Insurance Plan Seeks to Maintain, Expand Coverage in Wildfire Zones
California's insurance commissioner announced a regulatory plan, supported by the industry, allowing insurers to incorporate future climate risks into their pricing models and mandating increased coverage in fire-prone areas. This follows decisions by major insurers, including State Farm General Insurance and Allstate, to stop issuing new homeowner policies or renewing existing ones in the wildfire-affected state. Insurers argued that California's current rules limiting predictive models and rate increases made coverage too expensive. The new plan, yet to be formally proposed, would enable insurers to use forward-looking climate data, pending commissioner approval, potentially leading to higher premiums statewide. As part of the agreement, insurers committed to covering at least 85% of their statewide market share in high-risk areas. The shrinking insurance market has left many California homeowners without property insurance or resorting to the state-mandated insurer of last resort. The proposal, aiming to address the insurance crisis, will undergo a rule-making process and workshops, with a targeted completion by December 2024. Consumer advocates express concerns about potential premium increases.
Fresno Property Tax Exemption Could Affect 12,000 Future Units
The Fresno City Council granted a key developer exemption for his planned 71-home development from a community facilities district. The tax aimed to cover a shortfall in police and fire services for new developments, attributed to the expiration of a property tax-sharing agreement with Fresno County in 2020. The developer argued against double-taxation without added benefits for residents. The council, in a 4-3 vote, approved measures exempting the developer's project and potentially impacting 10,000 future single-family homes and 2,000 multi-family units. The decision leaves the city facing a potential annual shortfall of $1.8 million in property taxes, with concerns raised about subsidization by homeowners throughout the city. Despite differing opinions on the financial impact, the council members emphasized the need for negotiations with Fresno County for a more equitable tax-sharing agreement.
Los Angeles Controller Calls for Aggressive Climate Action
Los Angeles City Controller Kenneth Mejia is calling for an update to the city's "Green New Deal," expressing concerns that the 2019 climate plan lacks transparency and measurable outcomes. In a recent report, Mejia criticized the plan for its vague goals and insufficient metrics in the most recent progress report. The report emphasizes the need for clear, measurable outcomes and calls for bolder targets in renewable energy, housing, and reducing car usage. Mejia's analysis aims to work with city departments and the public to enhance the plan, acknowledging the urgency to address climate change within the next seven to ten years. While some goals, like sourcing 70% of the city's water locally by 2035, are well-constructed, others lack specificity. Mejia's team recommends a continued focus on transit-oriented development and real-time tracking for achieving renewable energy goals, emphasizing Los Angeles as a potential model for other cities in addressing climate change.
San Francisco Launches Program to Revive Downtown Storefronts
San Francisco's Vacant to Vibrant program, addressing a worrying number of vacant storefronts and other street-level commercial spaces post-pandemic, officially launched with the first cohort featuring 17 businesses. Among these are Devil's Teeth Baking Co. and Green Apple Books, housed in a previously deserted 500-square-foot space at One Embarcadero Center. The program aims to revive downtown areas impacted by a 34.7% office vacancy rate and supports small businesses with grants up to $8,000 for three months, while property owners receive $5,000. The temporary nature of the pop-ups allows property owners the option for longer-term arrangements, fostering potential permanent relationships. City leaders anticipate the program will add variety and interest to the downtown experience, encouraging the revitalization of the area. (See related CP&DR coverage.)
CP&DR Coverage: Supreme Court Takes on Exactions
The U.S. Supreme Court has agreed to take a development fee case from El Dorado County that the California Supreme Court declined to hear. It’s the most important Supreme Court land use case to come out of California since the court decided both the Nollan and First English cases in 1987. The case will test the question of whether the “rational nexus” and “rough proportionality” tests of the so-called Nollan/Dolan line of cases can be overridden by state legislation – and could narrow the ability of local governments in California to impose impact fees on developers. It’s even possible that the ruling could eliminate inclusionary zoning for housing.
Quick Hits & Updates
Oakland experienced the largest decline in one-bedroom rental prices among the top 100 U.S. cities, with a 7.2% drop in September year-over-year, reaching a median of $1,430—the lowest since at least 2017. San Francisco's metropolitan area saw a 4.1% decrease in rents, falling from $1,960 to $1,880, and the national rental market is showing a similar trend with a 1.2% decline.
The Midway Rising project, selected to redevelop the 48-acre Sports Arena site in the Midway District of San Diego, will no longer include 250 planned residential units for middle-income housing and a 200-room hotel. The changes were revealed during a San Diego City Council meeting, with the development group citing financial infeasibility for the middle-income housing due to the unavailability of certain economic incentives and the current high-interest rates, while the hotel plans were affected by the discovery of an 8-foot sewage line requiring a setback, leading to the reconfiguration of the project.
City officials and residents in Costa Mesa oppose the state's plan to repurpose part of the Fairview Developmental Center into a regional emergency operations center, arguing that the property is crucial for much-needed housing. The proposed Southern Region Emergency Operations Center faces resistance as residents voice concerns about its impact on housing development, while state officials consider alternatives, and the public comment period for the project's draft Environmental Impact Report remains open until October 20.
San Francisco officials are suing Chinatown property owners, alleging inhumane living conditions and years of ignoring tenant complaints and code violation notices. The lawsuit targets three hotels, accusing owners and their LLCs of creating a public nuisance, endangering health and safety and violating state housing law. The landlords face potential penalties and legal fees if the city prevails in court.
The San Diego City Council's Land Use and Housing Committee discussed a response to a Grand Jury report revealing a regional housing shortage, with the city noting it has implemented most recommendations but rejecting the suggestion to support legislation for a county agency dedicated to raising housing revenue. The proposed response, pending full city council approval, must be submitted to the San Diego County Superior Court by Nov. 6.
The California Air Resources Board's plan to achieve carbon neutrality and reduce greenhouse gas emissions by 85% below 1990 levels by 2045 emphasizes the need to address transportation, the largest source of emissions. However, an analysis by the Natural Resources Defense Council reveals a disconnect between the state's transportation spending and climate goals, with less than one-fifth of the budget allocated to projects reducing vehicle miles traveled, highlighting the urgency for aligning investments with decarbonization priorities.
A sizeable majority of residents continue to avoid the Bay Area's major urban centers, including San Francisco, Oakland and San Jose, due to concerns about crime, homelessness and a lack of clear identity and attractions. A poll sponsored by the Bay Area News Group and Joint Venture Silicon Valley reveals that 83% of respondents rarely or never visited downtown Oakland, 79% avoided downtown San Jose, and 70% stayed away from downtown San Francisco in the past year. The findings indicate serious challenges for the region's economic future and highlight residents' growing dissatisfaction and pessimism about the direction of their cities.
The Beverly Hills City Council unanimously approved an ordinance to comply with Senate Bill 9, allowing homeowners to subdivide and build new units. The city voted to limit the total size of new dwellings to 800 square feet, including basements and additional rules on accessory dwelling units will be considered by the Planning Commission in December.
The Los Angeles City Council voted 8-6 to halt a contentious hotel project in Benedict Canyon due to concerns about environmental impact and public safety, citing potential ethics violations, environmental threats and community opposition.
Metrolink is taking steps to improve its train services and frequency by investing in strategic upgrades throughout its 500-mile system. Additionally, they are planning to construct new infill stations near LA General Medical Center and the Pico Rivera community, enhancing accessibility for the San Bernardino and Orange County Lines.