Tuesday, April 10, 2007

Antelope Valley struggles with memories of ’90s housing crash

The ’90s slump was a doozy but today’s job base may limit the pain.
By Kim Christensen, Times Staff Writer; April 10, 2007

The Antelope Valley, then and now 
John Rockey has been hanging drywall for 35 years and he’s seen it all in the boom-again, bust-again Antelope Valley housing market.

As residential construction flourished in the late 1980s, his company’s ranks swelled to 200 — then shriveled to five when the economy tanked a couple of years later.

By the time a new building spree peaked in 2005, Rockey’s payroll had again grown to 200. But then came slumping home sales and a sharp rise in mortgage defaults and foreclosures.

Now his Lancaster-based Progression Drywall Corp. is down to 50 employees, and he’s got a serious case of deja vu.


“This is looking like 1990 all over again,” he said.

For many in the high desert north of Los Angeles, those are chilling words.

The economic downturn that racked California in the early 1990s hit especially hard there .The mere mention of the time summons images of squatters taking over their neighbors’ abandoned houses, of spiking crime rates and unprecedented gang killings, of hemorrhaging home values that took a decade to rebound.

With foreclosures on the upswing and a fresh crop of For Sale signs sprouting in front yards, Rockey and others are bracing for a return trip to a decade they’d rather forget.

“A lot of people are panicking,” said Jaimes Gumaro, a North Hollywood real estate agent who has a listing in a Palmdale neighborhood dotted with homes for sale. “They were expecting to have all this equity, and then it suddenly stopped. Now they just want to get their money out of it. They’re saying, ‘I’m outta here.’ “

Regional economists say such fears are overblown, pointing out that the job market is much stronger now than it was then.

But they also agree that outlying suburbs like the Antelope Valley are especially susceptible to the weakening housing market and the mortgage lending crisis playing out across the country.

“Right now the areas which are most vulnerable to real estate volatility would be those areas where there were a lot more new homes being built,” said Mark Schniepp, director of the California Economic Forecast, a consulting firm based in Goleta. “The development community is much quicker to cut prices than existing home sellers are, because they’ve got to move inventory. It’s not an emotional decision for them.”

Relatively low home prices have long been one of the Antelope Valley’s chief drawing cards, but that benefit has been diminished by flat or falling prices elsewhere.

“Outlying areas do better when prices are going up because people are seeking more home for the money,” said Patrick S. Duffy, managing director of Hanley Wood Market Intelligence. “If prices come down … then the Antelope Valley has to compete with softening prices in other areas.”

Rising gas prices also could take a toll on the area’s housing market, as prospective buyers think twice about the increasingly expensive commute to jobs “down below” in Los Angeles.

What’s more, the Antelope Valley has attracted waves of first-time buyers and others with modest incomes and sometimes spotty credit who must rely on high-cost “sub-prime” loans. It’s these borrowers who are now defaulting in record numbers, leading to a precipitous spike in foreclosures.

The numbers help tell the story.

Foreclosure sales in Lancaster and Palmdale rose to nearly 200 between Dec. 1 and Feb. 28, an eightfold increase in a year. That’s still well below mid-1990s levels, however, according to DataQuick Information Systems, a La Jolla research firm.

Notices of default more than doubled over the same period a year earlier, totaling more than 1,000 from December through February.

Housing starts dropped nearly 33% from 2005 to 2006, from 5,076 total units to 3,565, according to the Construction Industry Research Board in Burbank.

Home sales, including new, resales and condos, fell nearly 40% this year over last for the three months ended Feb. 28, according to DataQuick. Home values, which shot up 25% a year earlier, rose a tepid 3% for the 12 months ending Feb. 28.

For the month of February, single-family home values in Palmdale were down nearly 1% from the same month a year earlier, and in Lancaster prices sank more than 2%.

“Now we have all these folks who can’t afford their homes and their loans are adjusting, literally by the thousands,” said Peter Terracciano, who founded his Palmdale brokerage, Re/Max All Pro, in 1990, as the housing boom began to go bust.

Despite the negatives, however, economists, public officials and builders say the outlook is far from bleak.

Unlike in the 1990s, when home values dropped by as much as half, no massive layoffs are looming and the size of the area’s housing inventory is not cause for alarm, said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.

“I don’t think it is going to be that bad,” Kyser said. “In the ’90s, we had a recession and a brutal economic restructuring, and we lost 200,000 jobs in aerospace just in L.A .County. This time around, we have an economy that is rather healthy.”

The slumping housing sector is not enough to pull the local economy into a bad funk, Schniepp said, and the employment picture has brightened since the time when aerospace was “the be-all and the end-all” for workers in high desert communities.

“There is more housing development, more industrial development, more office development,” he said.

Brian Ludicke, Lancaster’s planning director, said residential building permits for this fiscal year will number about 1,100 — down from a high of about 2,800 in 2005. Many builders are scaling back projects, seeking extensions on start times or not starting them at all, he said.

But he noted that commercial development remains strong in his city because of the demand for more restaurants, retail outlets and other businesses to serve a population that has boomed since the late 1980s.

“The commercial guys say, ‘Hey, there are people living in those houses and they’ve got money to spend, and, golly gee, I need to capture some of that market,’ ” he said.

Gretchen Gutierrez, executive officer of the Antelope Valley chapter of the Southern California Building Industry Assn., said builders no longer have the “Build it and they will come” attitude that resulted in huge inventories of unsold new homes in the 1990s. Now they roll out subdivisions in small phases of perhaps five houses instead of 50.

Builders also have adjusted to the market by coming up with new incentives, offering to cover prospective buyers’ closing costs or throwing in kitchen upgrades or landscaping packages. Some have cut their prices, Gutierrez said, but not by much.

“No one is running ads saying, ‘Hey, we’ve slashed $100,000 off our prices, so come see us this weekend!’ ” she said. “We’re not seeing that, which is good.”

Although no major new developments have been announced lately, work continues on already approved projects such as the 7,000-home Ritter Ranch development in Palmdale.

Empire Cos. also is proceeding with Anaverde, a 2,000-acre development in west Palmdale that will have about 5,000 homes. About 900 have been completed, Gutierrez said.

James Previti, Empire’s president and chief executive, said a loss of sub-prime lending probably will put a temporary drag on sales. But he thinks buyers will find alternatives in government-backed VA and Federal Housing Administration loans.

“I think we will be adversely affected for one or two quarters as we transition into government financing,” he said, adding that he was “still fairly bullish on the Antelope Valley.”

Drywall contractor Rockey, who gets most of his work from large builders, has a dimmer outlook.

“Every customer has a different story every day,” he said, “and they’re not good stories.”

He recently learned that the builder of 300 new houses he’d been lined up to drywall in Rancho Cucamonga abruptly halted the project, costing Rockey $4 million in work. “We’re getting killed,” he said.

Homeowner Debbie Brown remembers the last time it got ugly in Palmdale, right after she moved there in 1991. When the size of their mortgages exceeded the value of their homes, she said, people simply walked away.

“Houses were getting dumped right and left,” she said. “There were all these empty houses, and people were crawling in through the screens and living in them. It was really scary.”

Palmdale Mayor James Ledford said his city had taken steps to ward off a recurrence of past problems, citing efforts to attract new business, monitorthe upkeep of vacant properties and conduct its own inspections of government-subsidized rentals.

“My fear is not as strong today, obviously, as it was in the ’90s,” he said. “But when the ’90s hit, I think it surprised everybody and showed that the outer regions are a little more vulnerable than the core. I do feel confident that as a city we have done things to protect us.”

Terracciano, the Palmdale real estate broker, fears that many homeowners will walk away from their properties, as they did before.

“Commuters are saying, ‘Why am I driving four hours a day, getting up at 4 o’clock in the morning and getting home at 7 or 8 at night, when my home is $50,000 upside down? Why am I banging my head against this wall when I can go back to L.A.? I might not be able to own a house, but my quality of life will be better, and I’ll be able to spend more time with my family.’ “

He said his business was off 30% so far this year, on top of a 20% decline last year. One of five sales has fallen out of escrow in the last month, he said, as lenders have pulled back on sub-prime loans.

Still, Terracciano’s ridden the ups and downs of the area’s housing market long enough to remain optimistic.

“The Antelope Valley is still the last affordable place in the L.A. area,” he said. “As long as the job market remains relatively strong, we’ll be all right. We will survive.”

kim.christensen@latimes.com

Times researcher Scott Wilson contributed to this report.

Posted by M at 19:20:27 | Permalink | No Comments »

Defaults Rise in Next Level of Mortgages

By VIKAS BAJAJ; Published: April 10, 2007

Some of the problems afflicting mortgages sold to borrowers with weak, or subprime, credit increasingly appear to be cropping up in loans made to homeowners who were thought to be less risky.

Loan Troubles Are Moving Up the Quality Scale

The latest sign of possible further deterioration in the credit market came yesterday as American Home Mortgage, a lender based in Melville, N.Y., said that it would earn less and pay out a smaller dividend because it was being asked to buy back and write down the value of certain loans.

 

Those loans are known as Alternative A, or Alt-A, and were made to borrowers with decent credit. Shares in the company tumbled 15.2 percent, to close at $21.92.

The announcement followed a disclosure last week by M&T Bank, a regional bank based in Buffalo, that it would write down Alt-A loans and no longer sell them because bids for the mortgages came in lower than it had expected.

Since the subprime mortgage market began deteriorating late last year, investors and analysts have kept a close watch on Alt-A loans, worrying that problems in higher-grade loans would prove to be a greater threat to the housing market and the economy.

Alt-A loans are made to borrowers with credit ratings that fall between prime and subprime, or to homeowners who have prime credit but are seeking a somewhat riskier loan.

Such loans made up about 10 percent of all mortgages outstanding at the end of 2006 and made up about 18 percent of home loans written last year, according to Moody’s Economy.com.

Together, subprime and Alt-A loans account for about 21 percent of loans outstanding and 39 percent of mortgages made in 2006.

The delinquency rate for Alt-A mortgages remains much lower than the rate for subprime mortgages, but it has been rising. In February, 2.6 percent of Alt-A loans were delinquent by 60 or more days, up from 1.22 percent a year before, according to FirstAmerican LoanPerformance. By comparison, 12.44 percent of subprime loans were delinquent by more than two months, up from 7.84 percent.

Reports that Wall Street, which made millions of dollars securitizing mortgages in recent years, is becoming more wary of Alt-A by putting loans back to lenders or by bidding less for them could be an indication that default rates will worsen before they improve.

The problems in subprime mortgages started late last year when big investment banks started returning delinquent loans to lenders. Many of those lenders have since filed for bankruptcy protection.

“The credit markets were showering the mortgage market with capital, and now that’s just evaporating,” said Mark Zandi, chief economist at Moody’s Economy.com. “The capital markets are going to exacerbate the problem, seemingly.”

Until recently, mortgage companies had been able to sell loans to Wall Street banks and other investors for a premium that was big enough to cover their costs of making the loans and to make a tidy profit. The banks would then package the loans into pools to be sold as bonds to hedge funds, insurance companies and other investors.

“Now you are selling at par or lower in some instances,” said Thomas M. McCarthy, a managing director at Carlton Group, a real estate investment firm that brokers the sale of mortgages. “It really throws the business upside down.”

For American Home Mortgage, the lower prices investors are willing to pay for Alt-A loans will mean that the company will earn from 40 cents to 60 cents a share in the first quarter. Analysts had expected it to earn $1.06 a share, according to a survey by Bloomberg News.

Beginning in the second quarter, the company, which is structured as a real estate investment trust, will reduce the dividend for its common shares to 70 cents a share, down from $1.12 in the first quarter. The company also said it would write down $484 million in mortgage securities it owns because of the lower prices at which the bonds were now trading.

Until recently, Alt-A loans were considered by many investors to be only slightly more risky than prime mortgages, and losses in bonds backed by the mortgages were small and rare, said Zach Gast, an analyst at the Center for Financial Research and Analysis.

“This is a definite sign that at least in the secondary market the subprime issues are spilling over,” he said.

Default rates have been worst for loans written in 2006, as many mortgage companies loosened lending standards by allowing more borrowers to make no down payments and not verifying that borrowers indeed earned what they claimed they did in mortgage applications. The companies relaxed the rules in an effort to bolster business at a time when interest rates were rising and the housing boom was fading.

Alt-A loans are also vulnerable to the deterioration in formerly hot housing markets along the coasts and in the Southwest, because they were often used by investors who were buying properties with the intention of quickly reselling them at a profit.

“Alt-A seems to be located regionally in spots where the market is having a great deal of difficulty, particularly in Las Vegas, Arizona and Florida,” Mr. Zandi said. So far, however, the problems in the housing and mortgage businesses appear to have had only a modest overall impact on the broader economy.

Still, Mr. Zandi says the true test will come in the next two to three months during the peak of the spring home selling season. He notes that employment in the construction sector, which had grown at a rapid pace during the housing boom, has leveled off in recent months but has not fallen significantly even as construction spending has tumbled.

Posted by M at 19:16:11 | Permalink | No Comments »

Lennar Corp. dominates redevelopment in S.F.

Hunters Point deal gives firm City Hall clout

Robert Selna, Chronicle Staff Writer; Tuesday, April 10, 2007

Lennar Corp. crews are shown grading for the new housing ... Old warehouses at Hunters Point would be demolished to ma... Lennar Dominates Base Development. Chronicle graphic by T...

Lennar Corp., the company Mayor Gavin Newsom wants to lead an ambitious redevelopment of Hunters Point shipyard and Candlestick Point, has woven itself deeply into the future of the Bay Area.

The company, which has supplanted Catellus Development Corp. over the past decade as the major player in Bay Area redevelopment projects, controls Vallejo’s decommissioned Mare Island Naval Station, San Francisco’s Treasure Island, Hunters Point shipyard and now — for all intents and purposes — Candlestick Point. The company expects to reap hundreds of millions of dollars from each project once it is completed.

It was selected, along with Catellus, by the Alameda City Council on Wednesday night to redevelop the former Alameda Naval Air Station, and it has set its sights on Concord Naval Weapons Station in Contra Costa County.

But Lennar’s enterprising relationship with San Francisco City Hall — in which it has come to control much of the city’s remaining undeveloped land — gives the company unparalleled sway over how San Francisco will evolve, arguably rivaling the clout of the city’s elected leadership and the voters themselves.

Critics say there are dangers in relying so heavily on a single company. If it ran into financial trouble, the impact on the city could be magnified. Moreover, trying to bargain from a position of strength with a corporation driven by its bottom line can prove difficult for public officials who need the company to deliver on multiple fronts.

Those risks are outweighed by Lennar’s strengths, according to Wall Street analysts and city officials. The company’s unmatched experience with the expensive and tedious work of military base redevelopment and its relative financial heft in an industry battered by recent economic trends could make it an ideal partner, they say.

“We consider ourselves part of the business fabric of the city,” said Kofi Bonner, president of Lennar’s urban land division and the company’s leading executive in San Francisco, who along with negotiators for Newsom believes the public-private partnership between Lennar and the city will be a winner for both sides.

A humble beginning

In 1954, Leonard Miller and Arnold Rosen, two young Florida homebuilders, started Lennar with $10,000. They developed a strategy of buying real estate when the market was depressed and later diversified, adding commercial property development to their business.

Through huge land acquisitions in California in the 1990s, Lennar’s profits soared.

In 1993, Lennar nationally took in $593 million in revenue. After buying out real estate firms and their holdings in places like San Diego, Orange and Los Angeles counties, the company’s revenue reached $8.9 billion by 2003. In 2006, it was $16.3 billion.

Lennar, which aims to earn a 25 percent return on its investments, is the biggest homebuilder in California based on revenue and units built, company officials say.

California’s weather and housing shortage led Lennar to invest more in the state than in any other region in the past few years, according to Emile Haddad, Lennar’s chief investment officer.

“To provide some perspective, we now own 80 percent of all of the entitled land in northern Los Angeles County,” Haddad said.

In the late 1990s, California’s shut military bases posed an opportunity that Lennar believed it was uniquely qualified to seize. While many of the bases were badly polluted Superfund sites — and had frustrated the military and local governments because they were so much work to decontaminate — Lennar saw potential for profit.

Many of the bases were on or near some of the best real estate in the state, as well as in or close to urban centers with jobs, growing populations and the need for more housing.

Two of the first bases Lennar made plays for were the former Marine Air Corps stations at Tustin and El Toro in booming Orange County, and eventually it landed development rights there.

Move into San Francisco

Potentially better opportunities sat up north in San Francisco.

In 1999, Lennar prevailed in a close contest for control of the 500-acre Hunters Point shipyard, closed two decades earlier. The city Redevelopment Agency Commission voted 4-3 to choose Lennar — against the advice of a financial consultant who had been hired by the city to evaluate competing development proposals and who recommended another company.

Lennar and its subcontractors are preparing a 75-acre, upland segment of the shipyard — the first and easiest parcel to be decontaminated by the Navy — for nearly 1,500 homes. By May, workers are to have started installing the communications, electrical, gas and water lines, streets, sidewalks and sewer lines to support residential life.

Under Lennar’s shipyard redevelopment deal with the city, it is paying nothing for the land but it is making upfront investments to build the necessary infrastructure and has agreed to a profit-sharing formula with the city’s Redevelopment Agency.

Having secured control of the shipyard, Lennar in 2003 joined a partnership that controlled Treasure Island Naval Station that was put together by Darius Anderson, a Democratic Party fundraiser and lobbyist.

Lennar, Anderson and other members of the partnership plan to have 13,500 new residents living on Treasure and Yerba Buena islands in a environmentally cutting-edge community of 600 “green” homes, with a new ferry terminal and 300 acres of parks and open space.

The partnership — which also includes the developer behind the successful Ferry Building restoration, Wilson Meany Sullivan — has proposed that in lieu of paying for the land, it pick up the $40 million estimated cost of the remaining pollution cleanup at Treasure Island.

The outlines of the redevelopment deal negotiated for Treasure Island call for the developers and the city to share the projected $1.2 billion cost to shore up the seismically unstable island, lay in new utilities and build transportation infrastructure for a planned community on the bay that still faces difficult questions about how people will come and go.

The city would raise its $700 million share of that cost by borrowing against future property tax revenue to be generated by a redeveloped Treasure Island.

Eventually, San Francisco would begin sharing in profits after the developers had reaped a 25 percent return on their investment.

Now, the mayor and Lennar want to add Candlestick Point to Lennar’s portfolio, a move prompted in part by the 49ers’ announced plans to give up on building a new stadium and residential community there.

The decision by the football team to instead seek a stadium deal in Santa Clara led the Newsom administration and Lennar to draw up a new integrated redevelopment plan joining Candlestick and Hunters Point shipyard.

On the combined 790 acres, it calls for 8,500 housing units, 2 million square feet of office space, an 8,000-seat to 12,000-seat arena and 700,000 square feet of retail and entertainment uses, more than 350 acres of parks and open space and a new football stadium — this time at the shipyard, rather than Candlestick.

The open space would include open-air parking for 19,500 cars immediately around the new stadium. The parking surface would be made of “dual-use turf,” natural grass held together with a synthetic mesh in the root system, which would allow for year-round recreation.

The change in stadium location and the parking-space innovation were included as a final appeal to the 49ers to reconsider their plans to leave the city.

Ultimately, the project would go before city voters, Newsom administration officials have promised.

Relationship’s risks, rewards

Michael Cohen, Newsom’s base reuse director, said the decision to put more chips on Lennar makes sense for San Francisco on a number of levels — one of which is a need to move quickly with a recrafted shipyard and Candlestick project in time to meet the 49ers expressed need for a new stadium by 2012.

“They had already spent a year and more than $1 million on Candlestick,” Cohen said of Lennar, noting that before the 49ers abandoned their own development plans for Candlestick, they were partnering with the company for the housing around a stadium.

“We didn’t want to start over because we are on a remarkably quick timeline, so they were the right one,” Cohen said.

But the control Lennar now holds over the city’s development future also would seem to increase its leverage with San Francisco in negotiations and renegotiations at the shipyard, Treasure Island and Candlestick.

UCLA real estate Professor Eric Sussman cautioned that the city may find it difficult to hold Lennar to its promises and that Lennar’s desire to make money inevitably will conflict at times with the city’s social goals.

“Look, there are always going to be cost overruns and contingencies, and the developer is going to say, ‘it’s out of our hands,’ ” Sussman said. “That’s probably magnified in big projects and multiple simultaneous projects with the same developer.”

Steve Meyers, a lawyer who represents redevelopment agencies throughout California, said that ideally a city is protected by the contract it signs with a developer. The reality is more complicated, he said, because officials find it hard to get tough on one project if they’re depending on the same company to deliver on other projects as well.

“It becomes more difficult to deal with a single operator if you’ve got an established relationship that you know involves multiple projects over a long period of time,” Meyers said.

Critics have said tension between Lennar’s profits and the public good already has surfaced at the shipyard.

In October, the Redevelopment Commission overseeing the project let Lennar adjust the housing mix planned for the upland segment, referred to as the Hilltop, in a way some observers say will make the community less affordable.

The company was allowed to convert plans to build 400 for-rent apartments and instead make them for-sale condominiums after arguing that construction costs had risen and without the change the firm wouldn’t make a profit.

Newsom administration and Lennar officials contend economic diversity is still being protected because some properties will be sold at below-market prices and the Redevelopment Agency is developing some Hilltop apartments to be rented at affordable rates.

Protecting the public interest goes beyond matters of dollars and cents.

In July, the city Health Department repeatedly cited Lennar for failing to keep track of its subcontractors who were not monitoring asbestos-laden dust created by Hilltop grading.

“Until about four months ago, you would stand on the hill next to the shipyard and see a huge cloud of dust, and you’d say ‘come on, you’ve got to be kidding me,’ ” said Melita Rines who lives across the street from the shipyard and is chairwoman of the India Basin Neighborhood Association.

The dust has become the subject of a lawsuit filed against Lennar. Company employees, who filed the suit in San Francisco Superior Court in March, say the company violated state law by retaliating against them for raising questions about dust problems at the construction site.

The employees also said they were victims of racial discrimination in the workplace. They are seeking unspecified damages. Lennar has said the allegations in the lawsuit are false.

According to the city, the fact that the dust problem was recognized and resolved means the shipyard project’s rigorous environmental standards were enforced and worked.

Relative financial strength

The day after the Newsom administration unveiled its proposed combined shipyard-Candlestick redevelopment, Lennar announced that its earnings had dropped 73 percent in the first quarter of 2007. That followed poor results in the previous quarter.

The short-term economic woes reflected a national housing-construction industry reeling from broad economic downturn — one that has caused other builders to walk away from a big Bay Area redevelopment deal.

In September, a partnership called Alameda Community Partners, which included Centex Homes and Shea Homes, abandoned plans to develop the former Alameda Naval Air Station, citing the downturn and the Navy’s $108.5 million asking price for the property.

But Wall Street analysts interviewed by The Chronicle insisted that Lennar is different — and the company’s ability, along with Catellus, to step in last week and snap up the Navy base in Alameda is evidence of that.

Although the company’s earnings tumbled from $1.58 a share in the first quarter of 2006 to 43 cents a share in 2007, the analysts said, Lennar is doing the right things to survive and is expected to stay in long-term projects in the Bay Area because they have such high profit potential.

“They have a strong balance sheet, and they aren’t going anywhere,” said Jeremy Pinchot, an analyst with Monness Crespi Hardt & Co. in New York.

Pinchot said few national homebuilders can handle mixed-used developments the scale of Treasure Island or the shipyard. Lennar can do so because it has a lot of capital socked away and long ago developed expertise in both homebuilding and other kinds of commercial development.

Cohen, Newsom’s point man on its dealings with Lennar, acknowledged that the city is placing a lot of land in Lennar’s hands but said the company has enough money and expertise to handle it.

He also said there is another way to look the relationship — one that suggests City Hall will continue to hold plenty of clout.

“They have agreed to invest hundreds of millions of dollars to create the infrastructure on these projects; the city couldn’t do that, nor can most other developers,” Cohen said. “The city has more leverage the more Lennar is invested … it’s harder for them to walk away.”

E-mail Robert Selna at rselna@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/10/MNGMEP5Q1V1.DTL

This article appeared on page A - 1 of the San Francisco Chronicle

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City Council puts off decision on proposal to restrict public displays

Steve Rubenstein, Chronicle Staff Writer; Tuesday, April 10, 2007

The Lafayette City Council took nearly three hours on Monday to decide that it couldn’t decide how many signs is too many.

The panel also couldn’t decide just how its proposed ordinance to restrict public displays like the controversial anti-Iraq war crosses near the BART station ought to apply to political signs, flags and holiday Santas.

In the end, the City Council simply put off deciding on the proposed limit of four signs per display on private property.

 

“The number of permitted signs is probably over-restrictive,” said Mayor Carol Federighi. “Twenty seems excessive, I’d say 12.”

Those numbers, however, dwarf the 3,200 crosses currently standing alongside Highway 24.

More than two dozen people streamed into the packed council chambers to voice their views before a crowd of 150. Speakers included parents who have lost children in the war and uniformed veterans, disgruntled homeowners, a fire battalion chief for the county and several attorneys.

Several of the residents faulted the display based on the fire hazard they said it posed. Contra Costa County Fire Battalion Chief Henry Warren said the display was not a fire threat by itself, as a roadside spark that would ignite the grass would not be enough to set a wooden cross on fire.

The council is considering an ordinance to limit future signs but would not apply to the crosses. The council is still considering whether to negotiate a limit to the expansion of the cross display.

Some residents told the council the display was offensive; others said they found it a moving tribute to fallen veterans.

Jeff Heaton, an organizer of the display, told the council that the “city needs to allow our display as previously planned. The right of free speech is paramount.” He said the display of crosses “is unsettling, and rightfully so.”

After the speakers, the council seemed to agree that the proposed language limiting signs to four was too harsh. “All of us are groping for an answer — I would rather punt for a little bit,” said Councilman Donald Tatzin.

Another councilman, Carl Anduri, said he thought that proposed number of four was too few, given his own wife’s political leanings.

“My wife will put up signs for three other candidates,” he said, speaking of the upcoming City Council election. “This is a very difficult balancing act.”

He said 20 signs might be enough, another council member said 15 to 20 would be sufficient, and still another said a property might have 12 permanent signs and eight temporary signs.

The council directed the city staff to rethink the proposed language and agreed to revisit the matter in May.

They were also presented with a three-page ACLU letter that concluded: “It is our view that the restrictions under consideration would violate the free speech rights of Lafayette residents. … We request that you reconsider how your worthy goals of preserving neighborhood aesthetics and traffic safety can be realized without compromising fundamental freedoms.”

E-mail Steve Rubenstein at srubenstein@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/10/BAG0MP5QGF1.DTL

This article appeared on page D - 5 of the San Francisco Chronicle

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Instant Urbanism

NEW URBAN CENTERS TAKE ON A STAGE-SET FEEL IN BAY AREA

John King, Chronicle Urban Design Writer; Monday, April 9, 2007; Part 2

There’s a disconnect between the way that an increasing number of Bay Area suburbanites would like to live, and the buildings that we see as a result.

These people crave a sense that they’re part of the action and a lifestyle that is at once convenient and cosmopolitan. They want easy access to districts that offer diversity and surprise, where shops and housing and civic activities are all close by.

Until recently, the only places that met this description were neighborhoods in San Francisco, Oakland and a handful of smaller Bay Area downtowns. But that’s changing fast — suburbs throughout the region are home to projects that claim to create urbane oases amid the sprawl of shopping centers and detached homes.

 

So far, though, the buildings that accompany the hype are more branding exercises than architecture. They wear old-time masks that treat urbanism as a gimmick, a theatrical blast from the past. A changing society gets looks that are frozen in time.

The popularity of this type of growth shows there’s room in the suburbs for density, for buildings that climb and fit snugly together. It also shows that in terms of architecture and urban design, there’s a lot more to be done.

The Bay Area has no single project as ambitious as Belmar, a 100-acre mall site being reborn as 22 blocks of a suburb outside Denver, or the redevelopment of Denver’s Stapleton airport into a 4,700-acre district modeled along traditional neighborhood lines.

Instead, smaller projects fill in the region’s blanks. But the rationale is the same — a combination of need and desire.

Both forces are at work in Petaluma, a city of 55,000 in southern Sonoma County, where a long-established downtown is being redefined.

While most Petaluma neighborhoods consist of detached houses cloaked in shrubbery and trees, the downtown is shaped by the city’s past as a commercial and agricultural hub. Ornate cast-iron landmarks survived the 1906 earthquake; gaunt metal sheds along the Petaluma River still store building materials.

You’ll now find something else downtown: the Theatre District, six blocks of buildings near the river that echo the scale and appearance of their neighbors while stacking apartments amid restaurants, offices and shops.

In all, 430 housing units have been built or approved downtown since 2003, when the City Council approved a plan to steer growth toward the city’s center. The plan came five years after a vote where residents decreed that Petaluma could no longer allow subdivisions on adjacent farmland.

“Since we can’t grow out, we can’t do sprawl,” explained City Manager Mike Bierman. “Convincing developers there was a market for downtown apartments took time, but the market has changed. We’re getting a much more urban growth now.”

It’s good growth, too.

The project fills a long-empty corner of downtown while adding a riverfront walkway that widens to include a handsome plaza with grass and trees. And while Theatre District rents start at $1,350 a month for studios, the city reserved a prominent block nearby for Downtown River Apartments — 81 units for low-income households.

As for the 12-screen cinema, it’s there by popular demand — a well-publicized lobbying effort by seven teenage girls who wanted more to do downtown.

The architecture tries to build on downtown’s strengths by echoing what’s around it. Riverfront apartments near the old sheds wear corrugated metal. The cinema’s Art Deco look harks back to storefronts a few blocks away.

The most obvious example of this is Basin Street Landing, which fills the block between the cinema and the riverfront plaza. It’s designed to look like seven buildings of varied style and age. One false front resembles a warehouse. Another is modeled on a 1930s bank.

All of which is respectful — to a fault.

This kind of mock-historic veneer is commonplace today, but in a genuinely historic setting such as downtown Petaluma, it just seems absurd.

To understand why, look no farther than the corner of the Theatre District that isn’t new: a quartet of single-story structures built between 1912 and 1930, then fused into an automobile showroom. Now they contain storefronts and the innards of the cinema.

There’s nothing elaborate about these masonry structures, but they’ve got character to spare. Each sturdy brick has a story of its own; the repairs made over time only add to the weathered allure. The thick walls show the structural heft that helped these buildings to endure.

By contrast, the facades of Basin Street Landing have all the depth of fabric glued onto plywood. One quick glance is enough to see they’re fake.

Cities insist on this sort of deference all the time. It’s politically and visually safe. But the result in Petaluma shows how one-dimensional the result can be.


Where Petaluma’s Theatre District takes cues from the neighbors to fill in the blanks, Santana Row in San Jose goes to the other extreme. It creates a new district from scratch and treats urbanism as ambiance.

Not that this 42-acre site in the Bay Area’s most populous city has much to draw on. The only recognizable thing nearby is the Winchester Mystery House. There are tile-roofed townhouses to the east, Westfield Valley Fair mall to the north and traffic on all sides.

All that disappears once you enter Santana Row’s three tall blocks — a color-saturated cross between old-time New York and the townscape from Disneyland’s “Pirates of the Caribbean.”

Each block consists of a single broad structure that’s four to six stories high, with glassy storefronts topped by bright facades. The columns of one building are adorned with garlic castings. Another has walls decorated with metalwork scavenged from Tunisia.

The southernmost block widens to allow a landscaped median supposedly modeled on Las Ramblas, the famous shopping street in Barcelona. Inside that median you’ll find a small 18th century chapel shipped in pieces from France and then reassembled. The chapel’s neighbor? A tequila bar.

It’s no shock to learn Robin Leach of “Lifestyles of the Rich and Famous” hosted the 2005 lighting of Santana Row’s Christmas tree. Here’s what is harder to believe: When Santana Row opened in 2002, one executive for the developer, Federal Realty Investment Trust, billed it as “perhaps a new urban paradigm for America.” Another explained, “We’re trying to create an urban district like Greenwich Village, like SoHo.”

While the retail scene never hit the upscale heights Federal aimed for, there’s definitely a market for the rest of the show. Patrons fill the five spas and the 20 restaurants and bars. As for the 501 residential units on upper floors, when 219 were converted to condominiums last year, they sold for an average price of $700,000. Federal now is negotiating with the city to add 12-story residential towers to the mix.

“It’s all about the experience, the environment,” said Fred Walters, who oversees Santana Row for Federal. He describes the market for his turf as “modern urban, younger couples, working professionals … people who want an urban experience, like in San Francisco, but they also want to be close to work.”

The fact that restaurants are hopping and condos are selling shows that Santana Row strikes a chord. If most Americans still prefer single-family homes in quiet settings, others are eager to trade isolated quiet for concentrated buzz.

But this isn’t a neighborhood, and it’s certainly not “a new urban paradigm.” Santana Row is a world unto itself — a hopped-up blend of shopping center and entertainment zone with housing on top and free parking in back.


To see what’s missing at Santana Row, head back north past Petaluma to Windsor — the Bay Area’s most intriguing example of large-scale place-making, and its most frustrating.

By the time this residential enclave of 25,000 incorporated in 1992, the terrain was defined by shopping centers and wide driveways. That’s still the case on the east side of Highway 101. But visitors who exit onto Windsor River Road and head west discover something much different. The brand-new downtown looks like a storybook village pressed from a mold.

Three-story-high old-fashioned buildings frame two sides of Windsor’s large town green, line two blocks behind it and are spreading south across Windsor River Road. The structure closest to the freeway sports a whimsical 60-foot-high clock tower.

The developer, Orrin Thiessen, is the architect as well.

“Windsor didn’t have that much in the past, so I’d look at pictures of Healdsburg and Santa Rosa,” Thiessen said. “I’d take an old photograph of a building I liked and make it fit what I want.”

That’s easy to believe. Everything is fuzzy and familiar, part Old West and part Thomas Kinkade painting. Like Santana Row, the buildings are more about atmosphere than architecture. Like Petaluma, the details are pasted on.

But as cartoonish as the architecture might be, Windsor’s center functions successfully as a civic and cultural crossroads.

The green includes a stand of mature oaks and features such offerings as live music and a farmers’ market throughout the summer. Across Windsor Road from the green, a creek threads underneath a footbridge that connects a batch of Thiessen-designed lofts to 41 family apartments developed by the nonprofit Burbank Housing.

Instead of chains, storefronts contain local retailers, including two bookstores, a map shop and a natural pharmacy. The busiest may be Powell’s Sweet Shop, where schoolchildren linger on weekday afternoons.

Windsor opened the green in 2001 after purchasing land next to the town’s library and gymnasium. It then invited developers to purchase surplus land for mixed-use development with housing above offices and shops. Thiessen had done a small project along these lines in nearby Graton and wanted to do it again.

Once that land was filled, he kept going, working at an incremental scale that reduced the size of his construction loans. He’s finished 17 buildings and now is studying slides of European sidewalk scenes for a boutique hotel he has in the works.

Thiessen doesn’t apologize for how his buildings look. “A lot of people love it. A few people want to say it looks like Disneyland. Well, what’s wrong with Disneyland?”

But architectural deja vu isn’t why the downtown succeeds.

Downtown Windsor works because it serves different people in different ways. It’s growing up without overwhelming the small-town feel. You can run errands, do city business, meet friends or just hang out.

Far-sighted city planning laid the foundation. The old-time atmosphere is a distraction more than anything else.


A cynic would look at projects like these and dismiss the lot. They’re not Paris in the 1920s, or North Beach in 1950s, or SoHo in the 1970s.

Cue up the intellectual scorn.

But the fact is that American expectations are being redefined — and the suburban landscape where most people live is following suit.

This is, after all, a world where people want what they want when they want: music on their iPod, old movies or television shows on their DVD player, newspapers via the Internet.

Why shouldn’t urbanism be available on demand as well?

The thing is, there’s a difference between buildings and megabytes. One is ephemeral, the other isn’t. You can watch a grainy snippet on YouTube and move on, but a poorly designed building stays right where it is, looking more faded and false by the day.

The suburbia of the future will be more dense than today, with a more varied set of options. And that’s a good thing: There’s a limit to how far a region’s population should sprawl, or how much land should be consumed.

Fighting change is absurd. Sneering at it is equally absurd.

What we can ask for, though, is planning and architecture that looks to the future even as it draws on the past. This won’t be easy — but it’s what the Bay Area deserves.


Newburbs in the Bay Area

An ever-growing number of Bay Area suburbs are sprouting city-type downtowns and districts. Here are 10 examples - and it isn’t an exhaustive list.

 

1 COTATI: Taking cues from Windsor, this small Sonoma County town is working on plans for a zone of three-story buildings along the Old Redwood Highway. First in line: Windsor developer Orrin Thiessen has purchased 14 acres in the center of town.

2 NOVATO: The northernmost city in growth-wary Marin County allows buildings as high as 45 feet downtown if they include housing above retail and are of “exceptional design.” Already approved is a Whole Foods Market topped by 125 townhouses.

3 HERCULES: The region’s most elaborate experiment in New Urbanism is in this suburb north of Richmond, where 620 homes have ample porches and traditional flair. Next comes a waterfront district with a ferry terminal and 1,200 housing units.

4 EMERYVILLE: This old industrial hub is now a hip address with companies such as Pixar and a sea of contemporary townhomes. It also has a Santana Rowlike concoction called Bay Street; Phase 2 could include a 25-story residential tower.

5 WALNUT CREEK: It’s old news that downtown Walnut Creek is a shopping hub. The fresh twist is modern-looking housing with San Francisco prices; in the 181-unit Mercer that opens this fall, some condominiums are $1.1 million.

6 EAST DUBLIN: At the end of the BART line in eastern Alameda County, an ambitious transit center is rising that includes Camellia Place - 112 apartments for low-income residents - and the Elan complex with its marketing slogan “these aren’t your parents’ suburbs.”

7 SAN MATEO: Bay Meadows’ old training field now contains tightly packed homes, neighborhood parks and even lofts. The track itself closes this year - to be followed by 1,250 housing units along with commercial space and 15 acres of open space.

8 REDWOOD CITY: A new 20-screen multiplex highlights ambitious efforts to turn this city of 81,000 into San Mateo County’s downtown of choice. There’s more to come: new zoning allows 12-story mixed-use buildings along El Camino Real.

9 HAYWARD: More than 700 homes and a new City Hall have been built near the BART station since the city changed its downtown development rules in 1992; an additional 850 are slated for a former cannery site to the west.

10 UNION CITY: A developer has proposed four residential towers next to the BART station in this former industrial center - the centerpiece of a transformation that would place 1,000 housing units within a five-minute walk of BART.

 

Sources: Chronicle research, ESRI, TeleAtlas, USGS

The Chronicle

E-mail John King at jking@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle

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Is That Finally the Sound of a 2nd Ave. Subway?

Neal Boenzi/The New York Times

Mayor John V. Lindsay swung his pickax at a subway groundbreaking in 1972. Looking on, from left, were Percy E. Sutton, the Manhattan borough president; Senator Jacob K. Javits; John A. Volpe, United States secretary of transportation; and Gov. Nelson A. Rockefeller.

By WILLIAM NEUMAN; Published: April 9, 2007

The neckties are wide and the sideburns long, the pickaxes gleam in the sunlight. The governor thanks the president for providing money. The mayor jokes that “whatever is said about this project in the years to come, certainly no one can say that the city acted rashly or without due deliberation.”

A Groundbreaking History

The governor swings his pickax, but the pavement is too hard. A jackhammer is brought in to loosen things up. Now the governor and the mayor lay to with gusto.

The Second Avenue subway is born.

Or so it seemed at the time.

 

The sideburns were long and the neckties wide because it was 1972. The president was Nixon. The governor was Rockefeller. The mayor was Lindsay. And nearly 35 years later, no trains have ever run under Second Avenue.

But the line has had at least three groundbreakings.

On Thursday it will get another one.

Gov. Eliot Spitzer and a host of dignitaries will descend through a sidewalk hatch at Second Avenue and 102nd Street, a block south of the spot where Gov. Nelson A. Rockefeller and Mayor John V. Lindsay held a groundbreaking in October 1972. They will go into a never-used section of a three-decade old subway tunnel, stretching from 105th Street to 99th Street. The governor will give a speech, hoist a pickax and take a few cracks at the concrete wall, symbolically beginning the construction where it left off in the 1970s.

“There used to be a saying in New York, ‘I should live so long,’ ” said William J. Ronan, the first chairman of the Metropolitan Transportation Authority, who presided over the groundbreaking in 1972.

“Well I sure hope they’ll do it this time because time is moving on,” Dr. Ronan, 94, who lives in Florida, said. “And of course it’s going to cost a fortune, more than back when we were going to do it. It was expensive enough then.”

Several factors actually suggest that this time the outcome may be different. The financing for the $3.8 billion project appears more certain than in the past, including an anticipated federal commitment to cover about a third of the cost.

And the plan is more measured. The goal is to build a first section of the subway with stops along Second Avenue at 96th, 86th and 72nd Streets and at 63rd Street and Lexington Avenue. It is intended to operate as an extension of the Q line and is expected to open in 2013. Once further financing is secured, later phases of construction will extend the line north to 125th Street and south to Lower Manhattan.

It was September 1929 when the city formally announced plans to build the Second Avenue subway, running the length of the East Side and into the Bronx. The cost of digging the Manhattan portion of the tunnel was estimated at $99 million, although there would be additional expenses, including the cost of real estate and equipment.

The Second Avenue plans were part of an ambitious expansion to add a 100-mile network with an overall estimated cost of about $800 million. But within a few years, during the Great Depression, planning for the new line came to a halt.

The plans were revived during World War II. In 1951, voters approved a measure that allowed the city to raise $500 million for transit improvements, with the expectation that most of it would go to build the new line. But the money was used to fix up the existing system. No work was performed on Second Avenue.

The Metropolitan Transportation Authority took over the city’s subway system in 1968. Dr. Ronan began championing an ambitious range of projects, including the Second Avenue subway, from Whitehall Street to 138th Street in the Bronx. In 1968 the subway line bore a remarkably modest price tag of $335 million, but by the time of the groundbreaking in 1972, it had risen to $1 billion.

That ceremony was preserved in an 8 millimeter film shot by Robert A. Olmsted, who was a top planner at the transportation authority.

In the film, the sun is shining brightly, although some of the men are wearing coats and fedoras. There is a holiday air, and the mayor and the governor are all smiles. The two have been feuding for years, but on this day, they manage to keep their pickaxes aimed at the street.

“We were optimistic,” recalled Mr. Olmsted, who is 82. “It looked like we were going to get something done.”

Dr. Ronan recalled feeling that, “at long last, we’re going to have the Second Avenue subway.”

“It was a great day when they got to the groundbreaking,” he said. “Everybody was congratulating everybody. It got good play. It should have.”

Sidney J. Frigand, who was a spokesman at the authority in 1972, said he was more skeptical, especially about how the project would be financed. “There were a lot of flaws that had to be ironed out, and I sensed that it wouldn’t proceed as rapidly as we hoped,” he said.

Last week, a reporter described the film to Mr. Frigand, including the portion where the governor’s pickax failed to make the desired impact and the jackhammer had to be called in. “That’s the perils of groundbreaking,” Mr. Frigand, 81, said.

In October 1973, a year after that ceremony, another groundbreaking was held for the start of work on the downtown section, at Canal Street. Mayor Lindsay had gone bareheaded the previous year but now, according to a report in The New York Times, he wore a hard hat and talked ominously about “brinksmanship,” suggesting the city could not afford to keep building the subway without a large infusion of federal money. The cost had reached $1.3 billion.

This time, the pavement had been broken up in advance. After the speeches, The Times reported, the mayor attacked the loosened paving blocks with his pick.

In July 1974, Mayor Abraham D. Beame attended a groundbreaking at Second Avenue and Second Street. He went at the pavement with a jackhammer. The plan was to build the subway piecemeal, contracting out short, disconnected sections.

A year later the city was near bankruptcy; Mayor Beame called a halt to further construction. The stretch of tunnel he broke ground on was never built, although three other sections were finished and sealed. They included the two that Mayor Lindsay inaugurated, from 99th Street to 105th Street and Canal Street to Chatham Square, and a section from 110th Street to 120th Street.

Edward I. Koch was a congressman in 1972, and he appears in the film of the groundbreaking, although he said last week that he did not remember the event.

“I have no recollection of that day,” said Mr. Koch, who became mayor in 1978. “I do have a recollection that the Second Avenue subway — the first shovel went into the ground when God created the earth.”

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