As many of you know, we on the coast live in an area of scarce resources. Over the years we’ve had many building bans because of lack of water and sewer. And no sooner does a moratorium happen than some enterprising person figures out a creative solution.
I still chuckle over the brilliant solution to the sewer moratorium in the late 1980s in which two individuals came up with a most creative answer.
Since the sewer plant couldn’t issue more permits because of capacity problems, these people figured out how to reduce the waste from homes going to the plant by retrofitting homes with low-flow toilets. For every 20 homes they did, one sewer connection would be available. And best of all was the fact that they gave new toilets to the homeowners for free. They did then sell the sewer connections to builders so homes could be built.
But it didn’t stop there. Around the same time, the Half Moon Bay/El Granada water company known as Coastside County Water District issued around 2,000 new residential water connections for $8,000 cash or $15,000 on a bond assessment. As you would expect, these connections were immediately snapped up. And once they were gone, that was it.
If anyone wanted a water connection later, they couldn’t get one from the water company. Again, creative forces were at work. What resulted was a sort of “gray market” for water connections where owners would sell their unused connections to needy buyers. The water company got a small transfer fee for doing the paperwork.
Individual owners were contacted directly by potential buyers and made a sale. As time went by, and more of these unused connections were sold, the prices shot up. Around 10 years ago, they were going for around $18,000 to $20,000. Because there are so few unused connections left in the hands of individuals, the price is now a staggering $40,000 to $45,000. But if you need water, this is the market price. And for those who cannot drill a well, this is the only game in town.
Well, with the latest new twist in the long drawn-out Beachwood saga, water connection fees may tumble very soon. Since it’s likely our man-made wetland may never get developed because of a proposed settlement agreement from the state, there are now a lot of unused water connections owned by developers that won’t be used.
And since scarcity is what made prices shoot through the roof, a surplus should bring them back down to earth. Between Beachwood, Pacific Ridge and North Wavecrest, there must be 300 to 400 unused connections that will eventually end up being sold.
What will be interesting to watch is who starts to unload these first. So that I’m being fair to both sides, let me give advice to both the owners and potential buyers. For the sellers, I’d get rid of these as fast as possible before prices drop and for buyers, stand firm on your price and offer less.
It wouldn’t surprise me if in a year these prices dropped from their current level of over $40,000 to around $20,000. We’re talking about a lot of water connections. It also wouldn’t surprise me if several government agencies tried to make money on this by raising fees or trying to take them for other projects.
One word of friendly advice for those thinking of buying these water connections: Pick an intermediary to hold the money until all the paperwork is completed and the water company transfers ownership.
So maybe while you are checking stock prices for Google or Apple on your iPhone, you can add the price of CCWD water connections.
Steven Hyman is the broker and owner of Century 21 Sunset Properties. He can be reached at 726-6346 or at www.century21sunset.com.