Bay Area Airport Construction Workers Lose Work

Scores of local airport construction workers either laid off or on furlough hoped to go back to work after Congress agreed on a debt ceiling deal Tuesday, but were crushed to find no end to a partial shutdown of the Federal Aviation Administration.

Though air traffic controllers are still guiding pilots across the sky, construction projects and efforts to modernize or expand airports have been on hold since July 23, when the agency's authorization from Congress expired.

Frozen Bay Area projects include a new air traffic control tower in Oakland and seismic work at airports in Livermore and Palo Alto.

"Politics and recesses are at the heart of these decisions," said Pete Figueiredo, treasurer for Operating Engineers Local No. 3, at a news conference Tuesday at Oakland International Airport.

"Meanwhile, our people are making decisions between making rent or mortgage payments and putting food on the table tonight. I question whether (members of Congress) have the capacity to understand those kinds of decisions."

Oakland Mayor Jean Quan said the shutdown is affecting her city. "Tourism, with the low dollar, is one of our few growing industries. If we can't modernize our airport and make it more efficient to have flights going in and out, it slows that growth."

About 4,000 FAA employees and an estimated 70,000 to 80,000 construction workers are going without work nationwide. The FAA reports it issued stop-work orders at almost 250 projects, freezing about $10.5 billion in spending.

Congress has passed FAA funding extensions 20 times since the last long-term authorization expired in 2007. But in what Sen. Barbara Boxer, D-Calif., speaking on the Senate floor Tuesday, called "another made-up crisis by the Republicans" that echoed tactics used in the debt-ceiling debate, an extension recently passed by the Republican-controlled House of Representatives included significant changes to unions' rights and subsidies for rural airports.

That bill didn't pass in the Democratic-controlled Senate, and the result was a stalemate unlikely to see any movement until Congress comes back from recess after Labor Day.

The political details don't matter to Rich Zemlok, a 35-year veteran electrician who had been working on the Oakland tower after 10 months without work. The $31 million project funded by federal stimulus money broke ground in October but stands only about one-third finished, an airport spokesman said.

Zemlok and about 65 other workers at the site have been without work since the freeze, he said.

"They told us on Friday not to come in on Monday," he said. "I have a daughter in college. I need a job. I need to stay busy. But because of the political atmosphere, I got my job shut down."

After decades in the business, Zemlok said, the company he worked for shut down when the NUMMI auto plant in Fremont closed in April 2010.

The plant had given his company 95 percent of their work, Zemlok said, and he was unable to find another job until landing work at the airport almost a year later.



"And I'm one of the lucky ones," he said. "A lot of guys I know are going years without anything."

A lifelong construction worker, Zemlok said he's not interested in staying at home and collecting unemployment; he wants to work.

"But I'm running out of places to turn here," he said. "It's horrible."

Ashley Davidson, 24, is a first-year apprentice electrician who was also called off the Oakland project.

"I did all the quote-unquote 'right things' you're supposed to do out of high school," she said. "I went to college for a couple years. But I didn't find anything I was learning would guarantee me a job." She said she hopes to make electrical work her career after struggling through jobs that paid low wages and left her without any health insurance.

That can't happen if she can't learn the craft on the job, she said.

Davidson and other workers are unlikely to see work for at least another month. Representatives for several Bay Area lawmakers said a new deal isn't expected to be on the table until both houses return from recess in September.

Interest Rates on Loans will Increase

Barring last-minute action by Congress, many Bay Area home shoppers will soon find it harder to buy more expensive homes because of changes in eligibility requirements for a popular type of mortgage.

Starting Oct. 1, interest rates on loans between $625,500 and $729,750 will increase, potentially raising monthly mortgage payments by hundreds of dollars.

Before the change, loans up to $729,750 qualified for a reduced interest rate.

Private lenders say they're ready to pick up the slack. But real estate professionals are afraid that higher interest rates and down payments will make buying a home more difficult at a time when the market is still weak.

"It's a big mistake," said Ken Rosen, chairman of Rosen Consulting Group, a real estate market research firm in Berkeley. "It's the right policy in the long run but the wrong time to do this. If there was one single smart person in Washington they would say we want to encourage lending at the bottom of the cycle. Let's get prices up 5 or 10 percent first."

The break for homebuyers and those looking to refinance in high-cost areas like Silicon Valley stemmed from emergency legislation passed by Congress during the 2008 credit crunch.

Shrinking limits

The law -- called the Housing and Economic Recovery Act -- raised the maximum amount permitted on mortgages that qualify for Fannie Mae, Freddie Mac and Federal Housing Administration programs. Those loans have the implied backing of the U.S. government, which lowered their interest rate.

Now, under a complicated formula in the same legislation, five Bay Area counties will see the maximum drop from $729,750 to $625,500 on Oct. 1. Bigger loans will have to come from private lenders at interest rates that are about half to three-quarters of a percent higher.

The change would add $217 a month to a mortgage payment on a $725,000 loan if the Fannie and Freddie rate were 4.375 percent, when the private rate was 4.875 percent.

"While the interest rates are slightly higher, those are still extraordinarily good mortgage rates. They shouldn't affect buyers' ability to buy a home nor desire to buy a home," said Brad Blackwell, executive vice president and national sales manager for Wells Fargo Home Mortgage.

But Rosen predicted fewer people would be able to buy a home, although the lower limits won't hit the Silicon Valley as hard as other places because it has "just about the strongest housing market in the country." The East Bay has a much weaker housing market and will feel the impact more, he said.

The California Association of Realtors, which wants Congress to keep the higher maximum, says nearly 8 percent of home purchases in Santa Clara County could be affected; 11.5 percent in Contra Costa County; almost 10 percent in San Francisco; and about 6 percent in Alameda County.

"This change in policy would definitely have an impact at the worst possible time," said Robert Kleinhenz, deputy chief economist with the California Association of Realtors. He said the homeowner trying to trade up to a larger home will suffer.

Rep. John Campbell, R-Newport Beach, is co-sponsoring a bill that would extend the higher limits for two more years. Housing Secretary Shaun Donovan, however, said Thursday that lowering the limits was "the right step to take," and wouldn't have a big impact on the housing market.

Median price factor

Mortgage brokers and real estate agents say some customers are racing to beat the deadline.

"I am seeing people kind of rush to get in there," said Andrew Soss, president of the California Association of Mortgage Professionals of Silicon Valley.

Bank of America has already stopped accepting applications for the high-limit loans out of concern that they won't be completed before the deadline.

The limits are based on median home prices, and in some counties median prices have dropped substantially. Monterey loses more than any other county in the United States: $246,800. Its former limit of $729,750 is being ratcheted down to $482,950 because of declines in home values in the southern, agricultural part of the county.

"It's a ridiculously huge drop, and a ridiculous equation they are using to formulate this," said Stuart Shankle, broker at Shankle Real Estate in Monterey. "It's going to leave a tremendous void in the market."

Mortgage bankers downplay the impact and say they're ready for the business the new limits will bring to their doors.

"We view it as more of a little blip," said Buck Hawkins, vice president of the California Mortgage Bankers Association. "Most of us in the industry suspect the private money will come into that space and compete. It won't be a subsidized rate. It will be a market rate, about three-eighths to three-fourths basis points higher," he said.

Matthew Ostrander, a California Mortgage Bankers Association director and co-founder of Parkside Lending in San Francisco, expects any impact to be temporary.

"The Bay Area is going to do OK," he said.

Blow-Dry Bars' the Latest Rage in Hair Salons

Whether for a night out, an important meeting or a general pick-me-up, sometimes a girl just needs hair that shines and bounces. Right? But blow-drying one's own hair into a state of glossy perfection is darn near impossible -- one really needs a stylist brandishing tools and sprays.

That's where "blow-dry bars" come in.

Blow-dry-only salons, one of the latest trends in the beauty business, are popping up around the Bay Area, catering to women of all ethnicities who want salon-perfect hair between haircut appointments without having to spend a whole afternoon to get it.

For about $35, blow-dry bars will shampoo and coif customers in 45 minutes or so and, in the process, deliver -- the faithful say -- that hit of self-confidence that comes from looking polished.

"You go in feeling kind of blah, and you come out feeling really snazzy and ready to go do your thing," says Ellen Mazzoni, 57, a Burlingame resident who treks to Palo Alto once a week for a blow-out at Halo, a blow-dry bar that opened last fall at the Town & Country Village shopping center. Halo plans to open stores in Walnut Creek, Danville, Menlo Park, Burlingame and Marin County in coming months.

Just don't ask for a cut or color at a blow-dry bar, because that's not what these chic spots do. But they dish up more luxury than women got back in the day of the weekly shampoo-and-set appointment: Some blow-dry bars pamper customers with champagne, or offer party packages so friends can make blow-drying a "girls' night out" activity. Many will do makeup and bridal-party hairdos.

Mazzoni gets her shoulder-length blond hair cut and colored about every six weeks by her regular stylist, but after making her first visit to Halo, she says, "I loved my hair."

She's hooked on the blow-dry-only routine now. On a recent visit to Los Angeles, she sought out Drybar in Hollywood for a blow-out while on vacation.

Drybar, which launched in L.A. in February 2010, opened a San Francisco store on Fillmore Street in Pacific Heights in June. The chain now has a total of nine salons in California, Texas and Arizona, with plans for expansion.

There are no data on how many of the nation's nearly 603,000 beauty salons and spas are blow-dry-only establishments, says Brad Masterson of the Professional Beauty Association. But the trend has certainly erupted over the past two or three years, he says.

"While most professional salons have always offered blow-outs, the popularity of blow-out-only salons is built around specializing ... and providing an efficient and cost-effective way for women to look their best," he says.

There's plenty of demand for blow-dry-only salons, says Halo owner Rosemary Camposano, whose background is in high-tech marketing. Her 450-square-foot salon in Palo Alto could double its business if the space were bigger, she says, adding that Halo's future locations will be much larger.

"It's been a runaway-crazy hit," she says.

She thinks of her customer base as "all these women I know that live in the suburbs and would hate to be called 'suburban women,' " she says -- women who juggle busy lives but want to look pulled together, whether they are heading to work or schlepping kids to and from school.

"I am my clients," Camposano says. "I always spent a lot of money on highlights, and taking care of my hair, and then back in a ponytail it went."

Karen Marcum, owner of Blowoutbar Salon in downtown Livermore, says that although her salon actually offers a full range of cut-and-color services, she chose the salon's name partly because she knew how popular blow-dry services were becoming from her time spent as a stylist at the Hard Rock Hotel in Las Vegas.

"We did blowouts all the time on Saturdays and Sundays" at the hotel salon, at $75 a pop, she says. Her own salon offers a six-pack of blow-dry certificates for $210, which works out to $35 per blow-dry session.

The premise of blow-dry bars is that by getting a blow-out that looks good for three or four days, women who want to -- and can afford the service -- can spend more time looking and feeling salon-fabulous and less time sporting the last-resort ponytail look.

"A blowout these days is an affordable luxury similar to a manicure or pedicure," says Melanie Groom of Blo, a Toronto-based chain with a San Francisco location and plans for expansion in the Bay Area. "We feel really, really good when our hair is done. There's a certain way you walk. That's the No. 1 thing we try to have them leave with ... more confidence."

Confidence-seeking male customers are welcome at blow-dry bars, but most managers say they get very few. Clients typically are women from their 20s to their 60s. Some women bring in their daughters, too, so school-age clients are not unheard of. At Drybar, where the blow-dry styles on the menu are all named after mixed drinks, there's even one called the Shirley Temple for the youngest customers (ringlets not required).

Salon chain stores like Supercuts and Fantastic Sam's offer blow-outs starting at about $25, but customers are unlikely to find the perks like iPod docks, chick-flicks on TV or complimentary beverages that many blow-dry bars offer. Most traditional, full-service salons offer blow-outs, but they typically charge at least $50, and sometimes much more.

"This is not their service," says Groom of Blo. "They don't make money on a blow-dry; they make money on cut and color." Most blow-dry bars will make referrals to nearby traditional salons' cut-and-color stylists, and vice versa, managers say.

San Francisco resident Amy DeMartini started going to Blo in her Marina neighborhood about a year ago, and now goes about once a week to get her light brown hair blown out. It's convenient, fast, and the $35 cost is affordable for her, she says.

"It's absolutely a fair price for one hour of pampering, and it's maybe half the cost you'd pay at any other fancy salon in the city," says DeMartini, 30, who works in sales in the food and wine business. And, she adds, "As a working woman, it's important to look polished and professional, and getting your hair blow-dried is a part of that."