Last Monday, a slick four-color publication came in the mail with the moniker of
The Royce Reporter, this tax-payer funded newsletter coming from Representative Ed Royce, whose newly-configured district includes Chino Hills as of the fall 2012 elections.
When the redistricting was announced and the election pending, Royce took the opportunity to leap into the fray with the "Towers of Terror," otherwise known as the Tehachapi Renewable Transmission Project, and its eighth section comprising largely of 200-foot tall transmission towers in a narrow 40-foot wide easement owned by Southern California Edison.
Even though the congressional representative at the time was Gary Miller, soon to realize that beating Royce in the new district was impossible and who then moved to Fontana from Diamond Bar to run for election there, Royce plunged headlong into promoting the idea that the TRTP could be made into a "federal issue" by finding a link to the project via houses near the new towers and their applicability to Federal Housing Administration insured loan guidelines.
As pointed out in this blog, however, the rationale and the logic were, to put it simply, flawed. The fact was that FHA criteria for appraisers examining properties state very clearly that the houses had to be
in the easement for loans to be denied FHA insurance. While appraisers were expected to comment on the proximity to high-voltage transmission lines, and a whole lot else, and the potential effect on marketability and value, the FHA would not deny insurance in such a case.
Undaunted, Royce and Miller went ahead and scheduled an April 2012 field hearing in Chino Hills on the House Financial Services Committee, again tax-payer funded, to bring attention to the question.
In
The Royce Reporter, the representative made a point of claiming that "our hearing brought attention to the looming community disaster and helped convince the Public Utilities Commission (CPUC) to look at alternatives." While it would be expected that the newsletter would try to secure credit for Royce, it was more than a little surprising, perhaps, that almost no mention was made of the significant amount of effort expended by the grassroots community organization
Hope for the Hills, which merited one minor mention in the publication, or the City of Chino Hills and its long-running efforts to fight the project.
Moreover, right under this claim is a timeline (see image above) that very clearly states that the project was halted in October 2011 and that, in November, the CPUC ordered Edison to offer alternatives for the project other than the above-ground construction recently suspended. This was months before the vaunted hearing.
Further, Royce's involvement with this project did not appear to begin until
after the November CPUC order--this blog had a post dated 26 November 2011 noting that Royce had issued a mailer that arrived the previous day (see
here for that post) and which invited residents (and presumed future constituents) for a "meet and greet" with him at the Summit Ranch community in Carbon Canyon on 4 December.
The timeline then has a gap of nearly a year, because Royce still had to win the election, which was a foregone conclusion with Miller's exodus to the foothills and the overwhelming Republican support in the newly-demarcated district, but it does note that on 26 February 2013, "Rep. Royce contacts the CPUC in support of undergrounding [verb?] the towers," and that, two days later, the CPUC "gives the green light for Edison to being preliminary work to move the lines underground." This was written, seemingly, as if the two events were intricately connected.
As can be seen in the 28 February 2013 blog post
here, the link between Rep. Royce's contact and the decision by the CPUC, which was hardly a "green light . . . to begin preliminary work to move the lines underground," is , , , um, debatable.
Now, despite the fact that FHA appraiser guidelines specifically indicate that insured loans were only a problem for properties within an easement, this flyer highlighted an assertion made by Rep. Royce at the April 2012 hearing that, "the FHA requires an underwriter to obtain a letter from the owner of the tower noting a given dwelling as not being within the engineered fall zone of a given tower."
Yet, as noted
here, from a Housing and Urban Development (HUD) property and appraisal webinar's Frequently Asked Questions (FAQ) section, this is only a half-truth and not quite the most important half:
If the dwelling or related property improvement is located within the easement of a high voltage tower, the lender must obtain a letter from the owner or operator of the tower indicating that the dwelling and its related property improvements are not located within the tower's (engineered) fall distance in order to waive this requirement.
The emphasis here is on the first part—if the dwelling or improvement on the property
is located within the easement of a high voltage tower. The reality is, uncomfortably close as many houses are to the massive towers, none of them is actually "within the easement."
As stated above, in another HUD document pertaining to Valuation Protocol FAQs, which can be accessed
here, this is the explanation to a question about eligibility:
If a living unit is located
outside the easement then the property is eligible for FHA financing.
However, the appraiser is instructed to note and comment on the effect on
marketability resulting from the proximity to such site hazards and/or nuisances.
In this case, the second sentence is a notable one, concerning "marketability" of a property, and whether houses in close proximity to the 200-foot behemoths would be hard to sell or at least at a decent market rate.
Another major point made in the Royce mailer is that, because property values in Chino Hills declined by 17% in the year prior to the April 2012 hearing and much of which occurred while the "towers of terror" were being erected, the drop was directly attributable to the project.
Firstly, there is no way to know if the TRTP work had anything directly to do with the property value fall. While it is certainly possible that this could have been the case for houses near the looming towers, any drop in, say, Butterfield Ranch or the tracts off Chino Avenue could hardly have anything to do with the project.
Moreover, in the year since the hearing, prices in the city have risen some 11 or 12% and, again, whether a property in Vellano or Los Serranos Ranch or Laband Village has seen a growth in market value would seemingly have nothing to do with developments with the TRTP.
It is also notable that, at the April 2012 hearing (the 97-page transcript for that hearing may be accessed
here,) Bobbi Borland of the federal Housing and Urban Development office in Santa Ana testified that, in Chino Hills, "approximately 3 percent of homes have mortgages insured through FHA." Even if a higher percentage of those were near the towers, this is still a very small proportion of residences, meaning that the whole issue raised by representatives Miller and Royce was, in fact, blown out of proportion. Additionally, Borland stated that, "FHA does collect a limited amount of appraisal data but does not track valuation or home price trends to the zip code level." When it comes to risks to the agency's insured loans in areas near transmission lines, she observed that, "it is important to note that payment default may have many causes, and there is simply no easy way to identify whether a default was driven by property value declines attributed to nearby transmission lines."
When Rep. Miller questioned Borland, he asked "If a home is outside of the easement area but within the gall zone, does that have an impact on FHA's ability to loan?," she responded that FHA
insures, but does not
issue loans. Admittedly, this blogger did not make that distinction in earlier posts, but it was a little more surprising that a member of the House Financial Services Committee did not know what the FHA did with loans, even as he answered, "I understand that," when she clarified.
In any case, Borland also stated that "our guidelines state that it does not impact the FHA loan. It would be up to the individual lender," meaning that the decision to
not issue a loan to a residence near a transmission line is a private matter, not a federal one, and therefore completely outside the jurisdiction of the House Financial Services Committee.
Having said all this, Miller raised the possibility that the proximity to the towers could
possibly be a reason for an appraiser to lower the value of a house and when Borland responded (or started to) with, "I can't really comment on the lender's . . .," Miller cut her off and then she indicated that, "it was possible." The operative definition of "possible" could be interpreted myriad ways under the circumstances.
This is especially true when the discussion went into the "fall zone," it being posited that, in case of collapse, the towers would fall outward, even though they have 50' bases in concrete below ground and are, actually, designed to collapse downward. When this distinction was pointed out, however, Miller simply uttered that this made him feel much better and he turned and asked Royce if he felt the same way.
As to whether proximity to transmission lines hurt property values, Chino Hills realtor Marion Profitt stated,
while CAR does not possess statistics to show what the impact on pricing may or may not be due to a home's proximity to the power lines, I can tell you from my 20 years of experience that for some home buyers, it does matter. Just recently I took an investor to see a property that backed up to an easement, and its mere location next to that easement was enough for them to say no. However, this isn't the case for every buyer. Many have no problem living next to the power lines, but there are many buyers I have worked with who require a discounted sales price or who will refuse to buy one of the properties. I have spoken with many other realtors in Chino Hills and they have shared similar experiences to mine.
This can compared to the testimony of Fred Kreger of the California Association of Mortgage Professionals, who observed that,
through my 10 years of experience as a mortgage professional, I can safely say that the impact of high voltage transmission lines on property values and FHA eligibility has
been somewhat minimal. On a monthly basis, I originate many loans within the surrounding cities and counties, of which FHA loans serve an important role for my particular clients. I have yet to have a customer encounter difficulties with their FHA
eligibility due to high voltage power lines.
Kreger further added that,
in my experience, the appraisers will note the presence of high voltage transmission lines. However, the effect on the marketability of the home value is minimal, if any. Over years of research and study, I have concluded that although community members and homeowners have negative feelings towards high voltage power lines, their presence is apparently not given sufficient enough weight by buyers and sellers of real estate to have any consistent, material effect on market value."
And, even though Profitt expressed concern about FHA financing in Chino Hills (remember that only 3% of all residences in the city have FHA-insured morgages), Kreger stated that, "I see no problems in terms of eligibility of FHA insured mortgage programs" and the question of transmission line proximity.
The point of all this is not to take sides on the issue of whether the towers should be allowed to stay above or under ground, but to question the motivation and justification for the involvement of local representatives in the federal government in what is, truly, a state matter (this is, perhaps, more than a little ironic given that conservatives often invoke the mantra of "states rights" in so many cases of alleged federal overreach.)
Reps. Miller and Royce, angling for advantages in election campaigns in realigned congressional districts, clearly overreached in making the argument that FHA-insured loans were the entry point for their involvement and used tax-payer monies for the debatable stretch in logic.
Talk about making something a "federal issue."
