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Historic homes $Millions risk to City

Original post made by Mike Forster, Evergreen Park, on Sep 1, 2023

Today, in the 2020s, a historic preservation designation without homeowner approval might expose our City to hundreds of millions of dollars in eminent domain costs.

California SB9 has established a new floor for the potential value of homes in California. Any homeowner can split a lot, build up to two homes on each lot, and gain financially. Any City actions without homeowner approval that would prevent the homeowner from doing so might require the City to provide just compensation for that lost potential gain.

In Palo Alto, a back-of-the-envelope calculation would show that the lost potential value could be at least $1M and $2M per property. For 148 homes, the City compensation required by our U.S. Constitution could be at least $148M, and likely higher.

The City should investigate this potential financial risk thoroughly before proceeding.

Comments (5)

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 1, 2023 at 1:37 pm

Online Name is a registered user.

It might also consider the costs and likely settlements from homeowner lawsuits for this flawed anti-democratic move.

I'm all for historic preservation but not this nonsense where yet again the city's outreach was pathetically flawed I guess it was too hard and/or too sensible for the city and its consultants to think of searching property records by the dates when houses were built since there are so many obvious omissions of 100-yr-old homes and entire streets with gorgeous vintage homes.

But for once I'm thrilled with the incompetence of the city and their consultants. Thanks for saving so many the trauma of dealing with this.

Posted by Norman Beamer
a resident of Crescent Park
on Sep 1, 2023 at 8:57 pm

Norman Beamer is a registered user.

Classifying a home under the historic inventory is not an eminent domain issue.

Posted by MLF
a resident of Evergreen Park
on Sep 3, 2023 at 11:42 am

MLF is a registered user.

In response to Norman Beamer: My point is the following:

In the past, "Classifying a home under the historic inventory" might not have been "an eminent domain issue." However, now that the State of California has changed the laws that essentially place a new floor under the value of a home, it may have become an eminent domain issue. Here's a hypothetical example:

In Palo Alto, a 1800-sqaure-foot house on a 7,500 square foot lot in College Terrace would likely sell for about $3M. Per the new state laws and Palo Alto floor-area-ratio limits, the owner could demolish the house, split the lot, and build two 800-square foot houses on each new lot, for a total of 3,200 square feet. At about $500 per square foot, the new construction total cost would be about $1.6M.

Based on recent sales of old, small houses on small lots in College Terrace, each of those new small houses would likely sell for at least $1.5M, for a total of $6M, or a net increased value of $1.4M over the previous value of $3M plus construction costs of $1.6M.

Classifying a home under the historic inventory without the homeowner's consent would reduce the potential value of this home by $1.4M. Our US Constitution states, "nor shall private property be taken for public use, without just compensation." An historic designation very likely constitutes a "public use", and therefore the homeowner would be entitled to compensation - i.e., eminent domain.

$1.4M times 128 (or 130 or 148) possibly designated homes could make the City liable for hundreds of millions of dollars in eminent domain costs.

Posted by Jack Freeman
a resident of Menlo Park
on Sep 3, 2023 at 11:50 am

Jack Freeman is a registered user.

It shouldn't matter whether the home is 100 years old or 1 year old. The owner should be able to do whatever they want with the property because they own the property.

Personally speaking, many of these older 'Queen Anne' designs would be better served by being torn down for new housing with modern-day accoutrements.

Just preserve one or two of them and focus on building newer homes. Antiquity is overated.

Posted by Penelope Walsh
a resident of Midtown
on Sep 4, 2023 at 12:58 pm

Penelope Walsh is a registered user.

Restoring a dilapidated Queen Anne house is akin to restoring a rusted 1961 Rambler.

Unless one is planning to sell it to an outside party for an ehorbitant price, the ROI is not worth the effort or expense.

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