« June 2008 | Main | August 2008 »

July 30, 2008

The Housing and Economic Recovery Act of 2008

July 30, 2008

Dear MBA Member,

This morning President Bush signed into law The Housing and Economic Recovery Act of 2008 into law.

Considering the current state of the real estate market, I can say with 100% confidence that this is indeed the most significant piece of housing-related legislation that we have seen in more than a generation. While there is no cure-all to solving the nation's housing problems, this bill will serve as the foundation for responsible solutions in the future.

While this bill did not enjoy an easy road to passage, it is gratifying to see that many of the provisions that MBA tirelessly lobbied for are part of this landmark housing bill. FHA modernization and GSE oversight reform have been long standing goals of MBA and these provisions are reflected prominently in the new bill. In fact, MBA testified before Congress thirty times in 2007 and 2008 on issues related to this bill.

In addition, several of the provisions that MBA and its members found troublesome are not included in the bill, most noticeably the bankruptcy cramdown reform provision.  MBA launched an extensive communications and advocacy campaign, over several months, affirming the industry's opposition to the bankruptcy reform proposal. Our Chairman-Elect, David Kittle, also provided testimony before Congress on several occasions regarding bankruptcy.  In the end, the bankruptcy provision was deleted from the bill, despite heavy lobbying efforts from various consumer groups who supported it.

Among the bill's provisions are several that MBA feels are vastly important to our member companies as we look to secure the future of our industry:

  • FHA Modernization:  Authorizes a $25 million appropriation to improve technology, processes, program performance, eliminate fraud and provide appropriate staffing. Effective January 1, 2009, it also increases the FHA loan limit to the lesser of 115 percent of the local median home price or $625,500 with a floor for lower priced markets of $271,000, establishes a 12-month stay on FHA's proposal for risk-based premiums, sets the down payment requirement at 3.5 percent and prohibits seller-funded down payment assistance (both direct or through a third party).

  • GSE Oversight Reform:  Creates a new regulator (five-year term, appointed by the President, confirmed by the Senate) with oversight authority similar bank regulators, establishes a new affordable housing fund and capital magnet fund to be funded by a 4.2 basis point fee on all new loans, significantly changes the affordable housing goals and raises the conforming loan limit to the higher of $417,000 or 115% of the local median home price, not to exceed $625,500 (effective January 1, 2009).

  • FHA Rescue: Creates a voluntary program for lenders to write down the loan balance in exchange for an FHA guaranteed loan not to exceed 90 percent of the newly appraised value of the home. The lender would pay a 3 percent FHA loan origination fee.  To qualify, the borrower must have a debt-to-income ratio above 31 percent on the original loan.  The program is capped at $300 billion.

  • Tax Incentives:  Creates a $7,500 refundable tax credit for first-time home buyers, expands the volume cap for the low income housing tax credit, allows for tax-exempt treatment of bonds guaranteed by the Federal Home Loan Banks and exempts the low income housing tax credit from the alternative minimum tax.
    " Affordable Rental Housing:  Encourages the development of affordable housing by harmonizing multifamily FHA mortgage insurance programs with the low income housing tax credit.  Allowing these two programs to work together will result in more effective uses of both programs.

  • GSE Backstop:  Authorizes the Treasury Secretary to temporarily increase the GSEs' line of credit and to, if necessary, buy equity in the GSEs in order to provide confidence to credit markets. Also provides a role for Treasury and the Federal Reserve in GSE oversight to ensure safety and soundness. 

  • TILA Reform:  Requires TILA disclosures to be delivered seven days prior to loan closing, requires that disclosures include examples of how payments would change based on rate adjustments in addition to disclosing the maximum possible payment under the loan terms and mandates that the consumer receive early disclosures before paying anything more than a nominal fee that covers the cost of a credit report.

  • Empowering States:  Raises the cap by $11 billion on tax-free bonds that state housing finance agencies may use to help at-risk homeowners by refinancing troubled loans and appropriates $4 billion for states to purchase and renovate abandoned and foreclosed properties.

  • Licensing:  Encourages state officials to create a national licensing system for residential loan originators, allows HUD to create its own national licensing system if the states fail, establishes minimum qualifications for all loan originators and requires federal regulators to create a registry for banks and thrift employees who originate loans.  

I am proud to say that MBA was instrumental in shaping this bill into a law that will benefit the majority of American homeowners and help to stabilize the nation's housing market. Our hard work has clearly positioned MBA as the leading organization and strongest voice in the real estate finance arena.

As we usher in a new President and a new Congress in January, MBA will continue to work with both the executive and legislative branches to ensure that the housing market continues on the path to full recovery. The Housing and Economic Recovery Act of 2008 is certainly a step in the right direction and I believe it will lead to renewed consumer confidence in the nation's housing market as well as the overall economy.

MBA staff will be working to facilitate extensive discussions between industry players, the relevant federal departments and the federal and state financial regulators in order to address the challenges and questions that will surely arise during implementation of the different programs under this new law.

Sincerely,



Kieran P. Quinn, CMB
Chairman
 


[ Yahoo! ] options

July 29, 2008

INDUSTRY NEWS

SAVE | EMAIL | PRINT | MOST POPULAR | RSS | REPRINTS

Q&A with Dr. Catherine L. Ross: Shrinking Footprint of American Home Offers Greater Potential for Multifamily Developers
Published: July 24, 2008

CatherineRoss

Dr. Catherine L. Ross is the first executive director of the Georgia Regional Transportation Authority. She has extensive experience in transportation and urban planning, and organizational management consulting for both the public and private sectors. She is an internationally known transportation planner with experience in conducting transportation planning, urban and regional planning, quality growth and project impact assessments.

Dr. Ross is Georgia Tech’s College of Architecture’s first endowed faculty member. She holds the Harry West Chair of City and Regional Planning and directs the Center for Quality Growth and Regional Development (CQGRD).

She talked to MHN Online News Editor, Anuradha Kher, about the role of the multifamily industry in transit oriented development (TOD), how public/private partnerships make TOD more successful, and why it will take a cultural change in America to make this happen.

MHN: Do transit-oriented cities need to have predominantly multifamily housing?
 
Dr. Ross:
Transit-oriented cities certainly do have multifamily housing. I am not convinced that they have to predominantly have multifamily housing. It is quite common to find that cities with extensive transit also have higher densities with housing that includes lofts, condominiums, apartments and live/work play communities. These cities have communities that are developed around transit systems offering compact, mixed-use development with high-quality pedestrian environments. Many different types of housing can benefit as a result of proximity to transit. However multifamily housing, when it is located in a place that offers access to a wide range of attractive services and activities, can be an anchor in the development of transit-oriented communities.
 
MHN: What are the challenges/obstacles in creating a transit oriented future?
 
Dr. Ross: A primary obstacle is the design of our communities and neighborhoods, which has been largely driven by the automobile. To a great extent, we have constructed our homes in suburban enclaves with jobs locating in places that are totally automobile dependent. In addition, retail is located along commercial strips or in huge malls that once again require the use of the automobile. We are confronted with reconfiguring the built environment in urban and suburban communities providing transit alternatives. This will mean developing and redeveloping communities that are more compact but offer high-quality living environments. While most Americans have enjoyed the use of their cars, millions of us are now abandoning this mode of travel as a result of the escalating costs of gasoline and the push/pull of climate change and its impact looming large. Many are opting for more close-in locations or switching to transit.
 
A transit-oriented future will also require significant investment in transit systems including light rail, heavy rail, commuter systems, high speed rail, bus, pedestrian and bikeways. The construction of a more comprehensive and efficient transit system within the United States will require significant increases in funding for transit as well as a cultural change, which recognizes the benefits of expanding our travel and living choices.
 
 
MHN: Transit oriented development is the hottest topic in the multifamily industry right now. Will this trend continue on to be a defining one in the history of American housing?

 
Dr. Ross: Transit-oriented development is enjoying a resurgence in contemporary urban America as a result of a number of market and environmental phenomena. Towns and cities were initially constructed around public transit systems so in this sense, this is a re-emergence of a historical development pattern. Transit-oriented development creates the opportunity for unique market solutions. These solutions are most successful when there is a partnership between the public and the private sector. Previously, it was largely the public sector and policy interventions that drove transit development. The link between transit-oriented development and the multifamily housing industry will continue to expand and become more concrete in response to both the challenges and opportunities in the market place. This current union is one that will enjoy a substantial place in the history of American housing.

MHN: How much part does government play in making sure that America becomes more transit oriented?
 
Dr. Ross: It is imperative that the government play a role in assuring investment in transit as part of a strategy to assure the continued mobility of both passengers and commodities. The increasing requirement of more sustainable transportation in response to climate change and the escalating cost of travel can best be accomplished through a partnership with a continuing role for government.

MHN: What role do multifamily developers play in ensuring that a city becomes more transit oriented?
 
Dr. Ross: Multifamily developers play a very large role in creating transit-oriented communities. Much of the construction will take place around transit stations resulting in significant social, environmental and economic benefit. Creating greater housing choice while expanding the opportunity for residents to travel on transit results in the revitalization of declining neighborhoods, congestion relief and the creation of transit-oriented communities. In addition, there is great evidence that the footprint of the American home is shrinking, offering even greater potential for multifamily developers.
 
MHN: What are the cities in the United States that can be considered good examples of great transit-oriented societies?    
 
 
Dr. Ross: New York City is an outstanding example of a transit-oriented society. The vast majority of transit trips made in the United States occur in New York City, which is extremely multi-modal. In addition, Philadelphia, Portland, Ore., Seattle, Washington, D.C. and Chicago are all good examples of transit-oriented cities.
 
MHN: How much of a push back is there from lobbies of car manufacturers and how can cities tackle this problem?

 
Dr. Ross:
Historically, car manufacturers have generally supported the highway lobby and not been equally supportive of transit. However, they are currently experiencing very difficult times in the market. This is particularly true for American car manufacturers who find themselves with limited ability to respond to the changing preference for smaller, fuel-efficient or alternative fuel-powered vehicles. As the American preference for vehicles is changing, and the demand and need for public transit is expanding along with the cost of gasoline, there may be a lessening of focus on transit on the part of American car manufacturers. Whether this occurs or not, cities and towns will continue to be called on to offer sustainable, cost-effective, dependable, safer transit alternatives.

SAVE | EMAIL | PRINT | MOST POPULAR | RSS | REPRINTS

[ Yahoo! ] options

INDUSTRY NEWS

SAVE | EMAIL | PRINT | MOST POPULAR | RSS | REPRINTS

California Gets New Green Building Code
Published: July 21, 2008

By Anuradha Kher, Online News Editor

Sacramento, Calif.--The California Building Standards Commission recently adopted the nation’s first statewide “green” building code, which is intended to lead to improved energy efficiency and reduced water consumption in all new construction throughout the state, while also reducing the carbon footprint of every new structure in California.

“Once again, California is leading the nation and the world in emissions reductions and finding new ways to expand our climate change efforts,” says Commission Chair, Rosario Marin. “The commission should be commended for bringing everyone to the table including representatives of the construction and building trades industry, environmental groups and labor organizations, and achieving something no other state has been able to."

The new California Green Building Standards Code will result in significant improvements in water usage for both commercial and residential plumbing fixtures and target a 50 percent landscape water conservation reduction. The code also pushes builders to reduce the energy use of their structures by 15 percent more than today’s current standards. The new code declares the minimum standards that California will accept in environmentally friendly design. Local jurisdictions and builders who wish to do more are applauded.

According to the U.S. Green Building Council (USGBC), buildings nationwide account for 70 percent of electricity consumption, 39 percent of energy usage, 12 percent of potable water consumption, 40 percent of raw materials usage, 30 percent of waste output (136 million tons annually), and produce 39 percent of associated greenhouse gases (CO2).

California’s new building standards will result in increased water and energy savings through a combination of more efficient appliances more efficient building design and operation. The code also encourages use of recycled materials in carpets and building materials, and identifies various site improvements, including parking for hybrid vehicles and better storm water plans.

Additionally, the new code contains standards for single-family homes, health facilities and commercial buildings. The code is composed of optional standards that will become mandatory in the 2010 edition of the code. This adjustment period will allow for industry and local enforcement agencies to prepare for, and comply with, the new green building standards. Moving forward after 2010, the California Green Building Standards Code will be updated on an annual basis to ensure that the latest technology and methods of construction have been incorporated to always maintain a high level of standards.

[ Yahoo! ] options

July 28, 2008

OCC Hosts Web and Telephone Seminar on

FOR IMMEDIATE RELEASE
July 17, 2008

Contact: Bryan Hubbard
(202) 874-5770

OCC Hosts Web and Telephone Seminar on
 Low-Income Housing Tax Credit Funds on September 10

WASHINGTON — The Office of the Comptroller of the Currency will host a live Web and telephone seminar on opportunities for banks that invest in projects funded through Low-Income Housing Tax Credits (LIHTC) from 2 to 3:30 p.m. (EDT) on September 10.

This seminar will help bankers understand how the LIHTC program works and the current market conditions that affect pricing.  The seminar will also focus on underwriting considerations of LIHTC funds; financial, tax, and accounting benefits; and what to look for in a good fund manager.  Examples of successful fund investments will be provided.  Participants will have an opportunity to ask panelists questions during the seminar, online or by telephone.

Panelists include Barry Wides, OCC Deputy Comptroller for Community Affairs; Dana Boole, President and CEO, Community Affordable Housing Equity Corporation; and Richard Floreani, Senior Manager, Tax Credit Investment Advisory Services, Ernst & Young.  The seminar will include a welcome from Comptroller of the Currency John C. Dugan.

The OCC live Web and telephone seminar program is part of the agency’s educational outreach program to the banking community by allowing people from across the country to listen to OCC experts and industry professionals.

Cost for the Web and telephone seminar is $115 for national banks and $150 for others.  For more information and to register, visit http://www.occ.gov/up_event.htm or call (800) 775-7654.

###

[ Yahoo! ] options

July 22, 2008

Los Angeles, Banks Make Available $100M Fund for Predevelopment, Acquisitions

Los Angeles, Banks Make Available $100M Fund for Predevelopment, Acquisitions  
Published: July 22, 2008

By Anuradha Kher, Online News Editor

Los Angeles--The first multimillion-dollar financing tool for the creation and preservation of affordable housing in Los Angeles has recently been unveiled. The New Generation Fund is a $100 million predevelopment and acquisition fund created through a partnership of the city of Los Angeles and a consortium of banks, financial institutions, foundations and community development financial institutions (CDFIs).

The fund is designed to combat homelessness and reduce the housing burden on poor and working families by offering affordable housing developers early-stage financing for properties intended for low- and moderate- income residents.

“Housing is a cornerstone of prosperity in our nation and Los Angeles is committed to creating an affordable housing supply that meets the needs of our community,” says Los Angeles Mayor Antonio Villaraigosa. “The $100 million New Generation Fund will go a long way toward helping us realize this ambitious goal. I am proud that the city stepped forward with its initial commitment of $10 million to leverage private capital in the creation of this creative financing tool.”

Citi, Wachovia, Enterprise Community Loan Fund, Merrill Lynch, MetLife and HSBC have contributed a combined total of $100 million to the fund, which is expected to grow up to $150 million by next summer. The city of Los Angeles, the Ahmanson Foundation, California Community Foundation and Weingart Foundation are providing credit enhancements totaling nearly $14 million.

Enterprise Community Investment Inc. is the fund’s owner and New York-based Forsyth Advisors will manage the daily administration of the fund, with the California Community Reinvestment Corp. providing local support for vested parties.

“Having invested resources and built local development capacity in Los Angeles for more than 10 years, Enterprise understands the unique housing needs of the Southland—homes that are affordable, environmentally sustainable and accessible to places of employment,” says Doris Koo, president and CEO of Enterprise Community Partners. “We are excited to partner with the City of Los Angeles and other funders to tackle the local shortage of affordable housing.”

The New Generation Fund is expected to offer early-stage capital with flexible underwriting and expedited processing. Developers will be able to borrow up to $10 million per project, at 130 percent loan-to-value (LTV) for non-profit organizations and 95 percent LTV for for-profit developers.

In order to apply for a loan, potential borrowers approach one of five underwriting lenders: Enterprise Community Loan Fund, Low Income Investment Fund, Local Initiatives Support Corp., Century Housing or Corporation for Supportive Housing.

[ Yahoo! ] options

Would the Real Income Property Expert Please Stand

Would the Real Income Property Expert Please Stand

Posted: 22 Jul 2008 10:19 AM CDT

Heisenberg the German physicist said “An expert is someone who knows some of the worst mistakes that can be made in his subject and manages to avoid them.”

Recently, NetGain received an attractive four-color brochure editorializing the investment merits of a property. Among the pictures and maps was a description of the immediate area plus a brief financial summary. It was a partisan presentation for what was proposed to be an attractive income property investment opportunity.

Since the listing agent had already described why this was a wonderful investment, NetGain’s instincts were directed to what was wrong with the picture. The focus of attention always begins with the math. Two numbers stood out: The capitalization rate (cap rate) was 5.6% and the income was predicated on market rents. These numbers call for further investigation and the question Heisenberg might ask from this brochure is “Who’s the expert?” Is it (1) the broker, (2) the seller, (3 ) the buyer’s money manager, or (4) the buyer?

1. The Broker

The broker should be designated an expert because there is no worst mistake(s) to be made from his presentation. A broker takes a listing and recommends a price to the seller based on the sale prices of comparable properties. The seller decides the price.

The intelligent broker knows that people who manage other people’s money are under pressure to invest. This broker further knows that the compensation of people who manage other people’s money increases when properties are bought. That motivation can drive a money manager to recommend the purchase of an income property with a 5.6% cap rate based on market rents. Consequently, the broker prepares an attractive four-color brochure highlighting the investment merits of the property and sends it out to the money managers.

2. The Seller

The seller should be designated as an expert because there is no worst mistake(s) to be made from this narrative. The seller has decided on a sales price based on information by the broker and his own prejudices. If the price is unrealistic, the seller changes the price.

3. The Money Manager

The buyer’s representative (money manager) should be designated with the opposite of expert (incompetent), the reason being he is about to make one of those worst mistakes. He’s going to recommend a property for purchase that he should pass over. NetGain’s own National Income Property Index (NIPI) currently recommends a 7% cap rate, based upon an objective formula that considers the mortgage market rate, the unemployment rate, and the consumer confidence index. The subject property is at a premium of 25% over NIPI’s recommended cap rate. To make matters worse the net operating income (NOI) was calculated on market rents, not collected rents. The operating expenses give no consideration for turnover vacancy, leasing commissions, increased marketing costs, and so forth. In other words, the already strained 5.6% cap rate is an inflated number. Of course, the catch-all justification is that the property’s good looks give it bragging rights.

Bragging rights aren’t enough for a pretty property that is materially overpriced, especially when the economy is trying to live through a credit crunch, record high gasoline prices, increasing unemployment, consumer confidence at record lows, fighting a war on two fronts, and a weak dollar (meaning higher interest rates).

4. The Buyer

The buyer should be designated with the opposite of expert (incompetent). The buyer made a worst mistake by hiring a money manager who put self-interest above his client when he recommended the purchase of an income property with foul numbers.

[ Yahoo! ] options

Salt Water Systems Gaining Popularity

Salt Water Systems Gaining Popularity for Pools Swimming pools are a cool refuge for residents this time of year, and maintaining them could become easier with the evolution of salt water systems. Salt water systems are now gaining in popularity for a number of reasons, including the reduced handling of chemicals by staff and potential cost savings.

http://www.multihousingnews.com/multihousing/content_display/features/e3i9d791163c345384df7fce8502ca80472

[ Yahoo! ] options

Investment opportunity in city of Winnetka

Hello,
Attached is an excellent investment opportunity in city of Winnetka on the main intersection of Nordhoff and Mason. Subject site consists of 11,126 square feet shopping center on 41,382 square feet land plus a double sided billboard. Price reduced to $3,100,000 @ 7% actual cap rate with tremendous upside in near future by adjusting the leases to the market rate.

 

 

Respectfully yours,

 

Mojgan Golcheh
(310) 997-0101 Ext. 510
(310) 877-1237 Cellular
(310) 288-1726 Facsimile
mgolcheh@capitalholdinggrp.com

[ Yahoo! ] options

July 21, 2008

For Immediate Release
July 21, 2008

 OFHEO RELEASES “MORTGAGE MARKETS AND THE ENTERPRISES IN 2007”  
WASHINGTON, DC — James B. Lockhart, Director of the Office of Federal Housing Enterprise Oversight (OFHEO) today released “Mortgage Markets and the Enterprises in 2007,” an annual research paper that reviews developments in the primary and secondary mortgage markets and the financial performance of government-sponsored enterprises Fannie Mae and Freddie Mac.

“This report is part of OFHEO’s ongoing effort to enhance public understanding of the nation’s housing finance system,” said Director Lockhart. “It details the deteriorating housing markets, higher foreclosures and mortgage market turmoil experienced during 2007 and the increasing role Fannie Mae and Freddie Mac are playing in stabilizing the markets.”

The report also provides updated historical data on the activities and performance of the GSEs, federally-established loan limits and mortgage interest rates.

The full report is available at: /media/research/MME2007.pdf
 
[ Yahoo! ] options

California Gets New Green Building Code
Published: July 21, 2008

By Anuradha Kher, Online News Editor

Sacramento, Calif.--The California Building Standards Commission recently adopted the nation’s first statewide “green” building code, which is intended to lead to improved energy efficiency and reduced water consumption in all new construction throughout the state, while also reducing the carbon footprint of every new structure in California.

“Once again, California is leading the nation and the world in emissions reductions and finding new ways to expand our climate change efforts,” says Commission Chair, Rosario Marin. “The commission should be commended for bringing everyone to the table including representatives of the construction and building trades industry, environmental groups and labor organizations, and achieving something no other state has been able to."

The new California Green Building Standards Code will result in significant improvements in water usage for both commercial and residential plumbing fixtures and target a 50 percent landscape water conservation reduction. The code also pushes builders to reduce the energy use of their structures by 15 percent more than today’s current standards. The new code declares the minimum standards that California will accept in environmentally friendly design. Local jurisdictions and builders who wish to do more are applauded.

According to the U.S. Green Building Council (USGBC), buildings nationwide account for 70 percent of electricity consumption, 39 percent of energy usage, 12 percent of potable water consumption, 40 percent of raw materials usage, 30 percent of waste output (136 million tons annually), and produce 39 percent of associated greenhouse gases (CO2).

California’s new building standards will result in increased water and energy savings through a combination of more efficient appliances more efficient building design and operation. The code also encourages use of recycled materials in carpets and building materials, and identifies various site improvements, including parking for hybrid vehicles and better storm water plans.

Additionally, the new code contains standards for single-family homes, health facilities and commercial buildings. The code is composed of optional standards that will become mandatory in the 2010 edition of the code. This adjustment period will allow for industry and local enforcement agencies to prepare for, and comply with, the new green building standards. Moving forward after 2010, the California Green Building Standards Code will be updated on an annual basis to ensure that the latest technology and methods of construction have been incorporated to always maintain a high level of standards.

SAVE | EMAIL | PRINT | MOST POPULAR | RSS | REPRINTS

[ Yahoo! ] options


From: HUD USER News
 
HUD USER has posted a Comprehensive Housing Market
Analysis (CHMA) report for the Augusta, Georgia-South
Carolina area. This recent CHMA contains valuable
information for builders, mortgage lenders, borrowers,
local planners, and others who need to keep up with the
area's housing conditions and trends. Prepared by field
economists in HUD's Office of Policy Development and
Research, the report provides data that are useful in
anticipating changes in the demand for new housing. Our
analysis describes the economic, demographic, and
housing inventory characteristics of the Augusta,
Georgia-South Carolina area housing market from 1990 to
2000, from 2000 through December 2007, and makes
projections regarding anticipated market activity during
the period of January 1, 2008 to January 1, 2011.
 
This CHMA, as well as previous CHMA reports examining
housing markets across the nation, is available
at www.huduser.org/publications/econdev/mkt_analysis.html.
All HUD USER CHMA reports are available as free
downloads. 
 
[ Yahoo! ] options

July 15, 2008

Are You at Risk for a Multi-Million Dollar ADA or FHA Lawsuit?
Published: July 15, 2008

Galanti

By Joseph Galanti, CFA, CFE, and Alexander Rey, Ernst & Young LLP

The Americans with Disabilities Act (ADA) and Fair Housing Act (FHA) still equate to significant financial and regulatory exposures for owner/operators of multi-housing units. Recently, compliance has become more important than ever. Unfortunately, these laws also remain as confusing as ever. The recent uptick in ADA/FHA lawsuits has been precipitated by management missteps and lack of clarity about accessibility standards. But clarity is critical, for the cost of redesign and retrofitting can easily reach into the millions, with legal fees, training costs and potential fines and economic damages.

Given the financial risks associated with non-compliance, property owners who fail to conduct timely assessments of compliance across their organizations may face significant unexpected future costs, operational uncertainties and reduced valuations. But few can afford to retain full-time risk management personnel who focus on these risks across an entire portfolio.

Multi-housing property owners, investors and managers can protect and increase the value of their businesses by proactively assessing ADA and FHA risks, formulating plans to address those risks and reducing uncertainties. This article briefly recaps the fundamental regulatory liabilities facing owner/operators, sketching a model for a preemptive strategy that seeks to assess facilities, improve access and monitor ongoing compliance. By undertaking such risk management strategies, companies can avoid the painful consequences of agency action—including financial losses.

Accessibility: The Landscape of Liability
FHA and ADA access requirements apply to all properties built for first occupancy after 1991 and 1992, respectively. FHA requirements apply to properties with four or more units and, if the building does not have an elevator, cover only ground-floor units. Requirements include accessible routes, such as wheelchair ramps, entrances, doors, kitchens and bathrooms, and even the proper positioning of switches, outlets and temperature controls.
Since ADA was passed in 1990, disability rights groups and the government have focused on retail, entertainment and hospitality businesses. More recently, the combined power of ADA and the 1968 U.S. Fair Housing Act (FHA), have been used to ensure that residential communities are fully accessible. Some of the largest apartment developers and owners have recently faced lawsuits. In one, Equity Residential Properties Trust was charged with violations in more than 300 apartment complexes totaling more than 80,000 apartment units. In another, AvalonBay Communities was accused of violations in more than 100 apartment complexes totaling 24,000 units. In 2005, Archstone-Smith settled with disability rights groups by agreeing to retrofit 71 properties.

ADA requirements are outlined in the ADA Accessibility Guidelines for Buildings and Facilities, but stricter local government guidelines apply in certain cases. Title III, which deals with “public-use” accommodations and commercial facilities, applies to accessibility in any areas open to the general public. In apartment communities, these include leasing offices, laundry rooms, swimming pools, basketball or tennis courts, parking lots and more.
For properties built and occupied prior to first occupancy dates, ADA/FHA requirements are less stringent. FHA requires that housing providers make “reasonable accommodations and reasonable modifications” when requested by disabled residents—a vague requirement to be considered on a case-by-case basis. In contrast, ADA puts the onus squarely on the owner to remove physical barriers when “readily achievable,” which could be thought easily accomplished without much difficulty or expense. For large, profitable businesses, however, this standard can be much stricter than for small, start-up businesses.

Compliance Enforcement: Steps to Mitigate ADA/FHA Risks

Litigation is an increasingly frequent recourse of both agencies and private parties to enforce ADA and FHA compliance. Property owners should act quickly to mitigate risk and to minimize out-of-pocket costs. Since many do not employ in-house ADA/FHA experts, one approach is to engage an in-house project manager and subject-matter specialists in access evaluation, design and compliance.
For organizations with multiple properties, this team would investigate compliance at all properties, as well as in unique unit types. Their program should include four critical steps:
1.    Assessing possible non-compliance within their properties and organizations;
2.    Quantifying estimated non-compliance exposure;
3.    Mitigating remediation costs through insurance, other claims and negotiations or settlements with key stakeholder groups; and
4.    Monitoring through training and compliance programs.

 ADA consultants and legal counsel can help estimate potential exposure and determine whether insurance will cover it. Depending on the violations alleged, the age of the buildings and unit types, and numerous other factors, a multi-housing company may quantify potential exposure by analyzing a statistically significant sample of properties and extrapolating to estimate the total impact of penalties, damages, retrofitting and other costs.

Non-Compliance Risk Management: Insurance
The multi-housing property owner can also explore different insurance coverages to address and transfer certain risks. These coverages could include:

1.    Employment practices liability insurance (EPLI) – With certain endorsements, typically covers some defense and liability costs associated with allegations of discrimination, generally attorney fees, expert/consulting fees, civil settlements, and costs for training, redesign and drafting of property alteration agreements. It typically does not cover property remediation (construction) costs.
2.    Professional liability (PL) practice – Covers contractors, architects, designers, engineers and other parties, related to the actual design and construction of properties in question. Since owners may have legitimate legal claims against designers and builders for their ADA/FHA liability, coverage should be investigated directly with those parties prior to taking any potentially unnecessary legal action against them.
3.    Project-specific professional liability (PSPL) – Covers professional parties involved in design and construction, such as contractors, architects, designers, engineers and others. Generally purchased for projects where the developer or owner requires coverage in excess of limits set by third parties’ professional liability practice policies.
4.    Owner’s protective professional indemnity (OPPI) – Project-specific and written as excess coverage for professional liability practice, typically covers the property owner directly in cases where the hired professionals’ coverage limits have been exhausted. A general condition is that OPPI not be disclosed to third-party professionals, lest it impact their professionalism.
5.    Directors and officers (D&O) liability – Can cover financial damages and attorneys’ fees resulting for individual directors and officers named in a discrimination complaint. Usually does not cover the corporation, or fines or penalties imposed on officers and directors.
6.    Commercial general liability (CGL) – Usually excludes ADA- or FHA-related claims. All CGL policies are unique, however; some may cover certain ADA/FHA issues.

Notwithstanding this apparent abundance of alternatives, the majority of liability—the cost of property alterations—is largely uninsurable. These costs can be significant for organizations with large property portfolios, so having reliable estimates before dealing with external stakeholders, such as disability rights groups, government agencies and shareholders, is vital.

While a property owner may be able to recover ADA/FHA litigation or settlement costs under an EPLI policy, it could still face significant costs to remediate properties covered in the settlement. An owner may seek to recover costs from its architect, developer, contractors and other responsible parties, but many large property owners have strong relationships, ongoing projects or future projects planned with such constituents and cannot risk upsetting those relationships. Capturing remediation-related costs can be complex and recovery difficult, requiring experienced legal and financial counsel.

Monitoring and Compliance Programs
For large property owners seeking to minimize risk across a portfolio, self-monitoring is the best solution. Even compliant organizations benefit from preventive risk management across the portfolio. Settlements or court judgments in ADA/FHA cases often mandate a compliance program to prevent recurring problems. In many cases, the issue is not “if” a payment is appropriate, but rather “how much” it should be.

Owners developing new “first occupancy” properties can mitigate risk by obtaining representations and warranties from contractors and design professionals. Buyers can mitigate risk by engaging consultants to assess accessibility compliance prior to acquisition, or by securing indemnification in the purchase and sale agreement.
       
Joseph Galanti (pictured) is a Principal in Ernst & Young LLP’s Fraud Investigation and Dispute Services (FIDS) practice in Miami. He provides services related to in complex insurance claims and disputes, and regularly assists policyholders and their counsel with first party property, third-party and specialty claims, including the following: property damage, business interruption, service interruption, extra expense, employee theft, environmental, employment practices liability, and commercial general liability.

Alexander Rey is a Manager in Ernst & Young LLP’s FIDS practice in Atlanta. A former hospitality executive, Rey provides dispute services and has helped numerous property owners and their counsel with financial and economic damages claims. 

(The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.)

SAVE | EMAIL | PRINT | MOST POPULAR | RSS | REPRINTS

[ Yahoo! ] options

July 14, 2008

back to homepage >

        PURPOSE: This program is designed to study in detail the appraisal of communications, energy and transportation properties for ad valorem taxation. The various indices of value - market, cost and income - and the application of these indices will be considered. As a rule, these indicators of value are considered for all types of property.

       FEE: Registrations received  and paid prior to June 30th are $275 without a CD of the materials, $300 with a CD.  Registrations paid after June 30th are $325 without a CD, $350 with a CD.  Registration fee includes four continental breakfasts, three lunches, break refreshments, four social functions The 2007 Conference Papers are available on CD for an additional $25.  Fees not paid by July 18, 2008, are subject to a $100 late charge.

        REGISTRATION DISCOUNT: A 10% discount will be given to all organizations simultaneously registering five or more participants in the conference.

        CANCELLATION POLICY: Cancellations received after July 16, 2008  will be assessed a $100 cancellation fee. Substitutions are welcome.

       LOW PRICED AIRFARE INTO WICHITA :

                             Air Tran Airways      

        DRESS: Casual, warm-weather clothing.

        TRANSPORTATION: Shuttle service will be provided from the Marriott Hotel, Fairfield Inn and Homewood Suites each morning and evening to and from the WSU campus.  See the shuttle schedule at www.appraisal.wichita.edu.

        LODGING: You are responsible for making your own reservations. Mention the WSU Appraisal for Ad Valorem Taxation Conference to receive special conference rates. The hotels will be responsible for confirmation and billing for their respective properties.

Wichita Marriott  - (Conference Headquarters)    $91
9100 Corporate Hills Drive - (316) 651-0333.  
   

 

When calling directly to the hotel, please mention that you are attending the Ad Valorem Taxation Conference to receive the group discount.
 

OTHER HOTELS:

Fairfield Inn - 333 S Webb Rd,

(316) 685-3777................................................

within walking distance of the Marriott

$71

Comfort Inn - 9525 E Corporate Hills Dr,

(316) 686-2844..............................................

within walking distance of the Marriott

$79

Hampton Inn - 9449 E Corporate Hills Dr,

(316) 686-3576..............................................

within walking distance of the Marriott

$99

Hilton Garden Inn - 2041 North Bradley Fair Parkway
(316) 219-4444............................................

$110

Homewood Suites - 1550 Waterfront Parkway,

(316) 260-8844............................................

     $129

 

When making your hotel reservations please mention the WSU Appraisal for Ad Valorem Taxation Conference to receive these special conference rates. Reservations are on a "first-come, first served" basis.

  • Continuing Education Credit  (CEU's)- This conference is approved for 20 CEU's from the IPT (Institute for Professionals in Taxation).  To determine if this conference qualifies for CEU's in your profession, in your state, contact the appropriate office to obtain forms and then contact pat.mcleod@wichita.edu

 

If you have questions regarding the conference,
contact the Center for Management Development, Wichita State University,
(316) 978-3118


W. Frank Barton School of Business
Wichita State University
1845 Fairmount
Wichita, KS 67360-0086

[ Yahoo! ] options

July 11, 2008

ATLANTA, July 3, 200 - IAHI, The Owners' Association for IHG brand hotels, is sponsoring two educational conferences for its 3000 members. The Leadership Institute, to be held October 12 through October 15 at Emory University in Atlanta, is designed exclusively for hotel owners. The General Managers Academy is available in three separate sessions, October 5 through October 8 at Emory University in Atlanta; October 12 through October 15 at Ashridge Business School in Hertfordshire, UK; and November 16 through November 19 at Emory University in Atlanta. The deadline for applications is July 14, 2008.

 

[ Yahoo! ] options

July 09, 2008

Fannie Mae Bolsters Multifamily Investment

July 9, 2008 11:18 AM EDT

 

WASHINGTON, July 9 /PRNewswire-FirstCall/ -- Amid stress in the capital markets and a downturn in the Commercial Mortgage Backed Securities market, Fannie Mae (NYSE: FNM) today announced that it will expand liquidity, stability and affordability by increasing its participation in key segments of the multifamily market. The company also announced that it has invested $20 billion in multifamily housing in the first half of 2008, further reinforcing Fannie Mae's leadership in the multifamily market.

"Affordable rental housing is increasingly needed during this housing and mortgage market downturn. Fannie Mae is increasing our product offerings to provide additional liquidity to meet the changing market needs," said Phil Weber, SVP of Multifamily at Fannie Mae.

According to a new report by Harvard University's Joint Center for Housing Studies, households should grow rapidly over the next several years, from an increase of 12.6 million households from the years 1995 to 2005, to an increase of 14.4 million from 2010 to 2020. Growth is primarily due to the number and age distribution of the adult population. Many of these new households and many existing households will need affordable rental housing or will choose to rent because it meets their family's needs. At the same time, however, the mortgage crisis has tightened lending and has made it more difficult to secure financing for rental housing construction and preservation.

 read more: http://www.streetinsider.com/Press+Releases/Fannie+Mae+Bolsters+Multifamily+Investment/3807126.html

[ Yahoo! ] options

The LOoP, CSE

The LOoP, CSE

 

<script src="http://www.gmodules.com/ig/ifr?url=http://www.google.com/coop/api/000747579154309164948/cse/nnakvu69iqy/gadget&amp;synd=open&amp;w=320&amp;h=75&amp;title=The+%22LOoP%22+sponsored+by+The+Harris+Company%2C+Commercial+Appraiser+and+Consultant%2C+A+Real+Estate+Services+Directory+and+Custom+Search+Engine%2C+CSE%2C+(real+estate+search+engine)+Get+Listed+NOW!+It'+Free%2C+and+IT+PAYS!+Call+310.337.1973%2C+or+use+email+below&amp;border=%23ffffff%7C3px%2C1px+solid+%23999999&amp;output=js"></script>

[ Yahoo! ] options

July 08, 2008

http://www.sba.gov/advo/laws/law_regalerts.html#safety

 

Public Hearing on ADA Regulatory Amendments
On July 15th 2008, the Department of Justice (DOJ) will hold a public hearing in Washington, D.C. on the recently proposed amendments to its Americans with Disabilities Act (ADA) regulations. The hearing will provide an opportunity for interested persons to express their views directly to Department officials.
The public hearing is scheduled for July 15, 2008, 9:00 a.m. to 5:00 p.m., Eastern Daylight Time. The hearing will be held at the Marriott Hotel at Metro Center, 775 12th Street, N.W., Washington, D.C. 20005, (202) 737-2200.
Individuals who would like to speak at the hearing should contact Linda Garrett, Civil Rights Program Specialist, Disability Rights Section, Civil Rights Division by email at Linda.Garrett@usdoj.gov or by telephone at (202) 353-0423. The Department will also continue to accept written comments on the proposed amendments until August 18, 2008
  • Notice of Public Hearing from the ADA web page
  • Advocacy contact:  Jamie Belcore at 202-205-6533
  • Submit Comments to DOJ Electronically
  • Regulations.gov, the Federal government’s one stop site to comment on Federal regulations.

    Department of Justice (DOJ) Releases Proposed ADA Regulations
    On June 17, 2008, the DOJ published a Notice of Proposed Rulemaking (NPRM) in the Federal Register that revises its Americans with Disability Act (ADA) regulations and includes new ADA Standards for Accessible Design. In addition to the new standards, the regulations propose a safe harbor that allows small businesses to claim compliance with the rule’s barrier removal requirements if they spent 1% of gross revenue on barrier removal in the previous year. Comments are due August 18, 2008.

  • Proposed rule from the Federal Register
  • Advocacy contact:  Jamie Belcore at 202-205-6533
  • Submit Comments to DOJ Electronically
  • Regulations.gov, the Federal government’s one stop site to comment on Federal regulations.
  • [ Yahoo! ] options

    July 07, 2008

    FREDDIE MAC STUDENT HOUSING MORTGAGE DEBUTS

    For Acquisition or Refinancing of Multifamily Properties

     

    McLean, VA – Freddie Mac (NYSE: FRE) builds on its experience in the student housing area by launching the Freddie Mac Student Housing MortgageSM, which provides financing for the acquisition or refinancing of multifamily properties.

    The Student Housing Mortgage is for purpose-built student housing and multifamily properties that are more than 50 percent occupied by students. The new Student Housing Mortgage offers flexible terms that include 30-year amortization and the potential for full or partial interest only, as well as up to 80 percent loan-to-value financing. The product is available to all Freddie Mac Program Plus Seller/Servicers.

    "The new Freddie Mac Student Housing Mortgage is structured using terms obtained through feedback from our Seller/Servicers and student housing owners and operators," said Patti Saylor, vice president of Freddie Mac Multifamily Offerings and Customer Management. "We continue to search for ways to expand our breadth of products in response to the demand in the marketplace and the needs voiced by our customers."

    Key Features for Student Housing Mortgage Product

    • Proximity to college/university is two miles or less, or on a public transportation route.
    • College/university size of at least 8,000 students. However, Freddie Mac will consider properties located close to multiple schools that have a combined student body of at least 8,000.
    • Nine- to 12-month lease.
    • Ground lease for college- or university-owned land may be permitted.
    • Master leases with college/university may be permitted.

    Since the introduction of the Freddie Mac Program Plus® network of multifamily loan originators and servicers in 1993, Freddie Mac has provided financing for approximately 55,000 multifamily properties totaling more than $194 billion.

     

    Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.

    ###


    © 2008 Freddie Mac
    [ Yahoo! ] options

    From: HUD USER News


    From: HUD USER News
     
    The Department of Housing and Urban Development's Office
    of Policy Development and Research (PD&R) is offering
    state and local officials, builder/developers, and
    others involved in Midwest flood recovery efforts a list
    of relevant publications and other resources to assist
    in the rehabilitation and rebuilding processes. The
    package, titled "Research & Resources for Flood
    Recovery," includes research reports, publications, and
    information concerning the use of manufactured and
    modular housing, rehabilitation, flood-resistant
    building design, and disaster response. The package also
    provides examples of existing county ordinances and
    state laws that support and promote disaster recovery
    and efficient reconstruction.
     
    These materials are available both electronically and in
    printed form. If you reside in the Midwest or are
    involved in flood reconstruction, you will not be
    charged for the print-based reports. As always,
    downloading publications and other resources available
    through HUD USER and the Regulatory Barriers
    Clearinghouse is free. The complete Toolkit is available
    at www.huduser.org/publications/destech/midwest_flood_recovery.html.
    To order, call 1-800-245-2691, option 1. 
     
    [ Yahoo! ] options

    July 05, 2008

    The Valuation of a Law Firm in a Divorce Proceeding Should Be Measured by Fair Market Value.
    by Peter M. Walzer and Edward Poll*

    A law practice has value even apart from its old couch, obsolete library, barely functioning IBM 386, accounts receivable, and whatever work is in progress. In addition to these assets, a practice may have goodwill, but the value of that goodwill may be the subject of much dispute. Nevertheless, in a divorce action, a court may find not only that a lawyer has goodwill but also that the lawyer's spouse must be compensated for that goodwill. Regrettably, the chance that a marriage will end in divorce is about 50 percent. Goodwill has various definitions, but the controlling definitions used in a divorce proceeding is found in the leading case on professional practice valuation - In re Marriage of Foster.1

    READ MORE...

    http://www.divorcenet.com/states/california/ca_art37

     

    [ Yahoo! ] options

    California Appellate Districts, June 19, 2008
    Muzzy Ranch Co. v. Solano County Airport Land Use Comm'n, No. A104955
    Dismissal of challenges to an airport land use compatibility plan, which the California Supreme Court previously ruled its adoption exempt from the CEQA, is affirmed over claims that the plan is not "consistent with" with an Air Force Air Installation Compatible Use Zone (AICUZ) study prepared for the site as required by Public Utilities Code section 21675(b). Read more...
    [ Yahoo! ] options

    July 03, 2008

    Excluded Parties List System

    1                   Scope

    1.1              System Overview

    The EPLS is an electronic, web-based system that identifies those parties excluded from receiving Federal contracts, certain subcontracts, and certain types of Federal financial and non-financial assistance and benefits.  The EPLS keeps its user community aware of administrative and statutory exclusions across the entire government, and individuals barred from entering the United States.  The user is able to search, view, and download both current and archived exclusions.

     

    EPLS access is available from any personal computer with Internet connectivity and a minimum web browser of Netscape 4.04 or Internet Explorer 4.0 at http://www.epls.gov.  The EPLS website’s Main Page (or home page) is shown in Figure 1.

    http://www.epls.gov/

    [ Yahoo! ] options

    July 01, 2008

    By Greg Moran

    SAN DIEGO – A Superior Court jury has awarded $26.5 million to a family whose Otay Mesa land was targeted for condemnation by the state Department of Transportation so it could build a freeway.

    The award was made to Anderprises Inc., a small San Diego family business that has owned land on Otay Mesa since 1974. The land was bought by Phil and Marjorie Anderson; their four sons and their families now own it. After a three-week trial before Superior Court Judge Patricia Cowett, the jury deliberated one day before making the award Wednesday.

    At issue was the value of a piece of land that the Andersons controlled off Otay Mesa Road east of Interstate 805 and south of Brown Field. Caltrans had used eminent domain to take a 2.8-acre sliver of a 58-acre parcel, said Vincent Bartolotta, Jr. the Andersons’ lawyer.

    But by doing that, the family claimed the majority of the parcel was cut off and landlocked – with no viable access in or out.

    The agency contended it did not have to pay damages for the balance of the land and offered $172,410 for the 2.8 acres, Bartolotta said. The agency argued that the land was slated to be used for open space anyway and could not be developed.

    But the Andersons rejected the offer, setting the stage for the trial.

    The jury ruled unanimously in favor of the landholders. The panel concluded the value of the 2.8-acre parcel was $1.3 million. Additionally, it set damages for the lost use of the landlocked property at $20.1 million.

    Bartolotta said that Caltrans announced it would build the Route 905 freeway in the early 1990s, and initially planned to complete it by 1997. But the road is still not built and it was not until 2006 that Caltrans moved to condemn the Anderson property.

    In the interim, one business approached the family to lease the parcel and use it for truck parking, but backed out believing that it would not be able to use the land after 1997.

    The jury pegged damages for that lost use at $5.1 million.

    Bartolotta called the award “truly a victory for the little guy. The justice done in this case shows that Caltrans can’t just come in and bulldoze people.”

    The victory might be short-lived, however.

    “We respect the jury’s verdict, but disagree with the assumptions that support the verdict,” said Ed Cartagena, Caltrans San Diego district spokesman. “We will review our options and move forward. An appeal is likely in the future.”

    This is the second largest award in a property rights case Bartolotta has won. He was the attorney for developer Roque de la Fuente, who won a $94 million award in 2001 against the city of San Diego over the development of an Otay Mesa business park. That award has been thrown out on appeal, and the suit is back in San Diego Superior Court. Bartolotta also represented the owner of the Gran Havana cigar lounge in downtown San Diego, which the city condemned in order to build a hotel.

    The San Diego Union-Tribune: http://www.signonsandiego.com

    [Slashdot] [Digg] [Reddit] [del.icio.us] [Facebook] [Technorati] [Google] [StumbleUpon]
    [ Yahoo! ] options


    Hosting by Yahoo!