The Burlingame Voice

Office Growth Drives Housing Demand, Duh.

It's generally fun to poke fun at EssEff politics, but this Election Day brought a rare instance of sanity out of EssEff voters.  As the Chronicle reported

Also winning was Proposition E, which will limit the amount of office space San Francisco can allow each year if the city fails to build enough affordable housing, based on targets set by the state.  The measure, which needed a simple majority to pass, was leading 54.54% to 45.46% — 130,736 to 108,983.

Prop. E was sponsored chiefly by Todco, an organization that operates and advocates for affordable housing in San Francisco, and its executive director, John Elberling.  Jon Jacobo, Todco’s policy director, said in a statement that voters “have shifted the paradigm of San Francisco. They have declared that we prioritize affordable housing before office development, and that is now the new norm in San Francisco.”

This move won't be a panacea nor will its impact be felt immediately.  In fact, a number of other crosswinds like the macro-economy, availability of leading edge skills, and the perception of quality of life in the Bay Area will all drive the influx or exodus of people.  Over the course of the last 20 years of my professional career I hired, or attempted to hire, dozens of professionals and admin staff into the Bay Area.  It's always been expensive and attractive, but re-balancing the availability of commercial space with residential space should help just a bit with the cost.  One wonders why it took a Proposition to do this in SF and why it isn't happening in other hotbeds like Mountain View or RWC instead of the futile rent control measures?

Banning Natural Gas in B'game

With several study sessions under their belts, the City Council is moving towards a ban on natural gas for new developments in town.  We first heard this out of Berkeley and discussed it last July here.  As the idea moves closer to home (the Daily Journal wrote it up here), I have some thoughts that I have just shared with the council via email.  Here is my letter

Dear Councilmembers,

I am intrigued by the discussions regarding banning natural gas hook-ups in future Burlingame developments including commercial, multi-family and single-family residences.  It strikes me that perhaps the councilmembers who support such a ban should lead the way in this change.  I suggest that each councilmember take the initiative to change out the gas appliances in their own homes first.  The community should be provided insights into both the capital and operating costs of this change.

It would be enlightening to understand the relative costs of electric furnaces, water heaters and high-end electric stoves and fireplaces that meld with typical Burlingame design aesthetics.  Similarly, if any councilmember has a pool or outdoor hot tub, it would be good to understand the options available to heat these amenities.  I can foresee some potential changes and additions to our existing building codes that might be revealed by councilmembers’ changeover projects.  Understanding these changes first would save residents and developers time and money as well as bringing our building inspectors up to speed.  The need for 220V power in many more home locations as well as the need for battery back-up and potentially back-up generators (with appropriate fuels if available) should be examined and shared with the community.  In my nearly 30 years living in Burlingame, I cannot recall a single natural gas outage, but electrical outages are frequent and not likely to improve in the mid-term future.

Lastly, we should all be provided with actual operating cost comparisons for the newly refurbished homes.  If these changeovers could be finished by next winter, a six-month cost comparison for the colder months of October to March would be ideal for assessing the true impact on Burlingame residents.

I look forward to the Council’s leadership on this important issue.

Sincerely,

Joe Baylock

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I'll let you know what I receive in the way of responses. 

  

School Bonds...And Then There Were 3

For the first time in more than 20+ years, I've been contemplating whether or not to support a B'game school bond measure (Measure O) and the SMUSHD Measure L.  Over the last 20+ years it's been a no-brainer to vote "yes" and to further support the schools with donations and charity auction donations and bids.  Parcel taxes and bonds for the local schools are the most local taxation we have and local is good.  In reading the full text of Measure O, my concern was the last bullet point on the Project List 

Workforce housing to increase accessibility for District employees to quality, affordable housing

I decided to check in with Superintendent Maggie MacIsaac about any housing plans and she brought Board member Davina Drabkin into the conversation.  Davina and I had a good conversation about the pressures the district is feeling to retain staff including credentialed staff in key areas like math.  Here are a couple things that came out of that discussion

• There is no pre-allocated portion of the $97 million for housing.
• There are a number of models being tried elsewhere (subsidies, partners, build to suit, etc)
• The Board included the language in order to be able to spend money on studying the issue
• Unlike some Districts, B'game doesn't have land available for any sort of build project and is unlikely to be able to buy it

As a former analyst, I also want to look at the metrics that might point to the severity of the problem, so Maggie was kind enough to provide the teacher turnover (not counting retirements which don't fit the problem) over the last 12 years which are

• Year        % Certified Staff Turnover
• 2007/2008             8.7%
• 08/09                    4.4
• 09/10                    10.6
• 10/11                    9.8
• 11/12                    7.6
• 12/13                    14.4
• 13/14                    12.2
• 14/15                    15.1
• 15/16                    13.8
• 16/17                    16.6
• 17/18                    12.25
• 18/19                    13.3   

There are a lot of factors that go into teacher turnover, but you can say there is a slight upward trend to the data.  There are also a number of non-District-driven projects that might address the housing issue-- the city project on Lots F&N, the stunning amount of building going on it town with affordable unit components, and the possibilities of additional teacher compensation that might not involve millions of dollars of debt.  Of course, the stunning amount of building will only exacerbate the school budget problem. The real challenge for Measure O and L is that a state Proposition, crazily listed as 13 that I'll just call the New Prop. 13, is also on the ballot for $15 billion.  As the Chronicle reported today

The largest school bond in state history, at $15 billion, is going to voters in March as supporters try to put a dent in a $100 billion backlog of failing boiler rooms, leaky roofs and new construction projects needed at K-12 schools and universities.

Proposition 13 — unrelated to the same-numbered 1978 tax measure — was placed on the ballot by the Legislature with bipartisan support.

Supporters, which include the education establishment as well as the construction industry, would allocate $9 billion to K-12 schools, $4 billion for California’s public universities and $2 billion for community colleges.

The prospect of voter fatigue is very real-- I am hearing it all over town.  So I'm still contemplating how I will vote, but I feel a little better having some information that I didn't have before.  Hopefully you are too.          

Josh Becker: Prop. 13 in Danger...All of it

I had an opportunity to hear State Senate candidate Josh Becker speak this week at a neighborhood meet and greet.  These are always interesting grass roots events and the Q&A can be enlightening beyond what one can read about a candidate in the papers.  I got just that sort of insight about Becker regarding Prop. 13 and what is known as the "split roll".  The split roll initiative would remove the tax protections on commercial properties in an effort to address the fact that they do not sell as often as residential properties and hence do not get reassessed as often.  Back in August, the proponents of split roll reworked their initial proposal:

The Schools and Communities First campaign, backed by the state's largest public labor unions and civil rights groups, will formally announce plans to refile the initiative later today. The changes include “improvements to implementation dates, expansive new small business tax relief, clarified education financing and stronger zoning language to ensure large corporations cannot avoid reassessment,’’ Tyler Law, a spokesperson for the campaign, told POLITICO.

Becker noted he backs the revised split roll initiative while noting he had not reviewed the final revisions to the text.  If those revisions offer some protections to "the corner grocery store" he would support it.  But Mr. Becker did not stop there.  Without being asked, he felt the need to go even further and suggest that the residential protections might also be reduced.  After noting that the original intent of Prop. 13 was to protect seniors, those on fixed incomes and lower income homeowners from escalating property taxes, he suggested that a move to remove those protections could be supplemented by "some sort of escrow account" that would hold the higher tax liabilities until the property changed hands at which point the seller would use some of the proceeds to pay the deferred taxes.

This is exactly the sort of stealth attack on Prop. 13 that groups like the Howard Jarvis Taxpayers Association warn about with the split roll initiative.  The complexity of it all, especially for seniors, boggles the mind.  Who sets these escrow accounts up, figures out the balances every year, applies some sort of interest rate to the balances, and adds the paperwork to an already endless pile of paperwork one gets during closings?  For me the real kicker was that Becker said all of this after earlier thanking those of us in the room who were paying the top 14% California income tax rate............

 

David Chiu: Robbing Hood Rides Again

From today's SF Chronicle article, here is the latest proposal from my second least-favorite Progressive Fascist:

SACRAMENTO — California homeowners with big home loans and vacation properties would owe higher taxes under new legislation to raise money for programs to get the state’s homelessness crisis under control.

The bill by Assemblyman David Chiu, D-San Francisco, would cap a state tax break for mortgages to the interest paid on the first $750,000 of a loan for a primary home. It would eliminate the deduction altogether for mortgage interest on second homes.  Chiu’s office estimates the changes would bring in $400 million to $500 million per year, which would be set aside as dedicated funding for shelters, permanent supportive housing and other homelessness services.

“These are the individuals who own the most expensive homes in California,” Chiu said. “It’s a small price to pay among a small number of wealthier homeowners to establish a permanent fund for homelessness prevention.”

I'll bet Chiu was at the front of the line to criticize Trump for limiting the State and Local Tax deduction on one's Federal taxes to $10,000 per year, but that won't stop Robbing Hood from doing far worse damage to California taxpayers.  "It's a small price to pay" especially if he doesn't have to pay it.

"Nimby's" Win One

I am enjoying the gnashing of teeth I hear from the SF Comicle and various other development addicts and so-called affordable housing advocates over the recent court ruling in favor of the city of San Mateo and its well-established building code.  Judge George Miram is leading the race for Person of the Year as the Daily Journal reported

An effort to take legal action against San Mateo for the City Council’s decision to reject a proposal to build a 10-unit condominium building off El Camino Real in 2018 hit a stumbling block earlier this month when a judge ruled the city did not violate the Housing Accountability Act when the council denied the project’s approval based on height differences between properties.

City Attorney Shawn Mason has alleged the city’s decision regarding the project near El Camino Real and West Santa Inez Avenue is defensible because the proposed development objectively violated the city’s multi-family design guidelines aimed at smoothing height differences between properties with transitional features, such as setbacks.

“This court finds that the city of San Mateo is a charter city whose charter fully incorporates the home rule doctrine and that the approval of the instant residential housing project is an appropriate exercise of municipal affairs,” wrote Miram in the denial. “Furthermore, this court finds that to the HAA is unenforceable to the extent the HAA conflicts with or purports to disregard otherwise enforceable portions of the city’s Municipal Code regarding review of housing development projects.”

That ruling has set off a firestorm of criticism from the housing fascists who want the biggest, cheapest, densest buildings built the fasted wherever some developer can acquire a lot.  The Gavinor is apparently one of them now along with all of the usual suspects.  The SF Comicle followed up its "news" piece titled "Ruling may undercut law on housing: Judge says San Mateo can ignore California statute" with an editorial today that starts and ends with some gibberish about "objective standards" that show a crisis--one that they help manufacture with a steady stream of name-calling, narrowly-edited statistics and a refusal to admit the basic economics of bad policies like rent control.  And yes, I do realize I am fighting fire with fire on the name-calling.  Bottom Line:  We should be thankful there is at least one judge willing to reinforce the obvious and stand up for local control.

P.S. If Laura's comment on the Lyon Hoag Emergency post is accurate (I have no reason to doubt her) and the developer has scratched that approved project at Bayswater and Myrtle  perhaps the development addicts will realize over-in-filling the Peninsula is even more complicated than they think.  Anyone care to speculate on whether the latest rent control statewide law or the return of even more stringent ones next election may have played into the decision?  Here's the now empty Hower Auto lot.

B'game (and H'borough) Are #9 in Real Estate Value

Remember the days when a healthy and growing real estate market was viewed as a good thing?  Before the envy merchants started hogging the headlines?  Me too.  So let's just note that 94010 is healthy and growing.  The Chronicle piece on Bay Area median prices puts our burg and the one "up the hill" that we share 94010 with at #9 in the Bay Area and #19 in the nation.  The median price thus far in 2019 was $2.63 million and the article notes we get a boost from the H'borough prices, but from what I've seen many sections of B'game are on par with sections of H'borough as people appreciate the walkability and bikeability of being close in.  But somethings don't just go up all the time though.

Although the Bay Area continues to dominate the PropertyShark rankings, it hasn’t been immune to a slowdown in housing prices. Of the 46 Bay Area ZIP codes that were on its list both this year and last, 25 went down in price, 19 went up and two were unchanged, according to a Chronicle analysis.  In a separate report issued Monday, the California Association of Realtors noted that the Bay Area has posted year-over-year price declines for nine consecutive months and 10 of the last 11.

Linking two rankings together we can also look to the San Francisco magazine annual Top 100 realtor rankings by sales where B'game is well-represented:

1            Stanley Lo        $304M

8            Phil Chen            $169M

30            Raziel Ungar        $100M

38            Jim Arbeed        $93M

39            Sandy Camaroto    $93M

67            Mike Bohnert        $72M

There is no telling what 2020 will bring, but with interest rates staying quite low, but not dropping from here and demand up, up, up the real question remains "Where will the water come from to supply all the new construction?"

 

Rent Control: +5% Sends a Message

The Law of Unintended Consequences is often not understood in Sacramento.  In fact much of what emanates from the Legislature and the Gavinor appears to reinforce the Law of Totally Expected Consequences.  OK, I just made that last Law up, but that doesn't mean it's not accurate.  The LA Times describes the latest instance

“We are pleased to announce we have come to an agreement on a series of amendments to AB 1482 that would create strong renter protections,” said a statement from Newsom, Senate leader Toni Atkins (D-San Diego), Assembly Speaker Anthony Rendon (D-Lakewood) and bill author Assemblyman David Chiu (D-San Francisco). “The bill will protect millions of renters from rent-gouging and evictions and build on the Legislature’s work this year to address our broader housing crisis.”

Applying the KISS principle to analyzing AB 1482, one can only conclude that the bill guarantees 5% + inflation rent increases for a huge majority of renters every year for the foreseeable future.  Why would any landlord do anything else after being told that is the limit of what is acceptable (and legal)?  As someone who is neither landlord nor renter, but an interested observer this is a totally expected consequence--as will be the calls for more taxpayer dollars to go to state-subsidized, "affordable" housing.  Bet on it.

Scott Weiner Comes to Burlingame

Two weeks after state senator Scott Weiner’s visit to Burlingame I am still marveling at how smoothly he can speak out of both sides of his mouth in a single meeting.  Weiner was invited to the Lane Room by Thrive which is a consortium of non-profit organizations.  He was invited to discuss the problems non-profits are having retaining staff as the cost of housing rises.  Weiner’s Senate Bill 50, discussed here and here, appeared to be popular with some in the audience of about 60 people.

In an interview by Samaritan House CEO, Bart Charlow, Weiner comes off as a tall, skinny, somewhat geeky attorney with a heart of gold.  He’s a man on a valiant mission.  Yet I saw in him a streak of progressive fascism interested only in consolidating power in Sacramento by any means necessary.  After describing the “carnage” that is happening in California and is “hollowing out even the middle class”, he excoriated the “No Growth” people for “adopting progressive talking points” such as “we need to build only affordable housing”.  He believes that will never happen without market-rate housing to subsidize it, but others think differently.  To him, it is better to demolish the concept of R1 zoning in the six most populous counties in the state via SB50 thus hurting the middle class homeowners who rely on their single-family homes as their largest investment.  Weiner’s claim that “this is not about getting rid of single-family homes” rang hollow after he said “single-family homes are a ban on affordable housing”.

When asked about SB50 excluding less populous counties, particularly Marin County, Weiner spoke “bluntly” about needing to do that to get the bill through a Senate committee headed by a Marin senator.  So much for principles of “fairness” that one hears so much about from progressives.

When asked about the housing quotas cities have been given (known as the RHNA formula), Weiner complained about how the formula has been gamed by some cities and two-thirds of cities don’t meet their low-income targets.  It didn’t seem to occur to him that perhaps that state-imposed process should be fixed by the state Legislature.  Better to scrap the whole idea of city zoning and let anyone build anything anywhere.  Nice leadership.

Someone other than me asked Weiner where all the water will come from?  He responded that “we have a structural deficiency” on water infrastructure and then made the ridiculous claim that “building housing doesn’t drive population growth” or water consumption.  He really said that.  After the obligatory comments on low-flow toilets and water reuse (“we are way behind Australia and Israel”), one was left to wonder how he would keep the middle-class in California without consuming more water.  It must be nice to live in the fairyland of the state senate and not have to worry about fixing “structural deficiencies” before plunging ahead with massive growth laws.

When asked about the impact that AirBnB and VRBO have on permanent rental housing and whether something should be done to limit those businesses, Weiner magically turned into a private property rights advocate.  He didn’t even seem embarrassed by the switch.  He then proceeded to say that “cities have ample tools to ban or restrict” AirBnB, yet he’s quite comfortable completely overriding these same cities’ zoning ordinances.  I almost had to admire such blatant hypocrisy spilling out in a single meeting.

The most revealing comment of the 90-minute session was buried in one of Weiner’s asides about Area Median Income (AMI) ranges and which income range was most “deserving” of subsidies.  He noted that this was a problem until we tackle “the long-term project to realign our capitalist society and socialize housing”.  There you have it.

SB50: The 'Drop Zone' in B'game

Yesterday's SF Chronicle piece "SF supervisors oppose Wiener's new housing-near-transit bill, but there's wiggle room" captures some of the many concerns about SB50.  We started the discussion here noting that another SF politician, David Chiu, decided it was good politics to point fingers at Burlingame.  One SF Supervisor, Vallie Brown, joined the "ruin other people's backyard" movement by saying “We need bold proposals, and not just here. We need to have the rest of the Bay Area and California get into gear around housing".  Talk about exceeding one's authority.  But most of the SF supervisors appear ready to vote for a resolution opposed to SB50.  Now if only our own San Mateo County supervisors had as much backbone.  But so far they haven't demonstrated it.  Today's Comicle editorial tries to paint even the SF supervisors as some sort of "reactionary" body--good luck with that laughable assertion:

In the long fight to keep California’s wealthy, homogeneous, exclusive suburbs just the way they are, Palo Alto and Beverly Hills have an ally they might not have expected: San Francisco.  The city’s Board of Supervisors — thanks to its purportedly progressive faction, no less — is poised to reiterate its reactionary resistance to legislation that would legalize higher-density residential development near mass transit amid a crushing housing shortage.

For many locals the threat is still abstract, so here is a map showing the affected sections of B'game should SB50 become law--I call it the SB50 Drop Zone

Lest you think it is bad enough that some hack politicians from the city who cannot even manage their own streets in a first-world fashion want to co-opt approval of development in more than half of B'game; the last part of SB50 says a city that is "employment rich" can't stop development anywhere in town.  Don't get too comfortable up in the hills.  Our City Council has taken a clear stance against SB50 and should be encouraged as they have been by two letters in today's Daily Journal here and here.  To buttress their good instincts, they should consider starting a legal reserve fund since this is likely to end up in court if it passes in Sacramento.  It might also be time to reconsider whether SamTrans should be allowed to operate on our section of El Camino Real.  That sounds crazy to say about a state highway, but it's not any crazier than Weiner, Chiu and Brown telling us we have to build five-story tall high-density housing everywhere in town.