduce the cost of benefits already locked in for active and retired workers.” (emphasis added) 

Similar loaded comments abound in the other pieces. For example, in the one called A CalPERS Primer, we have the ominous header, “Has anyone tried to dilute labor’s influence?” Gee, guess the answer. 

And finally, at least until further installments, there is a piece about how CalPERS is faring in the court system, with a clear message that the courts have a duty to reverse existing case law and break the promises made to existing beneficiaries. Read between the lines; what they are really talking about is the ability to reduce the cost of benefits already locked in for active and retired workers. This includes, one presumes, the ability for court ordered bankruptcy and the abrogation of all kinds of things. 

What Can Be Done 

Believe it or not, there are a couple of things that can be done to slightly modify the current system and allow these plans to survive on a go forward basis. In the last of my CalPERS article next week, I will provide some details and give my reasoning.

(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.

THE EPPERHART REPORT--Propositions, initiatives, measures, referenda, annoying – call them what you will, but they have been an integral part of California democracy for more than a hundred years. More than any other state, California relies on its citizens to propose and make law. 

It all started when Hiram Johnson, a progressive Republican, was elected governor in 1910. He crisscrossed the state in an automobile railing against the power of corporations, particularly the Southern Pacific Railroad. Big money determined who would run for office, who would win, and how they would vote once they got to Sacramento. 

Johnson won his election and pushed through a number of reforms reducing the power and influence of corporations in the Golden State. Most notably, in 1911, the people got the right to introduce legislation in the form of ballot initiatives and decide at the polling place whether or not they would become law. 

Even now, 105 years later, Proposition 59, asks voters to urge legislators to support an amendment to the U.S. Constitution that would overturn the Supreme Court’s decision in the Citizens United case and allow restrictions on campaign contributions and spending. Some things never change. 

Perhaps the greatest impact made by a ballot initiative occurred in 1978 when, by an overwhelming majority, Californians adopted Proposition 13. It rolled back property tax rates and capped annual increases. It also required a two-thirds vote to approve certain tax increases. In the years since, despite ongoing criticism, the impact of Prop. 13 has only been expanded and never reduced. It is known as the “third rail” of California politics. Touch it and you die. 

In 1994, Proposition 187 called for denying government services to undocumented aliens. Despite passage with 60 percent approval, it was never implemented due to a court injunction that stands to this day. What’s notable is not the measure, but the effects of the campaign supporting it. The pro-187 advertising run by the Republicans was viewed by many as racist and is considered to have triggered a mass movement of Hispanic voters to the Democrats. 

In 1998, voters passed a law, Prop. 227, to outlaw bilingual education in public schools. This year, Prop. 58 would repeal most of that ban. If it passes, it will be a clear demonstration of the demographic shift in California’s electorate.

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If adopted, two initiatives may have the most far-reaching consequences. 

The first, Proposition 62, proposes abolishing the death penalty in California. Currently, there are 741 prisoners awaiting execution, more than any other state. There have been 13 executions in California in the last 40 years. The reality is that a death row inmate is more likely to die of old age than lethal injection. (Another measure, Prop. 66, seeks to speed up the appeals process in an effort to ratchet up the number of executions.) 

The second, Proposition 64, would legalize the recreational use of marijuana. It many ways, it merely recognizes what is already a fact of life. But, acknowledging that fact legally and normalizing its use in the same manner as tobacco and alcohol is a big step for government. 

Finally, the state Democratic and Republican parties disagree on just about every measure. However, they both recommend a no vote on Proposition 60, which would require the use of condoms in adult films. In this time of political polarization, it’s good to know there’s something that can unite us.

(Doug Epperhart is a publisher, a long-time neighborhood council activist and former Board of Neighborhood Commissioners commissioner. He is a contributor to CityWatch and can be reached at: [email protected]) Prepped for CityWatch by Linda Abrams.

NEW GEOGRAPHY--The consumer technology boom, largely responsible for a resurgence in California’s economy after the tech wreck of 2001, seems to be coming to an end. The signs are widespread: slowing employment, layoffs from bell-weather social media companies, the almost embarrassing difficulty of finding buyers for Twitter, the absorption of Yahoo by Verizon and the acquisition by Microsoft of LinkedIn.

This is not to minimize the great things which have been accomplished over 15 years of massive investment in these technologies. Mark Zuckerberg founded Facebook in 2004, and is now worth some $55 billion, up $15 billion from last year. In 2015, more than 1 billion people globally used Facebook applications every single day. The “app economy” created by Steve Jobs and Apple is equally impressive. What would we have done with our free time if it were not for Farmville, Angry Birds and Pokemon Go?

The tech boom has changed the face of wealth in America. Tech oligarchs, mostly clustered in the Bay Area, which dominates some 40 percent of employment in search and web publishing, now account for one quarter of the wealth of the Forbes 400 richest Americans. This tilting of wealth is not going away, and may shape the business world for a generation.

Concentration and contraction

Overall though, the economic impact of these technologies has been limited. Google’s Alphabet Inc. and Facebook Inc. together employ fewer than 75,000 people, one-third fewer than Microsoft, worth only a fraction its value. Snapchat, the star of Silicon Beach, employs several hundred people, hardly enough to reverse a long-term decline in Southern California tech employment.

More troubling still are changes in the Bay Area tech culture. In its 1980s heyday, Silicon Valley was a Wild West of start-ups, new companies and ideas, and lots of jobs. Today, it resembles increasingly the cozy and fundamentally uncompetitive world of Detroit’s Big Three — Ford, Chrysler and General Motors. The Valley is increasingly dominated by a handful of companies — Google, Facebook and Apple — while conditions for startups, even well-funded ones, have deteriorated markedly.

Despite the hype surrounding the possible IPO for Snapchat, new firms raised $15 billion in venture capital during the third quarter of 2016 — ending in September — down 28.6 percent from $21 billion for the same period one year ago. The third quarter of 2016 marked the fifth straight quarterly decline in completed financings and the lowest number recorded by PitchBook since the fourth quarter of 2010, signaling that investors are writing bigger checks for fewer deals.

Rather than the Wild West, we are seeing consolidation in social media, which depends largely on advertising revenue. Google and Facebook claimed 64 percent of that revenue, according to Pivotal Research. Google scooped up $30 billion and Facebook gathered $8 billion, while other smaller companies have lost market share over the last five years.

As promising start-ups are swallowed up at an alarming rate, the likely scenario, as we have seen in other industries, may be secular stagnation. With less competition and innovation, the track record of oligarchies, particularly regionally incestuous ones, is not a great one, as anyone who deals with new Microsoft or Apple operating systems, can attest. Even Sergei Brin, a co-founder of Google, recently suggested that start-ups would be better off launching somewhere else.

One door closes, another opens

The preponderance of evidence is pointing to the end of the boom era in social media growth. Already, there are clear signs of slowing, with layoffs growing rapidly and more companies looking for space in less expensive, less highly regulated areas.

Yet this shift from social media may prove a long-term benefit both to the national economy and California. The sad truth is that for all the billions earned in stock market value, social media, unlike past tech booms, has done precious little to boost economic productivity. According to the Pew Center for Internet, Science and Tech, 56 percent of workers who use social media platforms for work-related purposes agree that social media distracts from the work they need to do, with 30 percent agreeing strongly.

Rather than thrilling tweens with their first Tweets, technology companies may be shifting to far more important callings. In the Bay Area and elsewhere, firms are delving into promising fields including autonomous vehicles, machine learning, artificial intelligence, financial technology, biomedical research and even space exploration. These endeavors do more than simply keep people entertained and informed about their friends. They may create the basis for longer-lasting growth in the productive economy, not only here in California, but around the nation.

Will California be able to maintain its innovation dominance in this next tech cycle? The Golden State faces the twin headwinds of high housing prices and restrictive regulations. These growing technologies require interfacing with the analog (aka real) world, relying more on 30-something, experienced engineers and data scientists than the millennial hipsters and coders who have fueled social media and casual gaming. California needs to make housing affordable and lessen regulatory burden for business if it plans to lead the next wave.

(Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism. Marshall Toplansky is senior advisor to Chapman University in the area of Data & Analytics, as well as an adjunct faculty member at the Argyros School of Business and Economics. This piece appeared most recently at New Geography.) 

-cw