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.
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.
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.
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
SB 18 also has provisions that cater
to the administration of grants for rental housing and legal aid for those
Tenants Associations Withholding to Pay Rent SB-529
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
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
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
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
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.
Extended Notices for Rent Increases AB-1110
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.
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.
Criminal Records on Rental Applications AB-53
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.
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.
Allowances for Tenants to Shelter those at Risk of Homelessness AB-1188
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).
Requirements for the Homeless Coordinating and Financing Council SB-333
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.
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.
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.
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.
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
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.
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
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.
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
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.
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.
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
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).
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.
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
Op. Exp. Ratio
Min. Debt Yield
Decrease in Max. Loan
Loan $ Lost per $1 of Expense
As mentioned above, you lose about $13 for every
$1 of additional expense.
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.
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 firstname.lastname@example.org or call/text (760) 201-6758.
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
Power outage – names and numbers for local electric supply
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
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
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.
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 email@example.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.
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.
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.
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.
MAYOR ROBERT GARCIA 333 West Ocean Blvd, 14th Floor Long Beach, California 90802 Mayor@longbeach.gov T (562) 570-6801 F (562) 570-6538
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!
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
– 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
folks seem to have learned negotiation by watching reality tv, and feel that
being a jerk is the way to get the best deal.
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
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.
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.
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.
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
Make Each Offer a
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.
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.
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 –
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.
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
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
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
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, CA, Lousiville,
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.
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
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
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
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
“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.”
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
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
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
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
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:
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.
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
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
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
“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.