The Burlingame Voice

State home insurance slipping down the slope

While the retreat by home insurance companies in California hasn't been top of mind for Bgamers, I watch it also as a Tahoe homeowner where it is very much top of mind.  The retreat is real--the public statements from insurance companies match my anecdotal evidence from Tahoe.  The local retreat might start in Hillsborough since the fire danger is greatest there.  With the Legislative session ending tomorrow for the year, the ball is back in Insurance Commissioner Richard Lara's court.  He has to navigate the insurance industry and the "consumer watchdog" industry.  Good luck with that.  The Merc has more details:

“I have always been clear, legislation is one of many options that we have been pursuing,” Lara said. “We also are moving forward with a package of regulatory solutions that will streamline the department’s rate review process, opening it equitably to public input — not just the entrenched interests that have benefited materially from the status quo. We will continue moving forward. Together, we can create a sustainable and resilient insurance market to protect Californians, our communities and our environment.”

While consumer advocates cheered the collapse of a “half-baked bailout” of insurance companies, no deal means no relief yet for consumers, especially those living in wildfire-prone regions who either can’t find an insurer or can’t afford escalating rates. Participation in the state-sponsored, last-resort FAIR plan, intended to provide temporary basic coverage in areas insurers deemed too risky for standard policies, has doubled.

Do you care to guess who is covering the liabilities stemming from FAIR claims?

County revenue: Slow down now or slow down later

In this world nothing can be said to be certain, except death and taxes.

         — Benjamin Frankline, in a letter to Jean-Baptiste Le Roy, 1789

The art of taxation is to pluck the goose so as to obtain the most feathers with the least amount of hissing.

        --Jean Baptiste Colbert, comptroller general of finance to Louis XIV of France.

 

The SF Chronicle did a wrap-up of the effects of rising interest rates, the resulting slowing home sales and selective home price declines on County property tax collections.  July 1 was the assessors' reporting dates.   I will pluck out the San Mateo County bits:

As mortgage rates shot up last year from around 3.2% in January to as high as 7% in November, fewer people could buy homes. The rise in rates “increased mortgage payments by 30, 40, 50%,” said Oscar Wei, deputy chief economist with the California Association of Realtors.  Buyers who could afford a home found slim pickings, because people with mortgages in the 3% to 4% range were reluctant to sell.

Regionwide, the assessed value of all property subject to property tax grew at a lower rate last year than it did in 2022, mainly because of the sharp slowdown in home sales.  That means property taxes — which primarily fund public schools, community colleges and city and county governments — will also see less growth in fiscal 2023-24.

San Mateo County reduced assessments on 6,403 homes for 2023-24. That was way up from 294 last year, but far below the 34,700 properties that suffered a decline in 2011-12, the assessor’s office said in a news release.

In San Mateo County, the value of business and other personal property rose by 15.7%. It contributed $1.7 billion to the county’s roll, which increased by nearly $19 billion, or 6.9%, to $307.8 billion. Last year’s increase was 8.3%.

Since the Fed is very likely to do at least one or two more rate increases, the turnover on homes is likely to stay muted.  Inflation is finally trending downward, so the double whammy of business assets higher valuations (separate from the real estate) is likely to level off as well.  There are a lot of shovels in the ground on commercial and industrial property, but it has to be nerve wracking from these developers as tech lay-offs continue.  Our County supervisors will have to be careful with all the hand-outs, pay raises, property purchases for subsidized housing, transit giveaways and the like.  Even without a recession later this year, further plucking the goose is going to involve a lot of hissing.

Stylistic Gems of El Camino Real

Jennifer Pfaff, the president of the Burlingame Historical Society, has penned the front-page article for this quarter's society newsletter titled "Overlooked Gems of El Camino Real".  It's a real gem of a piece, too.  You all should be members and get your own hardcopy mailed to you, but for those who have not yet joined I am going to pluck out just the architectural styles mentioned as "gems".  As part of the ECR project, Caltrans engaged a team of architectural historians from AECOM.  That's the source of this list:

• Bungalow Style single -- family homes found all over B'game but not nearly as many as we originally had.
• 1920 Mission Revival commercial automotive architecture - the C & D auto shop tucked away on the south end of ECR (see below).
• European Eclectic Revival - apartment building with arched windows and Flemish parapet end walls.
• Stucco Box apartment buildings - the technical term for our post-WWII flat-roofed structures.
• Podium Style - like The Viking building by Danish architect Mogens Mogensen.
• International Style - like our 8-story Burlingame Towers
• New Formalism Style - like Arcamino West on Arc Way.

This is quite a list for a three-mile stretch of historic road. It seems AECOM might have missed the Art Deco Adeline Market on the list.  Wouldn't it be nice if some of these had some historical protection?

The next Historical Society walking tour is August 6th when the Willborough neighborhood gets the spotlight turned on it.  Learn about the 22 Tudor style homes by joining tour guide Joanne Garrison at 1pm where Palm Dr. meets Willborough Rd.  Here's our Mission Revival shop

"Western White House" goes up for sale

Every Friday the Wall Street Journal has a separate section about high-end real estate around the world.  As soon as I turned to page M2 and saw the photo I knew we were looking at the Western White House in H'borough.  It has just been listed at $38.9 million.  Here are some fun aspects about the house

Newspaper heir George R. Hearst never held public office. But around 1930, the oldest son of William Randolph Hearst commissioned architect Julia Morgan to convert his Hillsborough, Calif., home into a replica of the White House.

Morgan, who designed Hearst Castle in San Simeon, added columns, wings, Palladian windows and a circular driveway, according to the book “Julia Morgan, Architect.” The resulting structure contains replicas of the Oval Office, East Room and White House Rose Garden.

The house was originally built around 1878 for businessman William H. Howard, who later sold it to railroad scion Charles Frederick Crocker, according to the San Mateo County Historical Association. The original design was a four-story Swiss chalet with 36 rooms, according to the book “Here Today: San Francisco’s Architectural Heritage.” In the 1900s, a local contractor jacked up the house and moved it with horse-drawn rollers about a half mile across San Mateo Creek to its current location, the book said.

My local historical sources, which are quite good, tell me that the horse-drawn move was featured in Popular Mechanics magazine back in the day.

Shortly after its arrival, however, the chalet caught fire and two of its four stories were destroyed. Hearst acquired the property around 1927, according to the historical association. 

(The current owners did extensive renovations and) said they tried not to deviate from Morgan’s vision. An oval-shaped library has the same dimensions as the Oval Office, he said. They even sourced period-specific furniture, he said, but didn’t end up buying it because they decided not to move in.

I've left out a lot of the owners' information, but if you are a prospective buyer Alex Buljan of Compass has the listing!

Civil Grand Jury bumps up against reality

It must be a slow session of the San Mateo County Civil Grand Jury if they have time to commiserate about how cities cannot track the incomes of people who occupy ADUs jammed into neighborhoods by the state housing requirement numbers.  No kidding.  Here are some of the specifics from the DJ piece titled "Civil grand jury targets cities' focus on ADUs".

Hillsborough, Woodside, Portola Valley and Atherton are leaning heavily on accessory dwelling units to address the state’s affordable housing requirements and has no way of verifying tenants' income, according to a report by the San Mateo County Civil Grand Jury issued Monday.  “For every accessory dwelling unit that gets a permit and is counted as an affordable unit, equals one fewer deed restricted affordable unit,” civil grand juror Spector said.

Of course, neither does any other city or town without a heavy investment in tenant-snooping snitches.  Even with a snitch army, how do you do it?   Here's the source of the issue:

Each jurisdiction is assigned a number of units for varied incomes: very low, low, moderate and above moderate. Most cities follow a 30-30-30-10 format, meaning 30% each for the very low to moderate income categories and 10% for above moderate. The categories are based on the county’s average median income, around $116,000 for a one-person household, according to the county.

Seldom does one see an instance of social engineering spelled out with such engineer-like specificity.  One wonders if the snoopers will want the full income $xx,xxx.yy details down to the penny?  So instead of crying time-out on the whole principle and sending the CA Department of Housing and Community Development a message to cease-and-desist, the grand jury doubles down

HCD instructed the county jurisdictions to monitor and verify ADU production and affordability at least every two years but never specified what the process should look like, according to the report.  In the report, the grand jury suggests jurisdictions stop using ADUs unless it has an effective monitoring system that verifies how they will be used.

Click through to read more of this ridiculous social engineering fiasco.  As I said, it must be a slow session at the grand jury to get this far out of their lane. 

Cellblock 6 is almost done

I was driving down Rollins Rd. south of Broadway with a friend who remembers the Velvet Turtle days and the arrival and departure six years later of Fattoria e Mare restaurant after that.  As we approached the new building he said, "It looks like a prison".  And so it does.  I hope they didn't spend to much on architects for Cellblock 6.

This is the view from the bike trail along the channel at Bayside Park.  Doesn't feel like B'game does it.

B'game History thru Gabriel Moulin's lens

It was standing room only for the quarterly Burlingame Historical Society meeting Tuesday night in the Lane Room.  More than 100 people showed up to hear local historian Joanne Garrison describe photographer Gabriel Moulin's documentation of the early days of the Easton Addition as part of the effort to sell building lots around Hillside Dr.  The genesis of the presentation was a book of said photographs that was donated to the Society.  That kicked off Joanne's effort to take current day matching photos to show the similarities and the changes.  Over 50 minutes, she added details about the Mills, Easton and Howard families--the original land owners in B'game.

The crowd included 17 descendants of Moulin, some of whom travelled from as far away as San Diego, plus a number of local residents of the Hillside-Summit-Canyon area.  Ms. Garrison was able to locate several houses that still exist on Cortez and Cabrillo, but the sad news that an important one on Hillside is schedule for scraping and sub-dividing was the downer of the night.  As the saying goes, "You'll miss it when it's gone".

It was great to see so many people come out to learn about and appreciate B'game history.  Here are the tram tracks going up Hillside drive that carried potential buyers.

Housing policy: Some thoughtful ideas

We have some thoughtful council members here in Ole B'game.  I don't always agree with their priorities or their approaches, but in the case of Mayor Brownrigg and Vice Mayor Colson, there is recent evidence of thoughtful housing proposals.  For the moment, let's put aside whether or not there is a "housing crisis", whether or not the local population will return to positive growth, whether or not the RHNA numbers driving policy (and the Big Stick from Rob Bonta) are reasonable and just look at the Brownrigg/Colson proposals as shown in a recent Guest Perspective in the Daily Journal.  I will boil them down a bit or you can click through for all of it:

1.  Sacramento could waive capital gains taxes for property owners who sell land to affordable housing developers.

2.  The state could streamline eminent domain for housing on underutilized parcels and then subsidize a city’s acquisitions.

3.  The state should help market-rate builders include more affordable housing units with tax rebates or direct cash subsidies.

4.  Faster than cities can create affordable units, we are losing even more “naturally affordable” units in older buildings when they get sold.  Indeed, the state does not even count a deed-restricted preserved affordable unit toward a city’s Regional Housing Needs Allocation requirements. That has to change.

5. The state’s housing targets seek a 15% increase in Bay Area housing. Punitive and prescriptive state housing mandates should be waived for cities issuing building permits exceeding a 10% increase in units.

6.  Water allowances should be prioritized for cities that undergo a 10% increase in actual occupied housing units. (see the post directly below)

7.  Infrastructure spending should be directed to communities that are getting housing built.

8.  And for social mobility, let’s reward cities that create more affordable family units (two bedrooms or more). 

Number 2, easier eminent domain, is the only one that raises a "Hell no" from me.  That is just replacing one big authoritarian stick with another.  Missing is my number 9:  introduce a pause in commercial development to give the housing market time to catch up.  That is really the only feasible way to bring back some balance without demolishing single-family zoning and quality of life while overstressing our infrastructure.  All of the others "just take money" that the state doesn't have.

Time to Disband the Air Quality Board

Some letter writer to the WSJ gets credit for this quip:  "The two things government does best are nothing and overreact".  He was writing about the Silicon Valley Bank bailout, but it fits perfectly with the gas-heater-haters at the Bay Area Air Quality Management District.  I think it's time we disbanded the BAAQMD, fired its staff (who aren't working in the public interest), and send the city council people on the Board back to their cities to Do The Job They Were Elected To Do; which is to make good local decisions.

The back story is a bunch of elected officials, who collectively probably couldn't pass a college-level Physics test, have decided that we shall not have gas water heaters or gas furnaces.  No soup for you even if your current set-up has been in existence for decades, works flawlessly during blackouts and costs way less than the alternative.  The Chronicle attempted to quantify the cost of complying:

The new regulations prohibit the sale or installation of water heaters and furnaces that emit nitrogen oxides after 2027 and 2029, respectively.  Electric water heaters and heat pumps are generally more expensive than their gas counterparts. People in older houses may face additional costs such as electrical panel upgrades, ductwork, rewiring or permits, though there are thousands of dollars of rebates and tax credits available at the federal, state and local levels to offset some of the cost differential. 

The cost of installing a heat pump can vary widely, from $7,000 to more than $20,000, according to various studies and data collected from completed projects. Costs for electric water heaters can range from $2,000 to $7,000. Staff from the Bay Area Air Quality Management District, the agency that adopted the zero nitrogen oxides regulations, presented average compliance costs at its approval hearing last week: $8,030 for a heat pump and $2,820 for an electric water heater. 

The estimates come from a 2021 study published by the Lawrence Berkeley National Laboratory, which collected total cost data from 1,739 projects in 15 states, including California, adjusted to the 2019 dollar.   The same study also published average installation costs for gas appliances: $5,096 for a gas furnace and $1,972 for a gas water heater.   Some people and groups have disputed these numbers from their own experience or by pointing to regional data that show much higher installation costs for heat pumps and electric water heaters.

They had California-specific costs (still not Bay Area-specific costs), but chose not to present them at the hearing before the vote--not that it would have mattered:

As part of the approval process, BAAQMD generated a socioeconomic impact analysis that included higher cost estimates from a 2019 Energy and Environmental Economics (E3) study specifically looking at California: between $7,000 to $20,000 of all-in costs for a heat pump depending on the type, and from $3,000 to $4,700 for a heat pump water heater.

The E3 study assumed that pre-1978 homes would need to upgrade to a panel of 200 amps when switching to both a heat pump and water heater, and estimated this would cost $4,256 for single-family homes and $2,744 for low-rise multifamily homes.

And there are higher costs from another data source and one person who highlights yet another unaccounted-for cost--TAXES:

Out of 9,895 heat pumps installed with Tech CLEAN funding, the average total project cost before incentives was $18,842, with an average total incentive of $3,433. For the 1,334 heat pump water heaters that received Tech CLEAN funding, the average total project cost was $7,054, with an average total incentive of $3,617.

The Tech CLEAN data tracks most closely to Redwood City resident Kent Holubar’s experience installing a heat pump last summer. Installation of Holubar’s Mitsubishi heat pump cost $17,875, with another $1,865 required for permits, bringing the total cost to $19,740, Holubar shared with The Chronicle.

Holubar had wanted to make the upgrade for a while and was able to do so with part of his mother’s estate after she passed away. But after the installation, Holubar received an annoying surprise: Holubar’s 1953 home was assessed at $10,000 more than it was before he installed the heat pump because of its air conditioning properties — adding extra property taxes every year, Holubar said.

Also lost in the ozone of government cost studies are the things I mentioned in my letter to the B'game city council and in the comments on the prior Natural Gas: Follow the Science? post.  Things like removing the old pipes and vents, drywall repair and paint, roof repairs to fill the old holes, pouring concrete pads for the new equipment--the list goes on and on.  BUT the big cost that none of these studies capture is the time and effort of the homeowner.  It will likely be enormous and growing worse as the deadlines loom and pass.  No more calling the water heater guy and answering one question:  Do you want a 40 gallon or 50 gallon unit?  Soon it will be "A Project" with all of the typical project management expenses in time, effort and money.   Better to disband the Air Quality Board and leave people to transition if and when they want.

Five Units on a Five Thousand Foot Lot

As I type this, the city council is going into closed session for two issues:

4. CLOSED SESSION

1. Conference with Labor Negotiators Government Code Section 54957.6
   City Designated Representatives: Human Resources Director Maria Saguisag-Sid, City Manager Lisa K. Goldman, City Attorney Michael Guina, Chief of Police Michael Matteucci, Timothy L. Davis Attorney, Finance Director Helen Yu-Scott
   Employee Organizations: AFSCME and Teamsters
2. Conference with Legal Counsel - Existing LItigation (Government Code Section 54956.9(d)(1))

Yes In My Backyard v. City of Burlingame, San Mateo County Superior Court Case No. 23-CIV-00519

The YIMBYs are filing lawsuits all over the Bay Area and the state because, well, the state has handed them a cudgel and why not use it?  The Sunday Chronicle added some color that you can read about here.  I'll just grab the start and then some B'game specific bits:

Los Altos Hills resident Sasha Zbrozek is the first to admit that he is not a real estate developer.  “I’m just some random homeowner dude,” he said. “I’m not qualified to develop much.”  Yet, over the past few days, Zbrozek has become the face of the “builder’s remedy,” a fledgling movement that over the next year could transform the way housing development is approved across the Bay Area.

The builder’s remedy allows property owners to bypass most local planning and zoning rules if that city or county has failed to complete certification of a state-mandated eight-year housing plan known as a “housing element.” So far, the Bay Area is not doing too well: Only five of 109 jurisdictions had their housing plans approved by the state by the Jan. 31 deadline.

Currently, the property has a house and a pool on it, but Zbrozek has submitted two alternatives for redevelopment. One would add five townhomes and retain his current house and swimming pool. The other would require razing his house and pool and putting a 15-unit apartment building along with the five townhomes. If the larger project is approved, he will sell to an experienced builder and move.

It's nice that Mr. Zbrozek knows he's not a builder but is pretty confident he can find one to buy him out once he sets it all up.  Now onto the local comments

So far there are dozens of property owners looking at invoking the builder’s remedy, but only a few have pulled the trigger, according to Sonja Trauss, executive director of YIMBY Law, which has sued several cities for not having compliant housing elements.

Trauss said she knows of property owners in Burlingame, Fairfax, Oakland, Sausalito and Palo Alto who are likely to file applications, but that many are hesitant given that the builder’s remedy has been in effect for only two weeks.  Trauss predicted that the “sweet spot” for builder’s remedy projects will be five units on a 5,000-square-foot lot, which is the most common lot size in California. That is the scale of the projects in Burlingame and Sausalito that she expects to be filed in the coming days.

More than a year ago I suggested that the City start building a legal reserve to counter all of this destruction of R1 zoning.  It was excellent advice since it appears we are a juicier target than say Palo Alto

Meanwhile, wealthy towns such as Belvedere, in Marin, or Palo Alto have the financial resources to fight developments in court.  “The places that are most legally vulnerable are also the places where you are likely to face the longest slog in getting the project approved,” he said. “Maybe you are likely to prevail in Palo Alto, but Palo Alto is going to give you hell for a half dozen years along the way.”

I'd love to be a fly on the wall of that closed session.  There was also a piece in the DJ recently that quoted a different YIMBY attorney as saying he was living on an air mattress in an attic because he couldn't afford anything else.  Don't the YIMBY's want to pay a living wage?  If that claim is accurate, it's hard to see how he was talking about His Backyard.