Fall Real Estate 2002

Publication Date: Wednesday, October 16, 2002

The razer's edge
Thinking of buying a 'tear down' or a home that requires major remodeling?

by Susan Golovin

Have you had the experience of passing by an empty lot and trying to remember the house that once existed there? Our neighborhoods are changing -- largely because more and more people are choosing to either tear down an existing home or remodel more than 50 percent of a home, thus making it subject to the same regulations as new construction.

When contemplating doing a tear down or major remodel, homeowners need to consider a whole raft of ordinances, dealing with setbacks, single-story overlays - even trees.

"It's Econ 101," said architect John Northway of Stoeker and Northway Architects in Palo Alto, who co-chaired the committee that devised the R-1 regulations, the zoning ordinances that cover single-family residences in Palo Alto.

"Because of the price of land, people are looking for a house that is fully built out, that takes advantage of the total floor area you can build in relation to the size of the lot," he added.

Those looking for property with the potential of tear down or major remodeling have a number of things to consider: building codes, zoning codes, needs and budget. Most architects say they can be most effective if they are involved with these projects "on the ground floor."

Northway advises that the first thing a prospective buyer should do is become familiar with all the zoning regulations and entitlements. "Ask them (in the planning department) about your neighborhood. They are very knowledgeable and helpful," he said.

"Most basically, you need to know the size of the lot and the total size of the house you can build there," he said. "You also need to know the size of the existing structure because sometimes it is larger than what current zoning would allow -- that is, if you take it down, you cannot build as large a home.

"This also applies to setbacks (the distance the structure must be from property lines). Sometimes the current home is infringing on current setbacks. A new home will have to comply with current law," he added.

"You don't want to buy a home that is in good shape and then spend $250 per square foot adding on to it thereby pricing yourself out of the market," said Palo Alto architect Tony Carrasco of Carrasco and Associates. "Resale value is a factor."

"Developers always tear down rather than remodel because it's cheaper," said Northway, but that depends on what one starts with and what one wants to achieve.

In Palo Alto single-story overlay zones are sometimes a factor. Whole swaths of the city, notably the Eichler neighborhoods, limit construction to one story. The regulations in these areas do allow for a larger footprint, but this of course decreases the size of one's yard.

In fact, building a second story anywhere in Palo Alto now requires an Individual Review Process. "Issues such as privacy, sunlight and compatibility with the neighborhood are considered," explained Carrasco. "If you are remodeling, you probably can't remodel a second story to its fullest extent because the new roof will have to be pitched lower to allow more light for the neighbors."

Owners can expect this review process to take a minimum of 30 to 40 days, and, if a hearing is requested, up to two months. Appeals can add another layer of complexity. And, of course, there are fees: $1,000 for a new two-story house or a new second story, and $350 for an addition to an existing second story (that exceeds 150 square feet).

In addition, there are other fees to consider: A building permit fee, based on the value of the home, can easily come to several thousand dollars. Also, Palo Alto school impact fees are assessed at $2.14 per square foot of net new area. Property taxes are determined by the county tax assessor.

"Better check out the tree preservation ordinance," Northway said. "It can be more restrictive than the zoning ordinances." Said rules apply mostly to heritage redwoods and coast live or valley oaks and provide that structures must be a certain distance from their drip lines. This can have a major impact on the placement of the home on the lot.

"In cases where the trees are close to the fence, you even need to consider the trees on your neighbor's property," said Palo Alto architect John Barton.

Many people like the idea of a flag lot, where the major part of the lot is set back from the street with a long driveway (the "pole") leading to the street. However, the pole doesn't count in the total calculation of area -- and, in Palo Alto, in order to preserve neighbors' privacy, you cannot build a two story home on a flag lot.

Similarly, if your lot is substandard in size as defined in the regulations, you must limit to one story.

"You need to know if you are in a seismic activity zone," said Barton. "Large parts of Palo Alto may be susceptible to liquefaction in the event of an earthquake. This will affect not only the seismic design of the home, but also insurance costs."

More common is the knowledge of the flood hazard zones in Palo Alto and parts of Menlo Park. "New construction in these areas requires that you be above the base flood elevation," said Barton. "You cannot build a basement. You also need to consider that if the house is elevated it will affect the maximum height -- you don't get extra. And, in some cases, you need to consider what your elevated first floor will be looking on to, just as you would with a two-story." Added insurance costs also apply.

"Most of the utility connections (gas, water, etc.) are probably undersized," said Barton. "It helps to think of that early on."

Indeed, Northway said, "Allow two and a half to three years for construction if you are building a large (6,000-square-foot) home. It is an extremely complex undertaking involving high-tech air conditioning, lighting, wiring for home-theater equipment and the like."

For less ambitious projects, both Carrasco and Barton say to allow for 12 to 18 months. "Remember that the permit process can take up to eight months in Palo Alto," added Barton.

In Palo Alto you also have to be aware of historic residences, structures built before 1940 or those that are on the city's Historic Inventory. Such residences may be subject to special regulations and extensive remodeling or deconstruction may require a hearing.

On a very practical note, Barton said, "You have to live somewhere. Be sure to allow for rent or mortgage payments for your present situation, as well as for the payments on the new purchase. It can get pretty expensive."

Many owners have tried to donate their tear downs. This is yet another phenomena in the Palo Alto area: whole houses being relocated. "The cost of moving a house is quite high, and you have to consider such things as compatibility with a new neighborhood, and lot orientation," said Carrasco.

Not to mention all those regulations...