What is BMO/BHO and How Will That Affect My Property Value?

07.11.2016 | Blog

The Baseline Mansionization Ordinance (BMO) and the Baseline Hillside Ordinance (BHO) have been under heavy scrutiny over the past couple of years in reaction to the tremendous amount of new construction around us.  For many reasons, the city council is looking to finalize a new ordinance that will further reduce the buildable square footage of new and existing homes, even further than the draft amendments that were passed in 2014.  With the proposed total allowed square footage to be reduced (FRA), this results in a significantly decreased allowable living space. The current proposed changes would reduce the square footage from 50% to 40% for construction projects on property under 7,500 sqft in size, and from 45% to 40% for lots over 7,500 sqft. As an example, a 6,000 sqft lot’s allowable building space would be reduced by 25%, or from 4,200 to 3,200 sqft. By now including garages, balconies, and entryways in that number, you can imagine how big this change could be.

Now, what does this mean for homeowners looking to sell? Simply put, the potential for add-ons and expansions to your property decrease, meaning there would be less room for returns on the buyer’s investment. Previously, a developer or (owner user) could purchase a property with 7,400 sqft of land with the hopes of building out a 3,700 sqft new construction home.  Now that same developer (or owner user) would only be able to build a 2,960 sqft foot home. As a result, to accommodate lower potential returns on the sale of the final home, the initial sales price a person would be interested in paying for the land would be lowered as well.

Does this mean that homeowners should scramble to sell their fixer properties before these proposed new ordinances go into effect?   That is the million dollar question and if you had already planned to sell in 2016, now might be the time to look a little closer at selling.