The Burlingame Voice

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.

Changes to Lyon-Hoag

We've been following the oncoming future of the Lyon-Hoag neighborhood for quite some time including here and here.  This might be the section of town undergoing the most change--at least until the up-zoning in the North end happens.  Regardless of how long the changes have been in the making, it's still a shock to many.  I needed a tow recently and the tow truck driver who has been doing that job for almost 30 years couldn't believe that Hower Auto had closed and that the Datsunville building had been sold and was likely closing.  At least Washington School is getting some new permanent classrooms as the population of kids is likely to jump once again with all of the development coming.

And don't expect the pressure to subside.  Beyond Facebook and the crazy CASA Compact is another wave of price pressure from the next wave of Bay Area IPOs.  The Wall Street Journal notes

Friday’s strong public-market debut of ride-hailing company Lyft Inc., now valued at roughly $30 billion, is expected to kick off a rush of massive IPOs that include competitor Uber and digital-imaging company Pinterest, supplying the Bay Area with possibly thousands of new millionaires.  What sets this IPO season apart from previous offerings is the sheer volume of workers expected to benefit from the bonanza and its impact on the Bay Area, already strained by a growing class divide fueled by the years-long tech boom.

One early Uber employee, who is currently living in a rental apartment with their spouse and sold about half of their shares during an internal sale, said they had been eyeing single-family homes in the city. But that even with a budget of $4 million to $5 million, they didn’t feel they could manage carrying costs and private school for their future children. They are now looking at homes in San Francisco’s suburbs farther south.

The eternal question is whether B'game and our neighboring towns will end up as an expanse of offices, housing and restaurants and nail salons with little in the way of small services like independent auto repair, mom and pop retail, entertainment venues or anything unique from any other suburbia?  Plenty of B'gamers fear the worst about that homogenization and the traffic with the most common question today being "If you decide to go, where would you go?" not generating a satisfactory answer very often.  Here's the Washington addition and the last view of Hower.

Mission Creep at Caltrain

Wikipedia defines "Mission creep" as "the gradual or incremental expansion of an intervention, project or mission, beyond its original scope, focus or goals, a ratchet effect spawned by initial success. Mission creep is usually considered undesirable due to the dangerous irreversible path, each success breeding evermore ambitious interventions, stopping only when a final, oftentimes catastrophic failure was precipitated."  In other words, stick to the purpose that you were set up to deliver on.  Caltrain is creeping towards mission creep as shown here from the Daily Journal piece

Caltrain officials want to build housing, retail and offices on the agency’s underused property, though plans for transit-oriented development will have to be balanced with the future needs of the railroad.  “I think we’ve got tremendous potential to develop this corridor land for not only housing, but commercial developments along the way,” said Board Member Ron Collins, the San Carlos vice mayor.

Apparently Collins wants to mess up the rest of the Peninsula the way they have messed up San Carlos.

Collins said he wants affordable housing to be part of the plans and Board Member Charles Stone, a Belmont councilman, agreed emphatically.  “I want this policy to prioritize affordability,” Stone said. “We’re a transit agency, we want to do projects certainly that don’t interfere with ridership and enhance ridership and we want to do projects that don’t hurt us financially and improve our finances if possible, but at the end of the day what I’m most concerned about is we play a part in the affordability crisis where we can.”

Voila, mission creep.  How about you just run the railroad and prep for electrification, increased schedules, improve service including "unmet demand", and work on the last mile problem that inhibits ridership.  Could you just do that?

SB50: Mi CASA no es tu CASA

Senate Bill 50 is the latest in a long line of bad ideas put forth by myopic politicians who cannot stand that some communities have different priorities than others.  That myopia is compounded by feelings of envy over perceived "inequality" and the self-righteous do-gooder, YIMBY mentality.  It's further compounded by politicians who have no qualms about reaching for Other People's Money (OPM).  Current case in point is Assemblyman David Chiu and his bill AB1487 that would create yet another regional agency to search for OPM to fund affordable housing.  As the SF Chronicle piece about the bill notes:

But the notion of a new agency and more taxes infuriates some city leaders who say the government is running roughshod over local control.  Residents often object to new development, saying it mars the look and feel of their communities.  The region is tightly interconnected, Chiu said, so a city council obstructing development in Burlingame puts pressure on Oakland and San Francisco. And, ultimately, the effects ripple, creating a severe economic split between homeowners and renters, and older and younger generations.

The finger-pointing at Burlingame might be because of Mayor Colson recent piece on local actions and the importance of local control which was much better thought out that anything Chiu has ever proposed.  You won't see the Burlingame reference in the on-line piece, but it was right there in the March 8 print edition.  Perhaps some editor thought better of stirring up this 'burb too much?  Here are some points from Donna Colson's Daily Journal piece:

Last month the Metropolitan Transit Commission and the Association of Bay Area Governments presented the CASA Compact, a 15-year policy package to confront the Bay Area housing shortage. The compact presents a 10-point plan for housing production, preservation and renters’ protections that was developed by a group of mainly non-elected, self-interested housing industry and policy advocates.

San Mateo County communities had no voice in the CASA Compact process. Not a single elected from San Mateo County was included on the leadership team, steering committee or technical committee which is frustrating as many small cities were already taking the initiative to craft viable housing solutions for their communities. Some cities are allowing teacher housing, others are embracing renters protections to limit gentrification, while some, like Burlingame, are updating their general plans to allow for up to 20 percent more growth near transit while protecting the character of existing single-family neighborhoods.

So where is all of this headed.  Going back to the Chronicle article:

It’s still unclear what will happen if cities refuse to build. Right now there is no real mechanism for the state to override local land-use authority. When Newsom proposed withholding transportation dollars from cities that don’t meet their housing targets, he ignited a political flame war.

It comes down to what the build-build-build politicians think they can get away with using OPM and political pressure.  Small minds like Chiu have no problem attributing their failure to manage growth to other communities, but cannot see that they are most of the problem.  Any one who thinks we can build our way out of costly housing without real restraints on commercial development doesn't understand economics or the intrinsic attractiveness of the Bay Area for businesses in our predominant industries of high-tech and biotech.  Build it and they will come, especially if the government is subsidizing the housing cost equation.  Here is the print version calling out B'game.

Developer Fees Coming

Ronald Reagan is famous for saying “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”  This has been proven over and over again.  I was reminded of the quote when I read that B'game Planning Commission is recommending a "Developer Fee" for new residential development.  The DJ notes the amounts as

Under the proposal, rental developers seeking to build up to 50 units per acre would be required to pay $17 per square foot; those proposing up to 70 units per acre would be required to pay $20 per square foot; and those proposing more than 70 units per acre would be required to pay $30 per square foot. Condominium developers proposing 7 units or more would be required to pay $35 per square foot.

That last bit seems like a typo, but the point is adding some costs that could total $15 mil over the next five years for the 400-600 units that are in the "pipeline" may have the unintended consequence of slowing down development.  If it does, I'm all for it, but that ain't what the initial goal is.  What to do with $15 mil and where to do it is another political football.  While we ponder that eventuality, here is another Reagan quote: "The nine most terrifying words in the English language are “I’m from the government, and I’m here to help.”