In light of the current football season, I thought the term “armchair quarterback” was appropriate considering the letter that was recently published on Don Roberts’ site. Although I appreciate David Kirwin’s enthusiasm and devotion to writing letters to the “editor,” this particular letter was disturbing enough for me to take note and devote an entry to. Although it did not push my “driving me nuts” button, it had enough eyebrow raising statements that made me take note.
David K contends:
…Although APCP press releases mention the real estate market often, I don’t believe the present market fluctuation is central to their decision. Markets always fluctuate, and long term trends have never gone down, in fact trade magazines are now showing the largest growth in industrial property trading in decades…
First, I hate hate hate when people do not back up key arguments with facts. I did a quick google search using a variation on key words to try to find these trade magazines or even a mention of it somewhere, anywhere, and I just can’t find it. This nugget of information is extremely compelling and would be valuable to, oh say, anyone with a stake in the Alameda Point project.
And then David K opines:
…Perhaps the developers realized they had a bad plan. Perhaps they realized there is no way they would ever be able to build undisclosed numbers of high-rises out there because developer/liaison person Helen Sause was not going to be able to open the door to high-rises at the point as she had done in San Francisco. Perhaps developers see that too many Alamedans have started to pay attention to them, and developers will no longer always have their way or be able to operate at will in our city…
I don’t know about the developer having a “bad plan,” because I read through a lot of the plan and it sounded pretty good to me. Considering all the constraints that they were under, there were a lot of good ideas in there and I would have been happy to see what they had planned being built even though it would not have been an optimal plan for me. Can I also say that I am tired of the numerous conspiracy theories that pro-Measure A folks throw around connecting Helen Sause with high rise building developers? And regarding Helen Sause, high rises, and San Francisco — if this is again about Yerba Buena Gardens I thought I had covered that issue already. Of course, our definitions of high rises may differ, but in my opinion, the buildings that were constructed in that area hardly qualify as a “high rise” to me.
And then David K. goes on to say:
It was reported that the bulldozing of the 600 affordable Navy residential units to make more room for Bay Port Development was to raise the money for needed infrastructure improvements at the Point. We will watch to see how that is handled now that is has been disclosed that the buyers and tenants of the new Bayport development are not allowed to dig even 24” deep holes in their yards. The “remediation” of the contaminated soil there was a thin layer of soil spread on top of the contaminated sites. Why would anyone want to buy an overpriced home on a toxic site with such a warning?
First: please I hope no one thinks they are doing us any favors out here at Bayport by “reporting” that there were toxins in the ground. That was fully disclosed to ALL buyers prior to signing any contracts. Anyone who tells you otherwise wasn’t paying attention during their their first meeting after selecting their lot. And whether you can dig holes in your yard, I believe the number varies from 4 feet depending on your location and if you have ever seen the size of our lots you would know that no one is contemplating putting in a pool or planting an extensive food garden (we’ll leave that to the folks out at APC.) And as enviroatty posted in another entry:
Generally, you can’t drill your own well to drink the groundwater under the base nor can you excavate to the “Marsh Crust” without a permit, which is from 5-20 feet down. I certainly wouldn’t drink the groundwater from the base, but given the levels of contamination and the remediation actions to date, you probably have more to worry about healthwise from the air emissions from cars, than any hazards from contaminated soil 20 feet under your house.
And what are the toxins we at Bayport need to worry about? According to our homeowner’s documents and this link by enviroatty: Petroleum Hydrocarbons, Polycyclic (Polynuclear) Aromatic Hydrocarbons, and Benzene.
What is Petroleum Hydrocarbons? Well, the Agency for Toxic Substances and Disease Registry, a division of the CDC says:
TPH is a mixture of many different compounds. Everyone is exposed to TPH from many sources, including gasoline pumps, spilled oil on pavement, and chemicals used at home or work. Some TPH compounds can affect your nervous system, causing headaches and dizziness.
How about Polycyclic (Polynuclear) Aromatic Hydrocarbons?
Polycyclic aromatic hydrocarbons (PAHs) are a group of over 100 different chemicals that are formed during the incomplete burning of coal, oil and gas, garbage, or other organic substances like tobacco or charbroiled meat. PAHs are usually found as a mixture containing two or more of these compounds, such as soot.
Ooh…watch out Bobby Flay, you might expose your children and neighbors to toxins forming a cluster of disease riddled children around your home and workplace.
And finally, the dreaded Benzene:
Benzene is widely used in the United States; it ranks in the top 20 chemicals for production volume. Some industries use benzene to make other chemicals which are used to make plastics, resins, and nylon and synthetic fibers. Benzene is also used to make some types of rubbers, lubricants, dyes, detergents, drugs, and pesticides. Natural sources of benzene include volcanoes and forest fires. Benzene is also a natural part of crude oil, gasoline, and cigarette smoke.
Regarding Bayport being overpriced, that’s all in the eye of the beholder now isn’t it? Bluedonkey.org has been tracking the pricing for the homes out in Bayport from the beginning and if you can see the pricepoints aren’t out of line considering the size of the homes. In fact, they are a bargain compared to most homes in Alameda.
Although I do agree with the modified portion of David K.’s conclusion:
We will have to be careful in the way we develop the Point…but for the long run the city should purchase the land
The city should own the land and we should be careful. But what we should be careful of is how we build it and what it looks like, we want something that is sustainable, smart, and inclusive…not a playground for the wealthy or a place to shunt off families on the low end of the socio-economic scale, but a community that is built around best practices and common sense.
No offense to Dave, but the first part of his argument in that market fluctuations had anything to do with the decision to pull out. Back up the train for a second. California and indeed the country are dealing with the biggest RE bubble in history. I could go on and on, but the basics that form the background are: after dot-com, market bombs. Feds also realize that boomers have no money and are about to retire. What do you do with a public now wary of investing in the stock market? - you lower interest rates and get em’ to buy real estate. In markets like california that have had supply problems for years ( thanks to the aforementioned measures), the prices sprial out of control. Risky loans once only reserved for commercial RE are made available to people without the real means to actually buy a home, and instead use them gambling pieces, wheras the loans can be turned into Refis once property value- which as dave points out- only goes ” up”… but the envitable is happening. prices are going dow, people who took out these loans ( and there are many) are now in trouble, supply is at an all time high ( anyone notice that literally half the island is for sale?) and a bust is on it’s way.
How bad of a bust are we talking? well, for starters, almost 30% of out state’s economy is tied to RE- way more than the dot-com ever was and we see how much that affected the local economy. There are over 500,000 RE agents in California.. that’s right.. enough to fill a city the size of Oakland. Construction work fills a huge void left by the exit of the 90’s tech boom. In essence, a fall in RE will not only affect homeowners, but the entire economy as well. I am a firm believer that prices will revert to 2001 or prior levels.
Hence the developers of Alameda point were smart for getting out, and for that matter probably fed up with all the red tape that made developing there too expensive in the first place.
The next 2-3 years will be VERY interesting. I expect old cliche’s related to RE to be obliterated.
Comment by Willy — September 26, 2006 @ 9:39 am
Geez Loren,
‘Hate’ is such a strong word – do you really mean to add it to your blog site? When you use it in triplicate it comes off rather whiney. I’m trying to get my 6 yr old out of the habit and to just ask for what he wants…
Bob Bach, National Director, Market Research Grubb & Ellis Co. (www.grubb-ellis.com) in a mid-year forecast in BUILDINGS, July, 2006 (www.buildings.com ) had quite a bit to say not only about the investment opportunities and growth in the industrial property market, but also prospects in the retail-residential markets in that “there are reasons to think that consumer spending and retail leasing are poised for a fall –high gas prices, rising interest rates, wobbly housing markets and burdensome levels of debt.” He also warned of a jump in 10-yr Treasuries and the affect on RE investors. (This somewhat also hints at residential/retail as a bad plan or a grim view of quick cash for APCP)
My point is that the AP property hasn’t changed, environmental hazards were known, and land prices always go up in the long run. APCP has been flip-flopping on plans from the beginning, R&D, office based to retail and residential. No matter where they flipped this City Council allowed all changes to the plan.
I will also add some agreement to part of the tone of Willy’s comments- Many of the RE loans starting before the .com bust were getting risky. People started spending the value increases of their homes, banking on the steady spiral of speculative values. REal Risky. It can be awful at the end of party-time when the piper calls to be paid. I have had discussions with some in our Planning dept who EXPECT many foreclosures at Bayport. Is this “Developing Blight”? Maybe so. America now has a fragile economy. Although I am not an economist today was nice for the stock market. It’s funny that crude oil has dropped 25% in recent months, and that is supposed to stimulate spending. Do you feel better now that it costs under $100 to fill up the Hummer? I tell all my high school age friends to study alternative energy. Yes, I am one of the dreamers; we can have free energy as soon as we learn not to waste it. I believe it is possible Tesla had it, and that distributed generation is the key; wind, solar, tidal, and gyroscopic we could have it all, right here in Alameda I am serious, the City should look at the natural remediation of contaminated soil by the use of fungus. Nature works best, it is truly amazing.
Now I will digress; Willy this is for you, I remember long ago being informed that this period in America would be rough, that the retirement of the baby boomers could strip the investment markets of cash, that America would need China for its consumer markets, bla, bla, blah. I remember driving 880/ 580/ 80 and the bay bridge in the 80’saying “traffic can’t get worse, it has to stop.” I was still saying that in the .com boom, and that people will someday use empty warehouses and hotels, filled with comfy cubicles and work by phone and data jack. I really thought SF office space would de-value on a scale you mentioned for California’s real estate market. It just won’t happen, though it’s possible – Office workers don’t face to face often enough to warrant the commute costs. But change is slow, it is ‘human’ not to like change. But let’s fade back to Alameda’s reality:
Obviously there is a lot of contention about what is a good plan for redevelopment in Alameda. That has always been true. That is why pre-measure ‘A’ Alamedans amended the City Charter with Article XXV. http://www.ci.alameda.ca.us/gov/city_charter.html?article=25 In a democratic society there should be a ballot choice by citizens as stated by Article XXV. Do you agree Loren, or do you believe the decision for how our city’s future is determined should be dictated by developers or closed city council meetings like the one tonight?
As far as the toxic condition of the soil, or the “cover-up” style of remediation at Bay Port; I had no idea what was done. Like most Alamedans, I didn’t start paying attention to this City Council until the ‘mouth-dropping’ acceptance of the unforgivable theater scam. Now I know I can not trust this current voting block of Gilmore, Johnson & Matarrese, or the development-weighted staff that advises them. I see a parade of judgment decisions that puts the welfare of residents and the residential quality of life at the end of the line. Now I have grave concerns for the kids who will live there, play at the park there and go to the new school there. Out of control health liability costs? – No kidding, especially if you don’t clean it up before building there. I think that is shameful.
Here is the EPA superfund site info for the Point; http://www.epa.gov/superfund/sites/iag/i01-09002.pdf Unfortunately like other public entities that don’t want to make facts public, but are required to do so by law; (Alameda City government) the EPA uses PDF format so some info is illegible – like the maps of hazzmat locations…
Dave
Comment by D.Kirwin — September 26, 2006 @ 10:12 pm
Dave,
I’ve been studying the housing market in California for years. I know I talk an awful lot about it on this forum, but the main reason is that I don’t think that most people in this state or the country for that matter understand the full extent of the seriousness we now face in respects to the real estate market and our economy.
In comparison, the current Real Estate market was simply ” dot-com part 2″; a sort of hangover, because just like the dot com, money was too easily obtainable to people who had no business getting it in the first place. Every single day I flip open the paper and read stories about lending agencies lending money to people on the lone assumption of “stated” incomes. All people had to do was go in and say they made “x” amount of dollars, and bingo- you instantly qualify to take out a $500,000 loan. I expect more amazingly stupid stories like this one to become readily visible in the coming months.
The media really whipped this up into a frenzy too. Everyone was convinced that no matter how much they paid for their home, the expected appreciation would work out for them. The biggest risk taken was buying a home when the buyer didn’t have the money in the first place, hence the exotic loans, which were really just placeholders relying on the hopes of rapid appreciation. Let’s see.. the last time I checked, the affordability rate in the Bay Area was around 12%, which means that almost 90% of the population cannot buy. The fact that many bought anyway is very telling of the possible future outcomes of this bubble burst will be.
The Alameda Journal, which is really just a publication from Knight Ridder in Oakland had entire sections of the paper inserted which were really just disguised advertising supplements.It had articles written by Real Estate agents. hmmm.. so a massive chunk of the paper, written by biased agents, disguised to appear to be “real news”… this kind of monkey business was and is still everywhere. Many people bought into it and firmly believed in Real Estate’s infallibility. It is repeated on TV, the radio, billboards, and the millions of smiling real estate agent’s faces you see swinging from “for sale” signs all over the area.
I know many people.. Too many really.. who bought homes with risky loans and were counting on retiring on the appreciation, refinancing, or otherwise banking all of their future financial plans on one thing- their house. All mention of traditional means like savings, retirement plans, mutual funds, etc were thrown out the window. I have one friend who bought 3 condos in another state. They are not selling and now he is over 300k in debt. Still another bought a huge home in San Francisco. He took out a combination ARM and IO loan. Values are going down, so now he has no means to refinance. He will have to sell… and lose money. Stories like this are becoming very common.
The worst part about this is that the problem isn’t just in California where these cycles happen over and over, but in the rest of the country as well. Foreclosure rates are up over 100% in California, but as much as 200% or more in other states like Colorado, Florida, New Mexico, and Nevada. Home prices are dropping massively in Sacramento, San Diego, and Most of Placer County. Many of these other states do not have the same dynamic economy that California has, thus even more pressure was placed on RE to prop up their economies. Once their Real Estate goes, so too does their state economy.
Simply put, this is the single biggest Ponzi scheme ever to be put onto the U.S.We are now a country that manufactures nothing and pays the people that fall through the cracks hardly anything. Real Estate was a temporary fix to a long developing problem, which is how do you revive an economy no longer based in real capital producing industries. By getting people to agree to overpay for their houses. The problem was temporarily sidestepped.
I fear that this latest bubble will put a fairly significant dent in the economy for years to come.
I hope people learn a valuable lesson in this latest fiasco- that working and saving your money is truly the best way to future riches, and that a house is not a stock, but a place to store your stuff and raise a family. Lastly, if prices on homes don’t match basic economic fundamentals, then please, for god’s sake- do not buy it lest you want to be saddled with debt for decades to come.
Comment by Willy — September 27, 2006 @ 7:49 am
Just for clarity, the “Superfund” site listed in D. Kirwin’s link refers to the Alameda Naval Air Station site, which is different from the several brownfield areas on the West End. The Dept of Toxic Substances Control Envirostor website, http://www.envirostor.dtsc.ca.gov/public/, lists the various sites in Alameda. The Federal NAS Superfund site is not the Bayport location, which is the “Alameda Naval Air Station East Housing” State Response site. If you compare the two “potential contaminants of concern”, there are far most hazardous materials on certain areas of the base than in the surrounding areas that are current developed. The Bayport area remediation was easy given the natural attenuation of petroleum hydrocarbons and the fact that there were low contaminant levels to begin with. Not so on the base.
The prohibition on excavation at Bayport seems to be an conservative approach to prevent even the possibility of exposure to any toxic materials given the levels and the types of toxins. I would be much more suspect if the master developer (APCP) chose a simple soil-cap remediation strategy for the rest of the base as many of these contaminants are much more toxic, and volatile, which means they can get into indoor air space. If I were an environmental insurer, I certainly would not be happy with that type of remediation, and hence, the “volatility in the environmental insurance market” issue from APCP’s letter (POSSIBLE TRANSLATION: We, the insurers, do not feel sufficiently protected against risks/claims that will be made to force additional remediation and/or for injuries that could be related to haz. materials. Thus, your premiums will be huge)
I think it would be great if more people showed an interest in these types of issues when it comes to development on the point — e.g. the need for excavation and disposal of contaminated soil, better indoor air quality studies, and active remediation. The base has significant contamination from the years that the military was out there and it needs to be cleaned up satisfactorily.
Comment by enviroatty — September 27, 2006 @ 8:54 am
For those that are interested in learning more, the next meeting of the Restoration Advisory Board for Alameda Point will be held on Thursday, Oct 5th 6:30 pm at City Hall West. The RAB is responsible for reviewing all remediation plans and advising the Navy and responsible agencies on clean-up programs. There are a number of citizen representatives on the Board who would welcome increase participation and intersest, especially as many of the remediation plans are now nearing implementation.
Comment by Doug Biggs — September 27, 2006 @ 9:34 am
Interesting that there is a perception by at least 1 individual that Bayport is overpriced. In July 2004 when I sold my Costa Brava home (in Harbor Bay), we sold it for $382/sq. ft & bought our Bayport home for $257/sq. ft. At the current prices are home is selling for about $318/sq ft. Sure doesn’t seem overpriced when you look at the raw data, now does it?
But, of course you have to look at the real estate market today. A realtor I know recently told me that $400/sq ft. is a reasonable figure to use for pricing an Alameda house for resale, but I won’t be surprised if that figure drops 10-15% over the next year. But even if the home prices drop in Alameda, I don’t know how someone can draw the conclusion Bayport is “overpriced”.
Comment by Kristen — September 29, 2006 @ 11:21 am
Thougt this would be of interest to some folks here: http://www.alameda-point.com/pdf/3-B%20AP%20Update.pdf
The ARRA is looking for another developer and despite the sentiment that the word “developer” could easily be exchanged with Lucifer for many Alamedans, the city really needs some well-funded entity to invest in the remediation, planning and development of the point, or it is really going to become a ghost town. A public sale would almost ensure that the process will be uncoordinated, unplanned and possibly even less desirable to those who celebrate APCP’s withdrawal.
Comment by enviroatty — October 8, 2006 @ 11:15 pm
The city has received a handful of inquiries from developers. I agree, an auction might not be the best solution!
Comment by alameda — October 9, 2006 @ 6:47 am
Perhaps the definition of “affordable” homes needs to be ‘cleaned up’ a bit. Below-market homes are not affordable homes; they are just partially financed by someone else. “Affordable” homes should be affordable themselves. Before any future developments are considered this major issue should be resolved. As soon as the below-market homes are resold at market rate the city will lose these ‘affordable’ dwellings. I believe the lifespan of ‘below-market’ status is 30 years at the most - Hopefully that is well below the expected lifespan of the homes they are now building in Alameda
-David Kirwin .
Comment by D.Kirwin — November 19, 2006 @ 11:05 am
Consider the source and from other nefarious conspiracy plots:
Depending on your perspective, the FBI has been either thorough or overzealous in its two-and-a-half-year public corruption probe of state Senate boss Don Perata. The latest example is the feds’ inquiry into Perata’s involvement in a proposal by two of his campaign contributors to develop the former Alameda Naval Air Station.
According to a copy of a federal grand jury subpoena issued July 2006 in the Perata case, along with other public documents, the FBI was interested in the senator’s attempt in 2003 to speed up the development of the former base by Shea Homes and Centex Homes. The two homebuilding giants donated at least $64,100 to Perata’s campaign committees and those associated with him from 2000 through 2006.
But in the spring of 2003, Centex and Shea’s plan to construct 1,700 houses was stymied by an obscure state agency — the Department of Housing and Community Development. The agency refused to sign off on Alameda’s “housing element,” which laid out how the city planned to ensure adequate affordable housing. This effectively halted the developers’ plan.
In April 2003, Perata fired off an angry letter to the agency’s director, Judy Nevis, saying he did “not believe that your department should withhold certification of the City’s [Alameda] element.” Although the senator never mentioned Shea or Centex, he wrote that the agency’s “failure to certify the element will certainly hinder and delay efforts to redevelop the Naval Air Station.” Full Disclosure obtained copies of Perata’s letter, the subpoena, and other documents through a public records request to the state housing agency.
It’s not clear from the documents whether Perata did anything illegal, but the senator did get his way. Nevis did not return a phone call seeking comment, but her agency approved the city’s element after receiving Perata’s letter, thereby green-lighting the plan for the former base. Three years later, however, Shea and Centex pulled out of the deal, citing the downturn in the Bay Area’s housing market. Centex spokesman Eric Bruner said his company also received a subpoena, but it does not consider itself a target of the feds.
East Bay Express June, 2007
Comment by Mike McMahon — June 30, 2007 @ 3:21 pm