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by Becky Bower

The first quarter of 2019 has been exceptionally busy for legislators drafting acts, bills, and ordinances intended that would have impacts on the rental housing industry. From the increasing congressional popularity of “Just Cause” evictions laws and rent control, to the implementation of a statewide rental registry – take a few moments to update yourself on what’s new and pending in California legislation.

California’s 2019 state legislative session has a projected end date of September 13, 2019. Keep in mind that this state has full-time legislators, allowing the legislature to meet throughout the year after adjourning their regularly scheduled sessions. Most of the state pending bills are still in Committee.

PENDING: “Just Cause” Eviction Bills
AB-1481 and AB-1697

This year, there are two proposed “just cause” eviction bills. While both propose to limit evictions to specific causes (like failure to pay rent or a breach of the lease) and include some “no fault” eviction causes (like demolishing the unit or withdrawing from the rental market), there are a few differences between the two bills. AB 1697 would only apply to tenants residing for a year or more, while AB 1481 would apply to all tenants. AB 1481 also bans the owner’s right to terminate the tenancy to move into the unit if the tenant is 60 years or older unless the tenant grants permission or if the lease provides notice of this tenancy termination option.

PENDING: Keep Californians Housed Act

Existing law requires a tenant within a month-to-month lease at the time the rental property is sold in foreclosure to be provided 90 days’ written notice. Tenants within a fixed-term lease (like a 12-month lease) would have right to possession until the end of the lease term, unless in specified circumstances. This existing law expires on December 31, 2019, however, if SB 18 passes, these provisions would stay in effect indefinitely.

SB 18 also has provisions that cater to the administration of grants for rental housing and legal aid for those experiencing homelessness.

PENDING: Tenants Associations Withholding to Pay Rent

This bill would give tenants the right to form, join, and participate in activities of a tenant association, subject to any restrictions as may be imposed by law, or to refuse to join/participate with a tenant association. Landlords under this bill would be prohibited from terminating the lease or refusing to renew the lease of a unit occupied by a member of a tenant association. Tenant associations (after a majority vote) can choose to withhold rent payments for up to 30 days in response to grievances or complaints against the property owner. The landlord would then need to meet with the tenant association to try to resolve the issues and provide a written account of any changes planned. If the rental property owner does not comply with these requirements, they would have to waive the rent that has been withheld.

In addition to the eviction protections surrounding a nonpayment of rent during a rent strike, this bill would also create “just cause” eviction protections for members of the tenant association.

PENDING: Rent Control Bills
AB-1482 and AB-36

Surprise, surprise… rent control is back! While AB 1482 does not provide specifics yet, this bill would cap annual rent increases by an unspecified percentage, plus the rate of inflation. It would also not override local, pre-existing rent control laws. Rental property owners would be prohibited from terminating a tenancy to avoid the rent increase cap.

Just like AB 1482, AB 36 is still missing quite a bit of information. As it stands now, this bill would allow local governments to cap rents on single-family rental properties (exempting landlords with one or two units) and on construction that’s at least 10 years old.

On April 10, 2019 Long Beach became the latest city to pass an ordinance that places a rent cap, plus a base relocation charge and “Just Cause” Eviction rules.

PENDING: Extended Notices for Rent Increases

For a month-to-month tenancy, existing law requires that if you increase the rent by 10% or less, the landlord has to provide at least 30 days’ notice. For rent increases of more than 10%, the landlord has to provide an additional 30 days, to a total of 60 days’ notice. AB 1110 would require 90 days’ notice for rent increases of more than 10% but no more than 15%. For increases of more than 15%, landlords would have to provide 120 days’ notice.

PENDING: Statewide Rental Registry

If passed, AB 724 would create a rental housing registry for all buildings within California. Information like the name of ownership, the number and size of each unit, and the move-in dates would be required information. Rental property owners who fail to comply would face a fine of $50 per unit.

PENDING: Criminal Records on Rental Applications

Similar to “Ban the Box” employment laws, this bill would prohibit the property owner from inquiring about, or requiring the tenant to disclose, any criminal records during the rental application process. After the initial rental application phase, landlords can request a criminal background check. If the owner considers denying an applicant based on their criminal record, they are required to provide the rental applicant a written statement as to the basis of their possible denial within 5 days of receiving the background report. The rental applicant will then have 14 days to provide evidence of record inaccuracy, evidence of rehabilitation, or other factors. The owner would then need to reconsider within a specified time, and if the decision to deny holds, the landlord would need to notify the rental applicant in writing.

If this bill passes, it will be the third “Ban the Box” housing law in place in the U.S., alongside Seattle, WA and Detroit, MI.

PENDING: Allowances for Tenants to Shelter those at Risk of Homelessness

This bill would permit a tenant to temporarily allow a person at risk of homelessness to live with them for up to 12 months, regardless of the lease, without negative repercussions from the property owner. Landlords can adjust the rent payable under the lease as compensation during the time the extra person is staying with the tenants, which terms would need to be agreed upon in writing by both parties. This bill would also permit the landlord to request a background check, however at this time, the bill does not say how or if a property owner would be permitted to deny the additional occupant if the findings within the background check do not meet their written rental standards. Nor does it describe allowable eviction causes (i.e. if the occupying guest breaks the tenant’s pre-existing lease).

PENDING: Requirements for the Homeless Coordinating and Financing Council

SB 333 would require the Homeless Coordinating Financing Council to develop and implement a strategic plan for addressing homelessness in California by July 1, 2021.

PENDING: CalWORKs Extensions

The California Work Opportunity and Responsibility to Kids (CalWORKs) program provides cash assistance and other benefits to qualified low-income families, which includes homeless assistance benefits to homeless families that have used “all available liquid resources in excess of $100”. This bill would also make a family eligible for temporary homeless assistance if the family’s gross countable income is less than the minimum basic standard of adequate care. It would allow the county to approve of additional days of temporary shelter assistance if necessary to prevent homelessness while the household is transitioning to receive permanent homeless assistance.

PENDING: Mandatory Acceptance of Section 8

The Fair Employment and Housing Act currently prohibits housing discrimination based on source of income. While Section 8 housing vouchers do not legally fall into the “source of income” category, this bill would change that. By expanding the definition of “source of income” to include section 8 housing vouchers, it would make it illegal for any property owner to deny a tenancy based on the applicant’s Section 8 enrollment.

PENDING: Housing Development Near Public Transportation
See SB-50

This bill would require cities and counties to create an “equitable communities incentive” for developments who agree to build a residential development near job-rich or transit-rich areas. This would amend the Density Bonus Law.

PENDING: Long Beach’s Tenant Relocation Ordinance
See Media Coverage

On April 3rd, the Long Beach City Council voted in favor of an ordinance that would place relocation fee policies on rental properties. While the City has not indicated what the timeline is on drafting the ordinance – which would then need to be voted on by the Council for final approval – it’s expected that this ordinance will impact landlords with 4 units or more (except if that building is the owner’s primary residence).

Relocation fees would become applicable if there is a rent increase of 10% or more during a 12-month period. It is also expected that the notice requirement for a no-fault eviction would increase to a minimum of 90 days. Since the ordinance draft is yet to be seen, there are concerns that the City will also include “just cause” eviction policies and a base rent cap in their ordinance. If you have properties in Long Beach, we recommend you contact your city councilmember.

PASSED: Tenant Screening Fee for 2019

The total allowed applicant screening fee has increased by $1.81 since last year. Application processing fees cannot exceed $50.94. This adjustment is made based on the changes to the Consumer Price Index.

PASSED: City of Glendale’s “Right to Lease” Ordinance
See Ordinance Info

This ordinance was revised in February to include relocation fees. Relocation fees apply to pre-1995 buildings with tenants choosing to vacate after a rent increase of over 7%. For buildings with 3-4 units, the fee is 3x the actual rent. For 5 and more units, the fee is 3x the amount of the rent after the rent increase. With tenants with an overall household income equal or less than the median income for Los Angeles County (plus 30% of the AMI), the relocation fee will be based on the length of occupancy. It follows: 3-4 years of occupancy equals 4x the amount of the rent increase, 4-5 years equals 5x the rent increase, and 5+ years equals 6x the rent increase.

This ordinance also requires rental property owners to offer a 1-year lease to rental applicants (which an applicant can reject and enter into a shorter period as agreed upon). Current tenants in good standing are required a 90-day renewal notice that also includes the 1-year lease term. This too can be reduced to a shorter period at the tenant’s request.

PASSED: Inglewood’s Temporary Rent Caps and “Just Cause” Eviction Policy
See Interim Ordinance

In early March, the Inglewood City Council temporarily capped rent increases at 5% for pre-1995 apartments. It also imposed a “just cause” eviction measure. These temporary ordinances should last 45 days (expiring mid-April) but could be renewed by the council for up to a year.

FUTURE: Los Angeles Rent Controlled Housing Gets a 4% Allowable Increase
See City Update

The City of Los Angeles’ annual allowable rent increase for rent controlled housing (properties subject to the Rent Stabilization Ordinance) has increased to 4%. This goes into effect from July 1, 2019 until June 30, 2020.

Becky Bower is the Content Strategist at The CIC Blog. She holds a degree in English, with a focus in creative writing, from CSU Channel Islands. Her biggest weakness is cake and favorite superhero is Batman.

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by Nick Schoch

Should you write-off almost anything? Maybe not if you want to refinance your property and get access to your hard-earned equity. Consider that for every $1 reduction in reportable income, you could decrease your potential loan amount by $11-13.

You mean I should pay more in tax? It depends on your appetite for debt. If you want to use debt to lever and maximize your return on equity, then you should hesitate before minimizing your taxable income. While a lower taxable income means a smaller tax bill, it also reduces the apparent cash flow available to support a loan. And let’s not forget that an aggressive tax strategy could expose you to an IRS audit and tax court (even if the likelihood is low).

Consider the lender’s perspective. Let’s consider how your tax minimization strategy affects how a lender sees you and your property. In this discussion, I will call the write-offs associated with a tax minimization strategy “discretionary expenses.” Lenders will determine the maximum loan that your property can support based on the smaller of two loan sizing approaches: 1. maximum loan-to-value (LTV) and 2. minimum debt service coverage (DSCR).

Approach 1: maximum loan-to-value. Most conventional financing sources will lend up to 70-75% of your property’s appraised as-is value. The good news is that reducing your Net Operating Income with discretionary expenses will most likely not affect your appraised value. This is because the appraiser will value the property based on how the average market investor would look at your property. Most investors would recognize the nature of your discretionary expenses and remove them from the income capitalization analysis. Thus, discretionary deductions will likely not affect loan amount determined by the LTV approach.

Approach 2: minimum debt service coverage. Most lenders require a minimum debt coverage ratio between 1.20x and 1.25x. This means that your underwritable NOI must be at least 20-25% greater than the debt service associated with the proposed loan. Unlike the average investor, lenders will not add back discretionary deductions to your NOI. Instead, most lenders will look at the last three-years of operating statements (profit and loss statements) to evaluate whether the expenses are recurring. If you’ve been managing your tax liability for the last year, you might be able to convince the lender that your discretionary expenses are non-recurring, and the lender may credit your NOI accordingly. However, if you’ve been aggressively managing your tax liability for longer than a few years, your discretionary expenses will appear recurring, and the lender will most likely treat the expense as legitimate. Even if your operating statements aren’t consistent with your tax returns, some lenders rely on your tax returns instead of your operating statements. This makes it even harder to credit your underwritable NOI. Thus, discretionary expenses will probably affect the cash flow constraint and cause you to get a smaller loan.

The table below shows how the math in approach 2 works with an example that assumes an additional 10% in discretionary operating expenses.

Op. Exp. Ratio 30% 40%
Discretionary Expenses   -$27,360
NOI $191,520 $164,160
Interest Rate 5.000% 5.000%
Amortization 30 years 30 years
Constant 6.442% 6.442%
Min. DSCR 1.20x 1.20x
Min. Debt Yield 7.7% 7.7%
Max. Loan $2,477,546 $2,123,610
Decrease in Max. Loan   -$353,935
Loan $ Lost per $1 of Expense   $12.94

As mentioned above, you lose about $13 for every $1 of additional expense.

A bigger risk. In addition to getting a smaller loan than you deserve, the lender may consider your tax return fraudulent. The IRS awards whistleblowers up to 30% of the collected amounts from tax cheats. This is a strong incentive that may encourage a loan processor or credit analyst to report a potential borrower with aggressive tax minimization strategies. That being said, I have yet to meet a lender with a policy of reporting potential borrowers they believe to be tax cheats. Instead, lenders will generally decline the loan because of questionable character or offer the borrower a lower loan amount that their tax-managed NOI can support. Nonetheless, I would be hesitant to present a client’s request to a Federally regulated institution if that client’s financials suggested overt tax fraud.

So what’s an apartment owner to do? The IRS tells owners that business expenses must be “ordinary and necessary.” Creative property owners can stretch this flexible guidance to minimize their taxable income. But how far do you stretch this guidance? Most lenders will underwrite property cash flow assuming expenses are at least 30% of gross income with no upward limit. If you manage your expenses between 30-50% of gross rental income, you won’t raise any eyebrows at first glance and you will ensure the property can support the appropriate loan amount.

I will end with the necessary and trite disclaimer: consult with your tax advisor before implementing a tax minimization strategy but I hope reading this article helps you keep in mind the potential effect it will have on your ability to draw on your hard-earned equity.

Nick Schoch is an independent loan advisor for 5+ unit apartments and a landlord located in San Diego, CA. You can download Nick’s Apartment Loan Handbook free at his website: nickschoch.com. If you have questions about this article or financing an existing property or purchase, you can contact Nick at nick@nickschoch.com or call/text (760) 201-6758.

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Apartment Management Magazine by Apartment Management Magazine - 2w ago

By Elaine Simpson

Typical emergency situations, in property management lingo, cover “fire, flood or blood”.  Take a look at the headlines this month and most of our country has suffered from some type of disaster or emergency situation: wildfires, hurricane caused high winds and flooding, earthquakes, tornadoes, bomb threats, renegade shooters, and the list goes on.  One of the duties of a property management company and its staff is to have a contingency plan in case of an emergency situation.

As property managers, what should we do?  We must educate our staff about possible situations and how to respond to them.   We should include sample emergency situations in our policy and procedure manuals and share a list of emergency contacts.

FEMA has leaders and regional offices around the country.  Become familiar with their office closest to you. FEMA stands for the Federal Emergency Management Agency, an agency of the U. S. Department of Homeland Security. Their customer service number is 1 800-621-3362 and their website is https://www.fema.gov.  There is a map of the United States showing which states are in which regions that can be accessed by visiting https://www.fema.gov/regional-contact-information.  This site also gives one access to flood maps. For the addresses and telephone numbers of the Emergency Management Agencies by state, visit https://www.fema.gov/emergency-management-agencies.  The National Emergency Training Center is a subsidiary of FEMA. They teach courses on how to minimize the impact of disasters and emergencies.

Other “readiness resources” to have on your list should include:

Power outage – names and numbers for local electric supply companies;

Road closures – state Department of Transportation;

Water – city or private water providers for sewer-related emergencies such as broken water mains, fire hydrant, or water service line or sewer backups;

Cable, Phone, Internet Service – list local companies with phone numbers and websites;

Gas – local companies with numbers and websites;

Public Safety – 911 and non-emergency numbers for police and fire departments;

American Red Cross – http://www.redcross.org/get-help;

Your County Department of Emergency Management;

Your County Department of Public Health;

Your State Department of Emergency & Military Affairs;

You can also download a guide provided by the U. S. Department of Homeland Security at Ready.gov called Protecting Your Family and Your Home, an Emergency Preparedness Guide.

For assistance writing a Policy and Procedure Manual or to find out more about the many and various ways Occupancy Solutions can prepare you for the future with in-person customized training or online e-learning training webinars and property management courses, visit www.occupancysolutions.com today or call 1-800-856-0948 for a free consultation.  Stay safe and be ready.  As one recent campaign touted “Disasters Don’t Plan Ahead…But You Can!”

Elaine Simpson – Owner, Occupancy Solutions, LLC

Operations, Leasing, Marketing Consultant and Training Specialist

Elaine Simpson has been employed in the housing industry since 1986. Starting on site as a leasing agent, she moved up, working as assistant manager, site manager, executive director and finally senior regional manager with communities in several states and portfolios containing more than 1400 units.  Ms. Simpson has worked for local and national industry leading companies and throughout her career, has trained new managers across the country, assisted in creating “Best Practices” and procedure manuals, participated in numerous task forces during national mergers, acquisitions and dispositions and headed “turn around” teams assigned to troubled communities, successfully increasing income while decreasing expenses and allowing the property to recover economic viability. 

With over 30 years of experience in the multi family industry, Elaine Simpson founded Occupancy Solutions, LLC to provide on site operations, human resources, housing program compliance, maintenance, marketing, leasing, training and consulting services for multifamily professionals of market rate, senior and affordable housing communities throughout the United States.   Occupancy Solutions assists communities by providing proven, cost-effective techniques and strategies that achieve increased occupancy, improve resident retention, minimize expenses and increase net operating income.  

Ms. Simpson is a licensed real estate broker in Michigan and Arizona, a Certified Senior Real Estate Specialist, a member of the National Speakers Associations, a National Apartment Association Education Institute Faculty Member, an Accredited Resident Manager a Certified Assisted Housing Manager and John Maxwell Certified Coach, Trainer and Speaker. Let Occupancy Solutions create solutions for your community. To learn more about the vast range of services and trainings Occupancy Solutions can provide, please visit www.occupancysolutions.com for more information.

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By Nate Bernstein, Esq.- Managing Counsel, LA Real Estate Law Group

If a tenant has been evicted by the landlord, and the landlord does a sheriff’s lockout, and the tenant does not remove their personal property (such as clothes, appliances, furniture), it is a big problem and headache for the landlord or manager. The personal property could be heavy furniture or a big screen television or any other personal property such as pictures, clothing, or toiletries.   You can’t rent out the property until the personal property has been removed and the premises has been professionally cleaned, painted, and repaired. You thought you were in the real estate business, but now you are in the furniture storage business!!  Your inclination from your feeling of dire frustration is to have the personal property thrown out into the street or into the neighborhood dumpster.   However, dumping the property in the trash bin is unlawful under California law, and the former tenant can sue you for the value of the property and any other charges incurred.  You don’t want to be in small claims court or any other court over this issue.     

Here is what you do to solve the problem:

Immediately after the lockout date,  serve the tenant by personal service or email a “Notice of Right to Reclaim Abandoned Property” that complies with California law. This can be served personally or by email.  You want to serve this notice as soon as possible because the former tenant may stall and delay to pick up the personal property- so you want to start the clock ticking on the notice!! This starts the clock of 18 days for the tenant to pick up personal property. You should give the former tenant post lock out access to the property only if he or she shows you a bona fide contract from a moving company with a move out date, and you are present to supervise the process.  Don’t give the locked out tenant any other form of access, and don’t provide a key!!

The Notice of Right to Reclaim Abandoned Property should describe in detail what items/categories were left in the property by the former tenant, all of the names of the former tenants, the property address, and should state, “If you fail to claim this property by (state date and time), and unless you pay the landlord’s reasonable cost of storage for all the above property, and take possession of the property which you claim, not later than 18 days after notice is deposited in email, this property may be disposed of pursuant to California Civil Code Section 1988. Pursuant to Cal. Civil Code Section 1984(b)(1): If you fail to reclaim the property, it will be sold at a public sale after notice of the sale has been given by publication. You have the right to bid on the property at this sale. After the property is sold and the cost of storage, advertising, and sale is deducted, the remaining money will be paid over to the county. You may claim the remaining money at any time within one year after the county receives the money.”

The Notice of Right to Reclaim Abandoned Property must notify the former tenant that he or she is being charged daily storage costs for the time that the personal property is being stored after the judgment for possession was entered by the Court. The amount of storage costs should arguably be “reasonable,” and probably should not exceed the amount of the monthly rent. The amount of monthly rent should be the maximum ceiling amount you should charge, but you need to use reasonable business judgment on this issue. If you want to be fair to the prior tenant, you can call some storage companies in your neighborhood to obtain an estimated a price point, and charge a similar daily rate for the comparable amount of personal property. You should be flexible with this requirement because your goal is to persuade the tenant to move his personal property, not profit from the tenant’s holdover. If a tenant is in financial dire straits, perhaps all he or she can afford is the cost of the moving company. If the former tenant is willing to hire movers to move out his or her items and actually pay for professional movers, you should let the tenant do so, and do so immediately. The storage cost factor is secondary. You want the personal property removed as soon as possible so you can clean the property, complete maintenance and repairs to prepare the property for re-rental.

If the stubborn former tenant does not pick up the personal property within 18 days of serving the notice, then you need to publish a notice of public auction sale twice in a local newspaper for the next two weeks. I would give the tenant copies of the notice of these publication. By the end of publication they will have been noticed three times in writing to pick up their property – the former tenant cannot claim with a straight fact he or she did not receive notice of a future auction. If after the two weeks of publication the tenant still does not pick up the property, then you can discard, sell, donate, or use the property, or gift it.      

The author of this article, Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estate litigation, commercial litigation, employment law, and bankruptcy/creditor’s rights matters. The contact number is (818) 383-5759, and email is natebernstein44@gmail.com. Nate Bernstein is a 25 year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options. He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company. Nate Bernstein created www.laquiettitleattorney.com, a leading educational resource on quiet title real estate litigation.     Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, and bankruptcy law. Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases.  

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Apartment Management Magazine by Apartment Management Magazine - 3w ago

by Kari Negri

There is no denying that investing in a real estate isn’t as easy as it seems.  If you have just stepped into the business, it can take loads of time and money.  Running a prosperous real estate business involves a lot of hassle and stress, especially if you’re managing it without knowing  all the laws and issues that can arise in owning an apartment building.  A Fair Housing class at The Apartment Association of Greater Los Angeles (AAGLA) is probably a good start.

Thanks to magazines like Apartment News Publications, Inc.  you can keep up on current issues within our industry which is also essential and if you do not have time to do all of this you need to consider your options carefully.   Doing it yourself could be a disaster but also hiring the wrong company or someone without good credentials can be just as bad.

Unfortunately, a lot of property owners avoid hiring great property management companies like SKY Properties, Inc. due to misconceptions like it is too expensive or these providers can’t preserve their property. There is a large percentage of people who conflate myths with facts, depicting an inaccurate picture of property management services. If you have been hearing these stories for a long time, it is the right time to clear the mist and debunk the myths related to property management services.

 Here we’ve rounded up seven most common myths to help you ease your mind.

Property Management Myths to Debunk   1. You Don’t Need To Hire Property Management Companies

Let’s begin with the most common one where most investors believe that handling management and ownership of rental properties is a breeze. According to them, they can handle maintenance and repairs to take full advantage of their investment.

However, to handling contractors, maintenance requirements, repairs and legal matters are going to take a heavy toll on you. It is better to hire the services of a reputable property management company to eliminate hassle and stress from your life.  Often they can save you more money than you spend on their fee.   You have to really know what you are doing to effectively manage rental property.  I say that because I am often hired after there is a disaster that could have been avoided completely. 

2. Property Management Service Is Expensive

 It is another common myth that prevents property owners from hiring property management services. However, any good property management company will rent your vacancies faster and know all the sources to do that which are often free or very inexpensive.   Their job is also to reduce expenses and because they often buy things in bulk and work with vendors that have the proper license and insurance can do more quickly and efficiently.  

3. They Can’t Preserve My Property

The feeling is natural when it comes to taking care of your property. However, a professional property manager cares about your building and knows it a valuable asset. They know how to keep it in great condition at the lowest cost to attain the best market price.

4. Renters Can Damage My Property

 Property managers are well-aware of your concerns when it comes to the safety of your property. That is why they make sure to rent your property to the best possible tenants and keep monitoring the property to prevent any damages.  The best thing you can do for your property is to put in the right people.  If you do not do this from the beginning one bad tenant can affect the income of your entire investment.   SKY has a tried and true method to put in the best possible people.

5. Property Manager Will not Listen to me and Control Everything

 A good property manager will listen to a building owner and put into action a plan that is in sync with what you want out of your investment.  The control will always be yours.  

Final Thoughts

Myths Debunked.  Now it’s the right time to hire a reputable property management company or take the necessary steps that includes knowing all the laws in regards to managing an Apartment Building in Los Angeles which is not easy.  Taking the right classes to educate yourself – you may want to do this regardless and last to keep reading Apartment News Publications, Inc. to stay on top of current issues.  The easiest thing to do however is likely to just hire the right company to begin with and stay out of trouble with code enforcement or legal matters.

Although I am not an attorney, I am a very qualified property management company with 26 years of experience so if you have questions, you can always email me and “ask SKY” at Kari@SKYprop.LA.

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by Joani Weir and the Better Housing for Long Beach Team


City Council Meeting

On April 2nd, 2019, the City Council of Long Beach voted to push through an ordinance for rent control. The city council deafened their ears to the vote of the people.  

The mayor and council members have voted to place a rent cap plus a base relocation charge and Just Cause Eviction AKA  Rent Control into Long Beach.   BUT do not be fooled into thinking there will not be great costs to the  renter as well as the small property owner.  We all know these new mandates will come with more inspections, fees, city administration fees etc….  Though council and city staff are going to control the rents of housing providers, they are not going to cap the fees charged to renters and housing providers.  They will not cap the bonuses and high pensions they pay themselves.  Bad policies like this is what puts property owners out of business, thus renters lose their housing.     

Council members are sending emails to their constituents denying that they voted on rent control.  Ask your council member what is the difference from their “tenant protections” and what is understood as “rent control”.  Is there a rent increase cap?  Yes.  Will you be forced to pay someone to leave who is a problem tenant?  Yes. Tenants will see it much harder to get their landlords to boot out a neighbor who is a nuisance or even one who is a criminal.  Will the cost of housing increase?  Yes. When vacancies occur, housing providers will be forced to push the rent as high as possible to make up for the the lost rental income.  This will cause less affordable housing in Long Beach.  Do not be fooled by their sly interpretation. 

Not all city council members were in support of the new ordinance for rent control. We thank Councilwoman Suzie Price, Councilwoman Stacy Mungo, and Councilman Daryl Supernaw for siding with the people against rent control.  There is still hope for Long Beach! We encourage you to thank them for their stance on this issue. 

We would also like to express a very special thank you to all who were in attendance for this specific council meeting! We estimate that we had at least 300 people in attendance from our side! The overflow of property owners and knowledgeable renters displayed our stance on rent control to the council.

The power of conversation must be greatly exhibited within these next couple of months. We have seen many people from the opposition flip over to our side just by the use of one single conversation! Get the word out! Share the facts.  There is power in truth! 

Keep Pressing On!

Let us not grow weary! We have two months to push back against the council before it is codified. We need your help! Again, let your voice be heard to the mayor and council members.  Remind them the majority of the citizens voted down Proposition 10 and signed thousands of petitions against rent control.  It is not time to silently lose your home and livelihood.  

Join us in showing our disapproval with the council’s decision by:

(1) calling or emailing all city council members.
(2) getting the word out among the people in your sphere of influence (wear your BH4LB hats!)
(3) supporting Better Housing for Long Beach by donating to keep us in the fight and
(4)Do not donate or support any council member or the mayor if they support rent control. 

Please immediately call and email Mayor Garcia and all council members and tell them to oppose all forms of rent control aka “tenant protections” and please ask them to stop the attack on small housing providers and renters in Long Beach.

333 West Ocean Blvd, 14th Floor
Long Beach, California 90802
Mayor@longbeach.gov T (562) 570-6801 F (562) 570-6538 
Council Members by District:

1st District-CouncilwomanLena Gonzalez
Email: district1@longbeach.gov
Phone: (562) 570-6919

2nd District-CouncilmemberJeannine Pearce
Email: district2@longbeach.gov
Phone: (562) 570-2222

3rd District-CouncilwomanSuzie Price
Email: district3@longbeach.gov
Phone: (562) 570-6300

4th District-CouncilmanDaryl Supernaw
Email: district4@longbeach.gov
Phone: (562) 570-4444

5th District-CouncilwomanStacy Mungo
Email: district5@longbeach.gov
Phone: (562) 570-5555

6th District-CouncilmanDee Andrews
Email: district6@longbeach.gov
Phone: (562) 570-6816

7th District-CouncilmanRoberto Uranga
Email: district7@longbeach.gov
Phone: (562) 570-7777

8th District-CouncilmanAl Austin
Email: district8@longbeach.gov
Phone: (562) 570-6685

9th District-CouncilmanRex Richardson
Email: district9@longbeach.gov
Phone: (562) 570-61

Words cannot express the appreciation that our team feels for your continued support in this fight! We are making our mark in history that will affect generations to come! If you have any questions, please do not hesitate to contact us at (562) 786-985

Fighting for You,
Joani Weir
and the Better Housing for Long Beach Team

P.S. Please donate to Better Housing for Long Beach so we can continue to fight against Rent Control. We are in this together!


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Apartment Management Magazine by Apartment Management Magazine - 1M ago

By Christopher Miller, MBA

While attending business school, I took a graduate-level class on the art of negotiation.  What I learned has saved me a lot of money over the years – whenever I buy a property, a car, or even when I hire someone to make repairs.  This article will review some of the main principals of negotiation and is a good start towards sharpening your own skills.

The Goal of a Negotiation

First – the goal of any negotiation should be to keep both the buyer and the seller happy.  As a buyer, you may wonder “What do I care if the seller is happy?”  Well, if you’re having carpet installed and the seller isn’t happy with the deal he made, he’ll probably do a lousy job for you.  It’s pretty much impossible to buy something for an amount that doesn’t make financial sense to the buyer.  It has been my experience that sellers are more open to a good-faith negotiation if they know that I am willing to let them make a living.  (Not a fortune – a living.)

Research – the MOST Important Part of Negotiating

Many folks seem to have learned negotiation by watching reality tv, and feel that being a jerk is the way to get the best deal. 

Your research is the most important part of negotiation – much more than what you say or how you say it.  Over the last 15 years, I have saved enough money buying cars to have bought me an extra car – and a nice one, too.  This is because I don’t skimp on research.  I ignore the MSRP of new cars, (since nobody expects to sell them for that much, anyways), and instead focus on the invoice price – what the dealer is paying for the car.  I will then do additional research to find out what buyers are paying for cars today.  The minimum price that buyers are paying is often below the invoice price – this is due to special incentives the manufacturers pay to dealers and an annual bonus that is paid depending on the total volume of cars sold.  Some of these dollar amounts can be found online, others (the annual bonus) can be much more elusive.  Now that you have all of this information, you are ready to select a price that you are willing to pay.  (This will be your offer.)

Find the BATNA for Each Party

Next, you’ll need to identify the BATNA of each party in the negotiation.  BATNA stands for Best Alternative to a Negotiated Agreement and, in it’s simplified form, represents what happens if a buyer and seller don’t come to an agreement.  Examining each party’s BATNA will tell you who has the most leverage in a negotiation – who is negotiating from a position of strength.  You’ll want to design your approach with this strength (or weakness) in mind. 

In my car argument above, let’s say that I make an offer to the car dealer by telephone.  If the offer is rejected, that car dealer has sold one less car this month and the car salesman has lost out on a commission – meaning that he may go home with an empty wallet at the end of the day.  I, on the other hand, still have my money in my pocket and still have a car to drive.  I need to remember, then, that I have the upper hand in that negotiation.  

Let’s use another car example.  About 10 years ago, I bought my wife a new car (and got a great deal by using my strategies.)  We were left with her old car quickly collecting dust on the side of our house.   I listed the car for sale online, and a potential buyer came by to look at the car for his teenage son.  Let’s look at both sides of this negotiation:  I have a car that I don’t need anymore.  The car certainly isn’t gaining value while it’s rotting away in my side yard, and I really don’t have a lot of time to be waiting for and meeting potential buyers.  If we don’t come to an agreement, my potential buyer will go home with his money in his pocket – he may be motivated to buy his son a car, but he’s probably not THAT motivated.  I, on the other hand, am stuck with a car that I don’t want or need anymore.

I recognized that my potential buyer has the upper hand in this negotiation.  Realizing this, my strategy was to make sure the first potential buyer I saw drove away with the car and left his money in my pocket.  I listed the car for a bit more than what I thought it was worth – his first offer was for $1,000 less than my asking price.  Rather than “split the difference,” I wanted to incentive him to buy the car now – so my counter was $750 less than asking.  ($250 more than his offer.)  He accepted, paid me, and drove the car away.  We were both happy.

Make Each Offer a Meaningful Offer

When I negotiate, I make each offer a meaningful offer.  By meaningful, I mean that it is an offer I expect the seller or buyer to take.  If an apartment property is listed for $1 million, I won’t pick a number out of the sky and offer $400,000.  If, however, my research into neighboring comparable sales and market CAP Rates indicate that the property is worth $400,000 – that very well could be my first offer.  If $400,000 is a fair price for the property, and I really like it, I may not want to pay more than $425,000 for it.   If, instead, I expect to pay around $800,000 for a building; a frivolous offer of $400,000 is just wasting everyone’s time.

This month, we discussed some basic principles of negotiation.  Negotiating to buy a car works the same manner as negotiating to buy real estate, to sign a new lease with a tenant or to hire a painter to renovate a unit.  Find out what this service should cost, choose your price and negotiate with potential buyers or sellers.  As always, it’s impossible to fully cover a topic in just a few pages, but this outline can give you a good start and can certainly save you substantial amounts of money the next time you’re negotiating for goods or services.  My toll-free office number is (877) 313-1868.

Christopher Miller is a Managing Director with Specialized Wealth Management and specializes in tax-advantaged investments including 1031 replacement properties.  Chris’ real estate experience includes work in commercial appraisal, in institutional acquisitions for a national real estate syndicator and as an advisor helping clients through over three hundred 1031 Exchanges.  Chris has been featured as an expert in several industry publications and on television and earned an undergraduate business degree and an MBA emphasizing Real Estate Finance from the University of Southern California.  Chris began his real estate career in 1998, began working in the partial interest industry in 2001 and has been a broker advising clients since 2003.  Call him toll-free at (877) 313 – 1868.

This does not constitute an offer to buy or sell any security.  Investments in securities are not suitable for all investors. Investment in any security may involve a high degree of risk and investors should review all “Risk Factors” before investing. Investors should perform their own due diligence before considering any investment. Past performance and/or forward-looking statements are never an assurance of future results. Examples given in this article are for illustrative purposes only.  Individual results may vary based on IRS tax changes, market conditions or tenant occupancy.  SANDLAPPER Securities, LLC nor Specialized Wealth Management/Chris Miller do not give tax or legal advice. We recommend that you seek advice from your tax and/or legal professional before investing. Securities offered through Sandlapper Securities, LLC. Headquarters: 800 E. North Street, 2nd Floor, Greenville, SC 29601. Member FINRA/SIPC. Specialized Wealth Management is not affiliated with Sandlapper Securities, LLC. California Insurance License # 0I80282.  Copyright 2018 Specialized Wealth Management. All rights reserved.

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by Florentina Sarac

Today’s demographics look substantially different than they did only a decade ago due to America’s older population growing significantly and at a very fast pace. According to Census data, the U.S. is a rapidly aging country, with more than 22% of the current population being aged 60 & over.

The overall aging of the population is not just the result of the economic hardship following the 2007 Great Recession, reflected in declining birth rates, but also the result of the Baby Boom cohort, America’s largest living adult generation, passing age 53 in 2017.

Our research shows that as the 60+ cohort grew bigger and faster, it also helped push the national median age from 36.7 in 2007 to 38.1 in 2017, the highest it’s ever been.

Taking into consideration the decline in births, as well as the higher life expectancy, this trend will likely continue uninterrupted. But which parts of the country have contributed more to this rapid graying of America?

The oldest cities by median age in the U.S. are popular retirement spots

Our top 30 oldest cities all have a median age over 39.6 and are mostly retirement cities in Florida, California, or Arizona. In fact, Florida is home to 12 of the oldest cities, with Cape Coral, first in our top, boasting a median age of 47.9, followed by Hialeah, with 46.5. Sunny Scottsdale, AZ is third in our top, with a median age of 46, proving once more its high popularity among retirees in search of warm days and entertainment.

The population’s median age increase is also reflected in the median household age that saw a steady increase over the 10-year period, reaching 52 in 2017.

Renter households over 60 are up by 43%, outpacing owner households and growing faster than other age groups

As expected, renter householders tend to be younger, with a median age of 42 in 2017, compared to owner householders that had a median age of 56 in the same year. Moreover, the rapid aging of householders is visible throughout the 10-year period analyzed with both renter and owner householders getting older. But the median age of renters has been slowly closing the gap over the last decade.

Renter households aged 60 and over drove the past decade’s surge in renters, with a 43% increase, from 6.551M to 9.37M in 2017, greatly outpacing younger age groups. While those aged 35 to 59 grew by 17% from 16.325M to 19.111M, renters aged under 35 witnessed the slowest increase rate of 7%, growing from 13.987M to 14.898M in a decade. Likewise in net numbers, the U.S. gained more new senior renter households in the past ten years than in either of the two younger renter age groups.

Stemming from a decline in homeownership, older renter households increased faster than older owner households – 43% versus 31%. The rapid growth of the 60+ population is also visible across owner households as the only increase in the 10-year period between 2007 and 2017 was witnessed by seniors over 60. Those aged 34 and under saw a 19% decrease and owner households between 35 and 59 decreased by 12%.

Past studies we conducted show that the older population is no longer enthusiastic about homeownership, with many seniors starting to downsize and move into rentals. As their children move out, they find themselves alone, in a big house that costs a lot to maintain, causing them to rethink their housing choices.

Austin boasts the highest 10-year percentage change in the share of older renter households

Out of the 30 most populous cities in the U.S., 16 experienced an increase of over 40% in the 60+ renter household share between 2007 and 2017. Austin, TX takes the first place as the city with the highest percentage change in the share of 60+ renter households, increasing by 113% in the 10-year period. Phoenix, AZ is also present in this top with the second highest increase of 112% and it’s followed by another Texas city: Fort Worth, with 95%.

On the other hand, New York had the largest share of 60+ renter households in 2017 – of 27% or 572,130 renter households. It’s also important to point out that New York is the only one in our top to have more 60+ renter households than under 34. However, this might not come as an absolute surprise if we think about the city’s infamously high rents, generally unaffordable to those under 34.

The second highest share of 60+ renter households is claimed by Baltimore, MD – of 25%, followed by Detroit, MI and San Francisco, CA with 24%. All top 11 cities have over 20% shares of older renter households, including Las Vegas, NV, Philadelphia, PA, Boston, MA, Chicago, IL, Los Angeles, CALousiville, KY, and Washington, D.C.

By 2035, the 60+ renter share is projected to keep growing while that of all other age groups will decrease

According to our projection based on the trend witnessed between 2007 and 2017, we expect the year 2035 will mark a major demographic shift with the share of 60+ renter households reaching somewhere around 31% and becoming the second highest share among all age groups. Despite being the majority, those aged between 35 and 59 will likely see a decrease in their share of renter households, dropping from 44% in 2017 to an estimated 43% in 2035. However, the most notable decline is projected to take place among those aged 34 and under, with their to decrease from 34% to 27% by 2035.

In terms of net numbers, the 60+ cohort is expected to grow to an estimated 18.6M by 2035 and will become the second largest group of renter households, surpassing those aged 34 and under.

This growing share of older Americans is bound to have an impact on the U.S. real estate market. This is a cohort of people that witnessed firsthand the impact of the 2007 housing crisis and the re-shaping of the economy, forcing most of them to give up their homeowner status and move into rental apartments. It’s important for developers to acknowledge the particular housing needs of older renters and make sure that they are being met.

Florentina Sarac is a creative writer for RENTCafé, where she covers everything from real estate news to market reports. She holds a BA in English and Spanish, as well as an MA in Multilingual and Multicultural Communication.

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By Jessica Guerin

When it comes to the health of the economy, the housing market is the canary in the coal mine, providing clear and early clues of pending trouble. And that’s why analysts track its performance intently, looking at a multitude of indicators that might signal the looming recession some are forecasting.

Now, one critical clue from the housing market has emerged to suggest economic growth is likely to backslide, and that is a steady decline in single-family authorizations.

In essence: Construction activity appears to be slowing.

Single-family housing authorizations – what some call a key predictor of economic recessions – represent building permits requesting permission to commence construction. In contrast, housing starts signal that construction has already begun. 

According to the latest data released by BuildFax, single-family housing authorizations fell for the third consecutive month in February, declining 4.24% from the previous month. This also represents a 5.75% decline year over year.

The data left BuildFax to conclude that, “without relief from this steady decline in single-family housing authorizations, an economic slowdown is likely forthcoming.”

Existing housing maintenance and remodeling volumes are also down, continuing a four-month decline. Maintenance volume was down 5.53% year over year, while remodeling volume was down 10.07%.

But at the same time, spend for both maintenance and remodeling increased, which BuildFax attributed to recent spikes in construction labor costs.

Interestingly, some cities are defying national trends, posting increases in new construction and maintenance in February.

Dallas, New York City, Chicago and Washington, D.C., saw activity in new construction and maintenance rise.

BuildFax said Chicago saw the greatest increases, with new construction up 60.15% and maintenance up 19.51%, which the report said could be a result of the city’s strategic five-year housing plan to solve affordability problems.

“It’s yet to be seen whether housing activity in these cities will eventually slow as it has on a national level or if these will be key metros to watch as the U.S. potentially heads towards an economic slowdown,” BuildFax wrote.

BuildFax CEO Holly Tachovsky said the performance of these indicators over the next several months will be key to determining the overall impact on the economy.

“There have been persistent declines across key housing indicators for four consecutive months. However, we anticipate some economic relief as we head into 2019’s spring home buying season,” Tachovsky said.

“Mortgage rates have reached recent lows leading to increased potential for home sales, which is oftentimes followed by a surge in remodeling activity,” she continued. “The performance of single-family housing authorizations, maintenance and remodeling activity through this next season will shed light on whether declines in the housing market will spread to the broader economy.”

Jessica Guerin is an editor at HousingWire covering reverse mortgages and the housing wealth space. She is a graduate of Boston University and has a master’s degree from Northwestern’s Medill School of Journalism. She worked previously as the editor-in-chief of The Reverse Review magazine, which was recently acquired by HousingWire.

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By Daniel M. Yukelson, Executive Director

You have heard it before, but it is worth repeating: There is no denying it, we have a housing crisis here in the Golden State of California.

Since the 1970’s, California has been experiencing an ever-increasing housing shortage, and by 2018, California had the 49th lowest ratio of housing units per resident.  Our current housing shortage has been estimated at 3 to 4 million housing units, or roughly 20% to 30% of California’s current housing stock.  The cause of this shortage is the imbalance between supply and demand resulting from strong economic growth that has led to the creation of hundreds of thousands of new jobs, and that in turn has led to increased housing demand.  However, while the economic “boom” continues, we have failed to construct enough new housing units to meet the demand.  To give you an idea of how bad the shortage is, for California as a whole, from 2011 to 2016, our state added only one new housing unit for every five new residents.

Some of California’s failure to keep up supply with growing housing demand lies in failed housing policies and over-regulation.  Laws such as rent control, the California Environmental Quality Act (C.E.Q.A.), zoning laws and others have discouraged or slowed down developers from constructing new housing units.  Local jurisdictions and “not in my backyard” (a/k/a, NIMBY) residents have slowed down or stopped entirely construction of new housing units in many areas.  The truth is that California does not currently have enough quantities of land that is zoned for housing to meet future demand.  Something has got to give!

Two Studies, Multiple Housing Proposals

This past year, two studies were published that attempt to solve the California Housing Crisis by offering a variety of solutions meant to thwart homelessness, provide more housing units particularly affordable housing, and to help stabilize the population of California renters.  These studies are “Finding Common Ground on Rent Control” published by the Termer Center for Innovative Housing at the University of California at Berkeley (May 2018) and the “CASA Compact” published by The Committee to House the Bay Area (January 2019). 

Why should you care?  Well, we believe that many of the elements contained in these studies may shape the 2019 and 2020 State legislative agendas on housing policy and may result in the proposal and passage of numerous State housing bills and local housing ordinances.  It is imperative that housing providers become familiar with the studies and become part of the inevitable debate that is certain to take place as our elected officials search for ideas to address the California housing crisis.

Terner Center for Housing Innovation: Finding Common Ground on Rent Control

The introduction to the Terner Center study starts out by citing grim details on our current housing crisis:

“California is in the throes of a serious housing crisis, with rising rents and displacement pressures touching a growing number of individuals and families throughout the state…more than half of California renter households (three million) are ‘rent-burdened,’ paying more than 30 percent of their income on housing.  Of those, 1.5 million pay more than 50 percent…Punctuating these sobering statistics are the seemingly endless daily anecdotes of families receiving exorbitant rent increases and being forced to choose between their homes and their other daily needs.”

The study cites a need for State and local policymakers to act to provide immediate rent relief.  The study then discusses the need to increase housing supply.  As a result, the Terner Center study makes two global recommendations to be adopted by California:

  • “Broad anti-gouging” rent control to be applied to units State wide, that would make it illegal to raise rents above a maximum threshold; and
  • Developer incentives to construct new and rehabilitate existing rental housing units that include a certain quantity of below market rent units.

While the Terner Center study acknowledges the many “drawbacks” of rent control, including providing benefits to those that do not necessarily need it, loss of rental housing units (e.g., the recent San Francisco study concluding that 15% of rental units were lost due to the implementation of rent control laws), and constraining new housing construction, it finds rent control as the only reliable “tool” to stabilize renters and keep them in place.  Accordingly, the Terner Center study proposes a Statewide “Anti-Gouging Cap” on annual rent increases equal to the regional Consumer Price Index plus 5%.  Now for those of us in already rent controlled jurisdictions, this sounds like a “dream come true,” but for those of us that are so fortunate, this represents only the beginning of the end.  The study does caveat that its proposed Statewide rent control limitation would not supersede more strict, local ordinance and that any violations of the Statewide rent control would be subject to both up to a $10,000 fine and up to one year in prison.

On the other hand, the Terner Center study attempts to throw our State’s developers a few “bones” by proposing to increase or preserve the State’s affordable housing stock through tax incentives.  Specifically, owners would receive an ad valorem property tax abatement for multifamily properties by committing to set aside a specific percentage of units at below market rate rents.  This tax incentive would be structured such that owners would be offered a 15-year (or more) tax abatement on the increased value of the sale and/or renovation of an existing multifamily property and on the new value of multifamily construction in exchange for setting aside a specified number of below market rent units.  In other words, the abatement would be equal to a dollar-for-dollar amount of the increase in property taxes resulting from any new assessed value.  The proposed eligibility for abatement is setting aside at least ten percent of units at below market rent for renters that fall into an affordability class of no more than 120% of the average median income for the area.

While the Terner Center study advocates the two previously mentioned recommendations for a Statewide rent control and developer incentives, it makes mention of two other, potential policies to expand rent control by amending the Costa-Hawkins Rental Housing Act.  As you may recall, Proposition 10 on last November’s ballot sought to repeal the protections we as property owners continue to enjoy Costa-Hawkins Rental Housing Act.  The Terner Center study, “as part of its efforts to stimulate new ideas for renter protections” suggests a “rolling inclusion” for Costa-Hawkins exemption from rent control (e.g., exempt new construction from rent control for 30 years) and allowing single family home rentals to be subject to rent control ordinances.  It is ironic that the Terner Center would place these draconian concepts under the banner of “to stimulate new ideas.”

The Committee to House the Bay Area: CASA Compact

The CASA Compact study bills itself as “A 15-year Emergency Policy Package to Confront the Housing Crisis in the San Francisco Bay Area.”  While specific to the San Francisco Bay Area, again we believe that many of the concepts cited in this study could find their way into new State housing laws and into local ordinances within other jurisdictions, including the Greater Los Angeles area.

The CASA Compact study cites several reasons the San Francisco Bay Area now finds itself in its current housing predicament starting with big business that has created jobs to developers that only build luxury housing; from local government officials who oppose new housing developments to environmental and labor interests that drive up construction costs; and of course, community groups that fear changes that new development might bring (a/k/a, the “NIMBYs”).  In making their recommendations, the sponsor of the CASA Compact, The Committee to House the Bay Area, brought together varying interest groups both involved in the cause of and the solution to the San Francisco Bay Area’s housing challenges, including business leaders, government officials, builders, non-profit executives, economists and housing and transportation experts.  Following its 18-month study, CASA Compact purports to deliver a “detailed, comprehensive and actionable” solutions to the San Francisco Bay Area’s housing crisis.

The “key” recommendations of the CASA Compact, each termed a “Compact Element,” are summarized below:

Compact Element details
Just Cause eviction policy Purpose.  Ensure that renters are protected from arbitrary evictions by adopting a policy requiring specific “just causes” (both fault and no-fault) for termination of tenancy, such as failure to pay rent or violation of lease terms.  Require housing providers to provide relocation assistance for covered “no fault” evictions.Exclusions.  Excluded from coverage are certain government owned housing, transient hotel occupancy, dormitories, and single owner-occupied residences.  Relocation benefits would not be applicable for owner move-ins.Waiting Period.  The “just cause” protections and relocation benefits would apply only after one-year of tenancy.Local Ordinances Supersede.  There would be no preemption of more restrictive local ordinances. 
Rent Cap Purpose.  Establish a rent “cap” that limits annual increases in rent to a reasonable amount.Proposed “Cap” on Rent.  For an emergency period (15 years), no increase to exceed the Consumer Price Index for a region plus 5%.  The “cap” on rent increases would apply to the renter and not the unit (in other words, vacancy de-control would be permitted).  Housing providers would be able to “bank” unused rent increases for 3 to 5 years up to a maximum of 10% to 15%.Pass-Throughs.  Housing providers would be permitted to “pass-through” certain cost increases to renters, including water and other utilities through use of a Ratio Utility Billing System (R.U.B.S.).Local Ordinances Supersede.  There would be no preemption of more restrictive local ordinances.
rent assistance and access to legal counsel Purpose.  For low income renters facing eviction, provide access to legal counsel and emergency rent assistance.Exclusion.  Tenants of property owners or master tenants residing in the same dwelling unit are not eligible for legal assistance.  Emergency rental assistance is to be limited “Cap on Assistance”.  Assistance would not exceed $5,000 to $10,000.
Remove regulatory barriers to accessory dwelling units (Adu) Purpose.  Extend San Francisco Bay Area best practices regarding accessory dwelling units to every jurisdiction by removing regulatory barriers.  Allow multiple ADUs on multifamily properties and “small” and “tiny” home building codes.
Miniumum zoning near transit Purpose.  Establishes minimum zoning standards in areas served by high quality transit services, including housing near jobs, and increases minimum building height within specified areas.Tenant Protections and Preservation.  All sites rezoned under this element would be subject to tenant protections.  Onsite affordable housing would be required at levels no less than current California bonus density laws or developers would have an option to contribute to an affordable housing fund as an “in-lieu” fee.
good governement Reforms to Housing Approval Process Purpose.  Establish government standards for streamlining the entitlement and permit process for residential development.Proposed Standards.  Jurisdictions would not require more than three de novo public hearings on a zoning compliant residential project.   Building permits would expire after 24-months in order to encourage more timely construction.  Adoption of deferral programs that allow builders to pay some fees later in the development process.
Expedited approvals for Financial Incentives and Selct Housing Purpose.  Ensure timely approval of zoning-compliant housing projects and create financial incentives for enabling on-site affordability.Proposed Standards.  Streamlined review process under state law for residential projects that meet certain criteria.  These projects should be granted statutory exemptions to compliance under the California Environmental Quality Act (C.E.Q.A.) and would be subject to limited discretionary review process.Qualifying Projects. Among other qualifications, (1) Complies with existing zoning standards; (2) located in urbanized area; (3) restricts units to 20% middle income that may range from 80% to 150% average median income (AMI).Financial Incentives.  (1) 15-years of property tax increment abatement; (2) “cap” on certain impact fees; (3) density bonus of 35%; (4) parking reduced to 50% of local standards at developer discretion; and (5) relief from strict liability standards for housing ownership.
Unlock Public Land for Affordable Housing Purpose.  Promote utilization of publicly owned land (surplus and/or underutilized) for affordable housing.  Amend the State’s housing element to allow residential uses on developable public land regardless of zoning.
Funding and Financing the CASA Compact Purpose.  Raise $1.5 Billion in new, annual revenue from a broad range of sources, including property owners, developers, local governments and taxpayers to fund implementation of the CASA Compact elements.  (Note: annual goal to expand the implementation of these elements Statewide would be significantly greater.)Potential Funding Sources.  Sources include, among others: (1) tax on vacant homes; (2) parcel tax; (3) commercial linkage fees; (4) gross receipts tax; (5) employer (per head) taxes; (6) sales tax (e.g., additional ¼ cent); and (7) general obligation bonds.
Regional Housing Enterprise Purpose.  Establish a regional leadership entity to implement the CASA Compact.  The entity must be governed by an independent board.

In addition to the ten elements outlined in the table above, the CASA Compact makes the following additional recommendations as “calls to action”: (1) Reestablishment of redevelopment agencies; (2) lower voter threshold for housing funding ballot measures; (3) increase incentives for cities to develop housing vs. commercial development, e.g.,  so-called “Fiscalization of Land Use;” (4) address homelessness through intervention policies that provide relief and housing; and (5) grow and stabilize the State’s construction labor force.

Implementation of the recommendations contained in the Terner Center study or of the CASA Compacts elements will take time and require many new State legislation and local ordinances be passed, and will take incredible leadership by our new governor, Gavin Newsom.  There is no telling which of the recommendations or elements, or derivatives of them, will resonate with our State legislature or other elected officials to be carried forward.  Some aspects suggested in the two studies are things we, as property owners, can live with and continue to be successful.  Other aspects will be very challenging for our industry.

As Charles Dickens book and namesake for this article, “A Tale of Two Cities,” goes:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

I think so much of Charles Dickens’ sentiments ring true for California’s housing crisis, and for property owners and renters alike.  Stay tuned!

Daniel Yukelson is currently the Executive Director of The Apartment Association of Greater Los Angeles (AAGLA).  As Certified Public Accountant, Yukelson began his career at Ernst & Young, the global accounting firm, and had served in senior financial roles principally as Chief Financial Officer for various public, private and start-up companies.  Prior to joining AAGLA, Yukelson served for 12 years as Chief Financial Officer for both Premiere Radio Networks, now a subsidiary of I-Heart Media, and 3 years for Oasis West Realty, the owner of the Beverly Hilton and Waldorf Astoria Beverly Hills where he was involved with the development and construction of the Waldorf.

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