The Burlingame Voice

Rent Control Part 15: Please sir, may I cover my costs?

Recall B'game sent the last rent control proposal to a resounding defeat.  You can read about it here.  But that doesn't mean the group that loves to play with OPM  ("Other People's Money") has gone away--and neither has the Voice.  Weekend reading of the SF Comicle yielded this little gem about the Board of Stupervisors taking up yet another rent control issue.  For our purposes, we'll skip the ordinance details--you can click through, but rather highlight the idiotic backdrop

A proposed ordinance to blunt the ability of landlords to raise rents so they may pay down mortgage loans and property taxes is headed to the San Francisco Board of Supervisors after winning unanimous approval from the Rules Committee on Friday.

As in many cities, when the costs of operating and maintaining an apartment building in San Francisco runs higher than the allowable rent increases set by the city’s Rent Board each year, landlords may request to pass on some of those expenses to tenants. Landlords may, for example, request a so-called operational and maintenance “pass-through” to help cover the cost of a new roof, or to keep pace with rising water or garbage-collection rates.

Do you realize how dangerously stupid this sort of thing is?  We dodged the local "Rent Board" bullet which we highlighted here as being rigged from the start.  Can you imagine having to individually go to some Board to raise the rent enough to cover things like water, garbage or maybe school bond costs?  This is the sort of thing that happens in socialist countries.  I'll repeat:  I'm not a landlord and have never been a landlord in Burlingame.  Twenty five years ago, I once rented out my house in Connecticut for a year when the market was really slow and I couldn't sell it, but today's post is driven by simple fairness and a concern for what actually works, not what might make some people feel good.

Drive-in Update: More jobs, more expensive housing and water

If you have not been out to the Bayfront lately here is a photo of the big 301 Airport Blvd. project's progress.  Suffice it to say it is rolling along.  With B'game real estate prices up more than 25% year-over-year and rents up about 14% (see the post directly below this one) it would appear that forces are in place to keep us on that trajectory.  Here is the next big demand driver.

Of course there are no new water sources for any of this and, in fact, the Chronicle just reported

Water bills in San Francisco are set to rise steadily over the next four years, after the approval of a rate schedule by the city’s Public Utilities Commission.  The city’s combined bill for water and sewer services will climb by an average of 8.4 percent, or around $10, each year through 2022, according to the commission.

So you know we are not far behind since we all feed off of Hetch Hetchy which they control.  Build it into your family budget now.

Housing by the Numbers

In preparation for the Housing Forum on Saturday, here are a couple of statistics about housing costs in the Bay Area and B'game.  Today's Chronicle piece addresses real estate prices by noting

The median Bay Area home price surged to an all-time high of $820,000 in March, up 9.3 percent from February and up 14.7 percent from March of last year, research firm CoreLogic reported Tuesday.  For the fourth consecutive month, Santa Clara and San Mateo counties showed the steepest year over year gains: 33.6 and 25.7 percent, respectively.

People “are trying to desperately buy something before it becomes completely unaffordable,” said Scott Anderson, chief economist with Bank of the West. “Six months, a year from now, you will see more of the downside from rising rates.”

While Zumper has provided this B'game-specific information to the Voice

-Burlingame ranked as the 7th most expensive city in the Bay Area to rent this month.

-The price of one bedroom units grew 4.4% to a median of $2,620, while two bedrooms jumped 5% to $3,390.

If you click through to the Zumper blog post and view the Yearly 1 Bedroom Rent Evolution chart you will see they find a 14% YoY increase--which is more than 45% less than the real estate price increase noted above for San Mateo County.  I'm guessing B'game is at the upper end of the County increases, so rents are increasing much slower than residential prices.  Food for thought before there is another run at rent control.

"Housing Advocates" Please Go Away

I am thoroughly sick and tired of the so-called housing advocates trying to pressure every City decision to add more housing.  In yesterday's Daily Journal we get two more examples.  First, the piece on redeveloping a piece of Bayfront land that is sitting mostly idle is on the docket for a meeting tonight with the State Lands Commission and the city and residents

State officials received an application from H&Q Asia Pacific in 2016 to develop a new hotel and park at the site, prompting a neighbor of the property to offer an alternative proposal to preserve the land as open space.

SPHERE Institute, a public policy research firm headquartered in the area east of Highway 101 along the city’s Bayfront, expressed an interest in leading the financing campaign to preserve the wetlands which exist on the property.

Housing advocates have also called for the site to be built into a residential development.

Really?  These clowns have no idea what it would take in city time, energy and expense to support ANY housing on the Bayfront.  There is no school, no police patrol to speak of (I know, I've done a drive-along with BPD), fire/ambulance coverage takes a lot of effort and will never be great without a new station that will never happen, and the weather sucks for the most part.  Just stop already!  Then this little gem of an idea pops up in the Rec Center article in the same edition

Under the direction from councilmembers, the architect will craft new designs and bring the issue back for further consideration in June.

While design revisions were considered, housing advocates suggested developing some residential units on top of the facility as a means of combating the city’s affordability crisis.

Stop already.  It's a Rec Center, not public housing.  The whole community is wondering where the heck the parking is going to come from for the recreation part and these clowns want to add housing?  Unbelievable.  We have a huge amount of housing already "in the dirt".  That's enough until all the other support services figure out how to handle the influx that has already been approved.   Oh, and just for good measure, we are back in a drought situation regardless of how much rain we get this week. 

Housing Manipulation: A Workshop That Worked

Regular Voice reader David Harris also contributes on occasion and has kindly provided this summary of a recent Housing Workshop held by the City.  David writes:

No matter where you stand on the issue of housing, affordable or otherwise, the city’s workshop on February 10 at the Lions Club was a well thought out and well attended effort to learn what residents are thinking and what their concerns are. Rather than a series of speakers addressing the audience, much of the meeting consisted of groups of residents huddled around tables exchanging ideas and sharing responses to questions posed by a facilitator.

“How does the housing climate affect you and the people you care about?” and “What are your hopes for the future of our community?” were a couple of the ice breakers that got conversations started.

Various housing options such as Accessory Dwelling Units (Granny units), multi-family units, live/work units and employee housing were presented, and pros/cons discussed at each table.  Residents were asked what their concerns were about each, and what other ideas they might have to create additional housing.

A few factoids that were shared and are available from the presentation on the city’s web site:

• San Mateo County has created about 79,000 jobs between 2010 and 2016, but only about 4,900 housing units.
• The median price of a home in San Mateo County has doubled and average rent of a two-bedroom apartment has increased 66% between 2011 and 2017.
• 30,000 people live in Burlingame. Nearly 39,000 people work here. Of those who work here, 38% earn less than $40,000 a year.
• Homeowners comprise 47% of the city’s population. Renters comprise 53%.

One can’t help but notice the imbalance between new jobs and new housing that seems to playing out each day as we watch a lot of commercial development (e.g. 300 Airport Blvd, north of Coyote Point) move forward lately and traffic congestion keeps growing.

After the meeting, one official told me that one of the reasons for the meeting’s format is that Burlingame has some big decisions coming up in the years ahead. It’s easy to know what residents are against, she said. But figuring out what they will support is a tougher challenge. Hopefully, this meeting helped provide some useful insights and perspective. Another, planned for April or May, is to focus on prioritizing options.

I appreciate David's recap of this workshop.  I am quite worried that some of the Big Decisions are being made without consideration to the quality of life in B'game.  This Monday night is a prime example of that with city parking Lots N and F on the slate for development of the "Village at Burlingame" affordable housing.  I have been hard pressed to find any current residents who think this is a good idea or that it will make a dent in the "affordability problem" with several thinking it will actually make things worse.  More than once I hear people ask "We can't afford a new, seismically safe Rec Center, but we can build affordable housing?".  Maybe we need a workshop on that trade-off.

An "Affordable Village"?

The Daily Journal gave an update to the on-going "affordable" housing saga in B'game late last week.  We've discussed how B'game has been expensive since its very founding here and I'm more convinced than ever that nothing the City tries will make much of a dent in that.  I've had several conversations with SF refugees and Silicon Valley people hoping to move north to follow the companies moving north that cause me to believe we will always be a prime destination.  And if we do something big enough (i.e. more than the 132 units being discussed now) it will have even more of a deleterious effect on the quality of life and education in B'game.

The Burlingame City Council discussed a joint effort with San Mateo County’s Home for All initiative aiming to kick-start community conversations this year regarding ways to make the city more affordable.

The pilot program is slated to launch Saturday, Feb. 10, with an initial discussion regarding affordable housing plans and policies standing to impact Burlingame.

“We will be getting a pulse of the community and seeing what people are thinking about,” Planning Director Kevin Gardiner said of the event to be coordinated by community engagement consulting firm Common Knowledge Plus and Home for All, which is a county program aiming to close the local imbalance of available jobs and homes.

Central to the initial talks will be the city’s vision to build the Village at Burlingame affordable development, slated to include 78 workforce housing units and 54 units set aside for seniors on a surface parking lot at Park Road and Lorton Avenue, south of Howard Avenue.

I'm reminded a bit of the old Boutique & Villager when I hear the working name for this "village", but I'll bet the ethos that existed when the B&V existed would not have looked kindly on this sort of thing.  Those were days when the small scale feel of the town was embedded in the press' mindset.  The results of the rent control vote would seem to say the general public still has some of that ethos, so I hope the Council really does listen to more than the squeaky wheels.  You would think with the building boom that is already going, the Peninsula Ave. overpass and B'way underpass concerns, the drive-in and PAMF projects under full steam and no new Rec Center in sight, there would be enough things to worry about without reducing downtown parking......

 

The Real Housing Story

The San Francisco magazine that magically shows up for free in my mailbox each month addressed "affordable housing" in its November issue.  "Affordable housing" was also a prominent topic at the City Council installation and rotation on Monday night with mention of Lots F and N where our city officials think we should be getting into the housing business.  But back to the SF Magazine.  Here is the start of the article on page 76:

Have you heard?  It's absolutely impossible to buy a home in the Bay Area.  Except people keep buying homes in the Bay Area.  And contrary to popular belief, these home buyers are not all monocle-wearing Monopoly men sporting Uber swag.  Some of them are teachers, hairstylists, social workers, single people, families, people of color, immigrants....

How on earth are they pulling it off? I needed to know.  And more important, I wanted everyone else to know.  Because personally, I'm not a huge fan of hopeless narratives, and our city has a thing for those these days.  So I asked them... they told me (1) they had saved little by little until they had a nest egg big enough to hold a down payment, or (2) how their parents had helpfully lent them (money) or (3) how they'd sold a company or invested in the stock market or (4) bought a tiny condo 10 years ago.

Well this may come as a revelation to the journalist, Erin Feher, but that is exactly how people have been buying into the Bay Area for at least 30 years.  In fact, I would suggest ALL OF THE ABOVE simultaneously.  Does it make buying easy--not exactly, but it does make it work.  And I speak from experience of doing 1, 2, 3 and 4-- some of them more than once.  It would be great if Erin wrote the same piece every other month and those who think they can build or rent control their way to housing nirvana read it every other month until they get it.

Kendall for School Board

I got my Sample Ballot in the mail today so "game on".  Let's face it:  the City Council race is a snooze.  Steve Duncan hasn't built the network of supporters needed to knock off an incumbent.  I should know since my wife knocked off three of them in succession, but it took several tries to get it right.  On the other hand, the B'game School District  (BSD for short) is shaping up to be a real race.  There has not been an actual election in 12 years for BSD Trustee but this year we have four candidates for three seats.  Even if you don't have kids or they are out of the elementary system, you should still care.  I won't bother to go into why here.

I don't endorse new candidates that I don't already know without sitting down for a talk.  Elizabeth Kendall came highly recommended and agreed to a sit down chat last week after several mutual friends assured her I don't bite--at least on first meeting.  We had a far ranging conversation with some mutual ground around our engineering backgrounds (hers is more in depth than mine) and how things work on the ground at Washington School where she has three kids enrolled.  That fact alone is a differentiator.

You can read her short statement in the Sample Ballot or you can go here.  I think she understates her level of commitment and ideas for improvement in the statement--sort of a rookie error.  She left out the use of Measure M funds that should mostly benefit the south end of town at this point.  The south end has seen under-investment even with the McKinley addition and with the City Council's move to add way too much "affordable housing" on public parking lots downtown, things could get urgent sooner than later.

I particularly liked her commitment (made public here since it is not in her statement) to meet with each school's PTA and site council every year.  That's just 12 meetings a year, but have the incumbents been doing it?  I don't know, but I like the initiative.  Kendall is also technically capable.  Getting the Member Hub going at Washington was good.  Spreading it to the rest of the schools is not complicated but someone has to push it.

Lastly, speaking of incumbents.  I had a short chat with Davina Drabkin yesterday in my front yard.  (School board candidates walking precincts--how great is that?)  She told me she encouraged Elizabeth Kendall to run.  And she is running on a slate with Kay Coskey, so where does that leave Doug Luftman?   He may be the odd-man out in more ways than one.  Note to Luftman who I don't know and have not met--you cannot run for "reelection" when you were not elected in the first place.  As an appointed incumbent, you have to run for election not reelection.  All of the candidates are rookies at running and he isn't the first one to make that mistake and probably won't be the last.

Bottom Line:  I think Elizabeth Kendall deserves a shot at B'game School Board trustee.

  

Housing Leveling Off?

The Wall Street Journal has a piece noting that things are (maybe) slowing down a bit in the EssEff area.  They note

San Francisco, once the hottest housing market in the U.S., is now one of the coolest, in a reversal that could presage a broader slowdown if more buyers decide it isn’t worth chasing rapidly rising prices.  Prices in San Francisco increased 5% in April, making the Bay Area one of the slowest growing markets in the U.S. and well behind markets such as Atlanta, Boston, San Diego, Las Vegas and Phoenix.

San Francisco’s apartment market also is sluggish. Average rents decreased 0.3% in the second quarter compared with a year earlier, according to data released this week by Reis Inc.

Economists said the weakening is being caused by a confluence of factors: slowing job growth, less demand from new buyers put off by high prices and, on the rental side, an increase in new apartment supply as developers try to cash in on a multiyear boom.

In many ways San Francisco is a unique market. The average home price has more than doubled since 2009, according to Case-Shiller, making a slowdown virtually inevitable. The number of home sales in the Bay Area in February sank to its lowest level since 2008, down 3.5% from a year ago and off 12.5% since 2015, according to PropertyRadar, a California real-estate research firm.

So supply and demand work their way back into some semblance of balance sans government price controls or perhaps in spite of it given SF's various flavors of rent control.  There are a number of For Rent signs around B'game--more than there was a year ago it would appear.  Good thing rents can float down as well as up.....

Construction Gets More Expensive

I'm not sure how I feel about this move by the Council to impose "developer fees".  It's one thing to collect fees and another to decide how to spend them.  The Daily Journal gives us the basics here.

Builders looking to construct new retail spaces, offices or hotels in Burlingame will be required to pay a new schedule of fees intended to help officials fight the local affordability crisis.

The Burlingame City Council unanimously approved Monday, June 19, establishing linkage fees charged to developers to generate revenue for a new fund designated for subsidizing affordable housing opportunities.

Fees will rise as high as $22 per square foot for office spaces, $12 per square foot for hotels and $7 per square foot for retail projects but there would be discounts for developers willing to pay prevailing wages to construction workers.

Assuming councilmembers confirm their vote at a second meeting, the rates will go into effect Thursday, Aug. 3, and projects currently in the development pipeline would be required to pay, raising officials’ concerns over springing new fees on unprepared builders.

The real problem is not to fund more so-called "affordable housing" since that is just a myth perpetuated by local socialists who never passed Econ 101 and don't really care about middle income people trying to make a home in B'game.  The new tax revenue should go to help infrastructure to support the increased load, the heightened police and fire needs and perhaps relieve the burden on the school system that comes with more kids.  And while we are at it--this should be sufficient to replace the .25% sales tax increase on the November ballot (see the next post down).  Here is the scary part:  the fees "could bump up to as much as $25 million in a more aggressive development environment, according to a city report."  I really don't want the City to have $25 mil (per year??) to distort the housing or office/commercial market in town.  But the old saying that if you want less of something tax it, means this might not be all bad.  Like I said at the top, not sure about this one.  What say you Voice bloggers?