• Justin Sullivan/Getty Images file photo
• Real estate in San Francisco and around the Bay Area is poised for an upswing, much like the trend before the recession hit.

In the half-decade before California was clobbered by its worst recession since the Great Depression, taxable property values — those of land, homes, apartments and commercial buildings — exploded.

Between 2003 and 2009, values increased by a whopping two-thirds, from $2.7 trillion to $4.5 trillion, much from new construction, and local governments enjoyed a nearly $20 billion increase in annual revenue from the boom.

We all know what happened next: The real estate market went into a tailspin. Local governments that had banked, literally, on ever-increasing revenues felt the pinch. It contributed heavily to two cities’ bankruptcies.

Actually, taxable values didn’t go into the tank.

They just stopped growing and shrank a little, falling to $4.3 trillion in 2011. And as the state’s economy began to improve, so did property values, rising slightly in 2012.

This year, they are poised to register a sharp gain, based on reports from local assessors that are being compiled by the state Board of Equalization.

Gov. Jerry Brown’s 2013-14 budget assumes a 2.8 percent increase, but it’s more likely to be in the 4 to 5 percent range.

Los Angeles County, which has a quarter of the state’s taxable property, is up 4.66 percent, and in some of the counties experiencing economic booms, such as those in the Bay Area, the gains are higher. They’re up 6 percent in San Mateo County, for example, and 5.17 percent in Alameda County.

Each percentage point of property value increase generates about a $500 million in additional revenue statewide, so overall, the increase could be well over $2 billion for local coffers and, indirectly, for the state treasury.

Under the state constitution, schools are guaranteed certain amounts of revenue, with the first increment coming from property taxes and the state providing the remainder. Thus any unanticipated increase in local property values and taxes decreases what the state must pay schools.

It’s not another property bubble, at least not yet, but with the housing construction industry beginning to pick up again, California could see strong growth in property taxes in the years ahead. The state is also seeing a surge in sales and income taxes, $2 billion over estimates already this year.

These revenue jumps, however, create another challenge for state and local politicians, who have overspent previous windfalls, leading to huge budget deficits and, as mentioned earlier, the bankruptcies of two cities.

Those who want more spending, whether it’s for government services or public employees’ salaries, will be pressing politicians hard.

Brown has said he wants to resist that pressure and redirect any windfalls into debt reduction and reserves.

But as the money piles up, the pressure will grow.

Dan Walters covers state politics for the Sacramento Bee.

Article source: http://www.sfexaminer.com/sanfrancisco/california-property-values-poised-to-soar/Content?oid=2535210

Gov. Jerry Brown pointed to city redevelopment agencies as cash-wasting bureaucracies when he took office in January, and he signed a pair of bills last summer that allow them two options: Go away completely or rely much more heavily on financing from local governments.

The California Redevelopment Association and other groups sued the state in July over the bills, calling them a violation of the 2010 voter-approved Proposition 22, which prevents the state from “raiding” local coffers to make up for its mounting debt.

Redevelopment Commissioner Rick Swig said the best-case scenario might actually be the Supreme Court upholding the state’s ability to eliminate the agencies.

“If the judge overrides them, the governor is going to find a more punitive way to get rid of redevelopment,” Swig said, adding that the agency simply needs closure on the turmoil. “We’re ready to go. We’ve been ready to go.”

The San Francisco Redevelopment Agency’s interim executive director, Tiffany Bohee, echoed that sentiment.

“We are anxious to get resolution and get back to business,” Bohee said.

She added that improvements in the real estate market suggest more promise for private investment in three major projects — Hunters Point, Treasure Island and Mission Bay,  the latter of which already has the massive new Salesforce.com headquarters moving forward.

In any case, the Redevelopment Agency and Mayor Ed Lee say they are prepared to move forward on keeping the agency alive, starting with a first-year commitment of $14.5 million in local funds. Lee said some of that money would come from The City’s general fund — which pays for basic services such as streets — plus another funding mechanism that’s yet to be announced.

“We already have a plan in place to present,” Lee said, referring to the need for Board of Supervisors approval on the agency’s funding future.

Although the agency has been executing work that was under contract before the state bills passed, it has been forbidden for months from starting new projects. The agency’s budget for the 2012-13 fiscal year amounts to $110 million.

dschreiber@sfexaminer.com

Article source: http://www.sfexaminer.com/local/2011/12/san-francisco-revitalization-money-hands-judges

But in the Bay Area, officials are already preparing for global warming by rewriting local building policies in anticipation of rising sea levels.

The San Francisco Bay Conservation and Development Commission, a 27-member state agency that regulates activities that affect the waters and shoreline of San Francisco Bay, is in the process of crafting regulatory guidelines that could restrict new development projects in parts of the Bay Area threatened by rising waters.

While environmentalists see these measures as wise, some developers contend that the BCDC is being overly precautionary and will unnecessarily stifle employment opportunities for contractors and builders.

The BCDC’s proposed guideline suggests “that state agencies should generally not plan, develop, or build any new significant structure in a place where that structure will require significant protection from sea-level rise.” If one prediction — produced by the United Nations — of a 55-inch rise in sea level by 2100 proves true, the BCDC’s advisory could apply to 332 square miles of Bay Area real estate. This 213,000-acre region is home now to 270,000 people, and state officials believe that figure should grow no larger.

“Given what’s coming in the next century, there are some areas where we just shouldn’t be building,” said BCDC Executive Director Will Travis. Though BCDC only holds authority over land within 100 feet of Bay waters, its proposed recommendations could be applied by local governments in areas beyond the agency’s jurisdiction.

David Lewis, executive director for the environmentalist group Save the Bay, is among those encouraging the enforcement of precautionary building restrictions for the future.

“We know from New Orleans and Japan that building in areas at risk of inundation is a bad idea,” he said. “We’ll need to protect some critical areas, like airports, but the state is saying it’s not smart to put new people at risk.”

But critics of the BCDC’s process have argued that the commission is basing policy-making on faulty maps that show ominous future high-tide lines drawn without regard to existing flood protections. These maps, critics argue, could drive down property values and scare away insurers from real estate where the waters may never reach.

Neil Struthers, CEO of the Santa Clara and San Benito Counties Building and Construction Trades Council, said sea walls, levees and other structures can subdue risks of flooding and inundation of low-lying land.

One location whose future is the subject of a fierce debate is Cargill Salt’s former drying pond in Redwood City, a 1,400-acre parcel where the corporation wants to build a bayside community of 12,000 homes for 25,000 people.

The Arizona-based developer tapped to do the job — DMB Associates — currently has lobbyists at work against the BCDC’s suggested building restraints, and Save the Bay’s Lewis suspects Cargill’s so-called “Saltworks” project is fueling much of the opposition to the BCDC’s Bay Plan amendments.

Though the BCDC’s proposal contains no specific language that could immediately halt the project, Pete Hillan, a DMB spokesman, said the BCDC is creating an atmosphere generally unaccommodating to development — what he calls a “retreat and surrender policy approach.” Hillan added that, in spite of some opposition, Cargill is committed to carrying out its project, now six years in the planning.

But what Cargill remains most concerned about, Hillan says, is Bay Area property values, which could drop as a result of the BCDC’s warnings of regions that could one day be flooded or lie below sea level. “Their amendments will basically declare people’s property as heading toward losing all value,” said Hillan, who believes the map depicting threatened areas shows lands that saltwater will never reach. “You can’t reduce someone’s property value without good reason.”

Save the Bay’s Lewis, like many environmentalists, feels that Cargill’s property would best be restored to tidal marshlands, which can buffer shorelines against flooding.

But Hillan said the Saltworks project would include a sturdy seawall that would protect much of Redwood City, amounting to community infrastructure built with private money.

Alan Talansky, chair of the policy committee of San Mateo Area Chamber of Commerce, feels that required environmental impact reports and general community involvement already provide sufficient regulation of building activity. “BCDC is proposing a level of oversight that isn’t necessary,” Talansky said. He also feels that predictions of sea level rise are all too speculative.

“To look at the next 100 years and surmise now what might be and then set regulations is the wrong approach,” Talansky said. “No one knows what the real rise will be.”

Many will be made to move away from swelling sea

If projections of rising sea levels are correct, in the coming century thousands of Bay Area residents will be forced to pull up their roots, pack their belongings and abandon their homes for higher ground.

Just as surely, other people’s properties will be protected, their communities buffered with public and private resources against the swelling of the sea by levees, seawalls and other barriers. The question is: Who will be protected and who will be forced to evacuate?

“That’s where we’re going to face some huge environmental justice and social justice issues,” said the San Francisco Bay Conservation and Development Commission’s Will Travis. “We as a society will need to decide which areas we’re going to protect.”

Important commercial centers, such as downtown San Francisco, the Port of Oakland, San Francisco International Airport and Silicon Valley, will certainly receive prioritized safeguarding, Travis said.

Already, plans are being proposed to guard Treasure Island — which will undergo a massive redevelopment in coming years — from the expected sea level rise.

But other threatened areas may never see such protections.

“We may lose Crissy Field, the Aquatic Park, parts of Emeryville, near-shore areas of Mission Bay, and the Eastshore State Park [between Richmond and Oakland],” said Saul Bloom, executive director of Arc Ecology, a development consultant in San Francisco. He points out that ocean-facing land will also be impacted. “At Ocean Beach, the water could come lapping over the Great Highway.”

This, he says, will give us two options: retreat or build seawalls.

“We’ll have to ask, ‘How much do we want to look like the Netherlands?’,” Bloom said.

The cost for protecting Treasure Island — a community that could house, at most, about 19,000 people — could be $190 million, according to a city spokesman. Under such looming figures, entire neighborhoods, in all likelihood, will be vacated.

“So the question is, how do we move people out of threatened areas in an equitable and fair way?” said the Green Party’s Eric Brooks. “We have to plan. Where will people go? They obviously can’t stay there — even in some wealthy neighborhoods. Parts of the Marina we’ll probably have to evacuate.”

Going under

16 inches: Sea level rise possible by the year 2050
55 inches: Sea-level rise projection for 2100
332 square miles: Area surrounding the Bay that could be under water if sea levels rise 55 inches
270,000: People now living in those areas

Source: United Nations Intergovernmental Panel on Climate Change, BCDC

Slipping away

In the coming century as sea levels rise, some places will be saved while others probably won’t. Here are the areas the experts – regulators, environmentalists, urban planners – predict will be protected and those that might be abdandoned.

What will be saved

• Downtown San Francisco
• Downtown Oakland
• Treasure Island
• Silicon Valley
• San Francisco International Airport

What may be abandoned?

• Richmond-Berkeley Shoreline
• Crissy Field
• Alameda
• Highway 37

Article source: http://www.sfexaminer.com/local/2011/07/environmentalists-developers-clash-over-how-deal-rising-tide

Mountain View, home to technology kingpins like Google, LinkedIn and Symantec, illustrates the disconnect between the current technology boom and the daily economic realities of many in Silicon Valley. The five biggest tech companies with headquarters in town are valued at more than $200 billion, but Mountain View, with a population of 74,000, faces a $2.6 million budget gap and has an unemployment rate of 7.7 percent.

“We really are seeing two very different economies emerging,” said Emmett Carson, chief executive of the Silicon Valley Community Foundation. “We have the Google campus; they’re expanding, they’re adding employees, they’re doing very well financially. But the nonprofit sector and local government have been stretched to the maximum.”

Like many other local governments, Mountain View’s has struggled with rising costs for city employee health care and retirement. Tax collections have picked up a bit from the depths of the recession, but because Internet companies generally do not produce products that are subject to local sales taxes, the Web 2.0 boom has not provided a direct financial boost to the city.

That is not to say that Mountain View does not benefit from the presence of Google and other big tech companies. Google just signed a 52-year, $30 million lease on nine acres of city property to expand its campus, and agreed to make the payment up front. City officials are leaning toward putting that money into a trust (partly as a reserve in the event that some of it has to be paid back if Google changes its plans) and using only the interest earned — about $1 million in the next fiscal year — to help close the budget gap.

Jac Siegel, mayor of Mountain View, said that he meets with Google representatives regularly and that the company recently gave $1 million to the local school district. “That was a nice thing to do,” Mr. Siegel said.

Ellis Berns, the city’s economic development manager, said: “We’re proud of the fact that they’re here. I think it adds a certain level of excitement to the community to have dynamic innovative companies.”

Dan Hoffman, Google’s director of real estate and workplace services, wrote in an e-mail: “2011 will be our biggest hiring year in company history and we’re excited to continue growing in Mountain View. Over the years, we’ve worked closely with the city and we look forward to continuing this relationship for many years to come.”

Still, Mayor Siegel is not ready to declare the Internet giant a model corporate citizen. “I’ve suggested — and I’m not afraid to say this on the record — that their generosity to us is underwhelming in terms of what they do for our city.”

Part of the problem is that corporate campuses, with their own cafeterias, day care centers and other employee perks, are not always very integrated into the surrounding community.

“The industry doesn’t create a lot of demand for services,” said Terry Christensen, a professor at San Jose State University who specializes in Silicon Valley politics. “The Google campus, they pay their taxes, but their workers don’t necessarily use parks, police and other traditional services, so you get a disconnect between the businesses themselves and the people who work in them.”

hrobinson@baycitizen.org

Article source: http://www.nytimes.com/2011/06/05/us/05bcmountainview.html