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September 30, 2009

MARKET SNAPSHOT: Charleston Has Bottomed Out and is On the Rebound

http://www.multihousingnews.com/multihousing/news/MARKET-SNAPSHOT-Cha-952.shtml
Charleston, S.C.—The apartment market in Charleston bottomed out at the beginning of 2009, asserts Jenny Shelden Pauswinski, multifamily market analyst at Charlotte, N.C.-based Real Data, which tracks apartment markets in the major metro markets of the Southeast, including statistics on over 900,000 units.

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ssue Number: RP-2009-47 Inside This Issue

Issue Number:    RP-2009-47 Inside This Issue


Revenue Procedure 2009-47 provides rules for employees who are reimbursed for lodging, meals, and incidental expenses, or meals and incidental expenses only, while traveling away from home, to substantiate the expenses by per diem allowance in lieu of actual expenses.  The revenue procedure also provides an optional method for employees and self-employed individuals who are not reimbursed to use in computing the deductible costs they pay or incur for business meal and incidental expenses, or for incidental expenses only if they pay or incur no meal expenses, while traveling away from home.  Use of a method described in this revenue procedure is not mandatory, and a taxpayer may use actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.

Revenue Procedure 2009-47 will be in IRB 2009-42, dated October 19, 2009.
 

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September 29, 2009

FEWA AZ Chapter has a very exciting opportunity for all expert witnesses that wish to improve upon their oral communication skills in court or at deposition.  You will not want to miss this outstanding workshop put on by a very experienced prosecuting attorney.  Download the attached brochure to find out all the important points that will make you want to sign up.  FEWA is cosponsoring this workshop along with the AZ Society of CPA's so we expect a large turnout.  Be sure to get your registration in early to guarantee a spot.
DATE:        Saturday, October 10, 2009
TOPIC:       Mastering the Art of Oral Presentations
SPEAKER:   Michael D. Schwartz, Esq.
TIME:          8:00 - 4:00
PLACE:        Sheraton Wild Horse Pass Resort and Spa, Chandler, AZ
RESERVATIONS:  Required by all. Phone, email or fax resevation.
Should you have any questions please do not hesitate to contact me. Hope to see you there.
Norma S. Fox
Executive Director
(949) 640-9903
(949) 640-9911 fax



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Amicus Briefs Supporting Cert: Is Forcing A Property Owner To Allow Adverse Speech A Taking?

Amicus Briefs Supporting Cert: Is Forcing A Property Owner To Allow Adverse Speech A Taking?

Four amicus briefs have been filed in Macerich Management Co. v. United Brotherhood of Carpenters and Joiners of America Local 568, No. 09-235 (cert. petition filed Aug. 24, 2009), urging the Supreme Court to review United Brotherhood of Carpenters and Joiners of America Local 848 v. National Labor Relations Bd., 540 F.3d 957 (9th Cir. 2008). In that case, the Ninth Circuit held that six rules applied by shopping centers to restrict picketing and handbilling by union members violated the California Constitution's free speech clause and therefore impermissibly interfered with protected union activity. The decision required shopping centers to allow speech adverse to the shopping centers' financial interests on their properties. We summarized the Ninth Circuit's decision here.

The Questions Presented ask the Court to revisit PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980), the case in which the California Supreme Court held the California Constitution's free speech clause required shopping center owners make their property available as forum for public speech (in that case, handbilling regarding a cause about which the shopping center was neutral). Most other states, Hawaii included, do not require a shopping center to open itself up as a forum for public speech. See State v. Viglielmo, 105 Haw. 197, 95 P.3d 952 (2004).

When the California Supreme Court's decision was challenged as a judicial taking in the U.S. Supreme Court, the Court held there was no taking because the shopping center "failed to demonstrate that the ‘right to exclude others’ is so essential to the use or economic value of their property that the state-authorized limitation of it amounted to a 'taking.'" PruneYard, 447 U.S. at 84.

The critical difference between PruneYard and Macerich is that in Macerich, state law is being used to force the shopping center to allow protesters on its property who urge shoppers to boycott the very shopping center at which they are protesting, going to the very heart of a property owner's right to exclude.


The cert petition and the Questions Presented are posted here. T
he case's docket entry is here.

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OCC Receives NASLEF Leadership Award

OCC Receives NASLEF Leadership Award

ST. LOUIS — Today the National Association of State and Local Equity Funds (NASLEF) presented its 2009 Leadership Award to the Office of the Comptroller of the Currency for its nationwide efforts to educate banks about the mechanics of Low-Income Housing Tax Credit investing. OCC’s Deputy Comptroller for Community Affairs Barry R. Wides accepted the award on behalf of the agency.

In remarks to approximately 150 state and local tax credit equity fund managers, Mr. Wides focused on the benefits of the Low-Income Housing Tax Credits and the need to fill the financing gaps that have slowed affordable housing development in many parts of the country.

“Over the past two decades, the Low-Income Housing Tax Credit program has financed nearly two million low-income housing units, and induced billions of dollars of private investment,” he said in his remarks. “When carefully implemented, financing LIHTC properties provides banks with both economic and regulatory benefits, including positive consideration under the Community Reinvestment Act.”

“The OCC has been holding seminars around the country in conjunction with the other bank regulatory agencies and the Federal Home Loan Banks to educate bankers about the LIHTC program and the new investment opportunities presented by recent legislation and changing market conditions,” Mr. Wides said. “These events, held in seven locations around the country, and our telephone seminar have reached over 1,000 bankers.”

The OCC will be holding its next seminar in Pittsburgh, Pennsylvania on October 23 in partnership with the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Cleveland. Additional events are planned later this year and in 2010.

To provide banks with easy access to information and best practices, the OCC has created a number of fact sheets, resource guides, and directories that can be found on the OCC’s Web site http://www.occ.gov/cdd/taxcreditresource.htm.

The OCC’s Community Affairs Officers, who are stationed throughout the country, are also available to answer questions and provide resource materials to national banks interested in learning more about LIHTC investment opportunities.

Related Links:

###


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September 28, 2009

California Health Facilities Financing Authority


Please click on the link below for the California Health Facilities Financing Authority's October 8, 2009 Meeting Agenda.

CHFFA's Agenda

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Public funding, incentives available for developers

Public funding, incentives available for developers
ARTICLE | By Jason Q. Freed
National Report--Hotel developers who refuse to let the impeding debt market stall their growth may want to look to unconventional sources. Government-issued loans, tax breaks and other public funding options are more prevalent today as stimulus programs increase incentives.
Read full story >>

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From: HUD USER News

From: HUD USER News
 
Applications for the 2010 Housing and Community Design
Awards program are currently being accepted by the
Housing and Custom Residential Knowledge Community of the
American Institute of Architects (AIA), in conjunction
with the Office of the Secretary of Housing and Urban
Development. These annual awards recognize excellence in
residential housing design, particularly in affordable
housing, community-based design, participatory design,
and housing accessibility.
 
Award recipients will have their projects publicized by
HUD and in AIA's enewsletter, AIArchitect,
at info.aia.org/aiarchitect/. The winning designs will
also be honored at the 2010 AIA National Convention in
Miami, on June 10-12.
 
Applications are due December 11, 2009. The criteria and
instructions for online submissions are located by
clicking the AIA/HUD Secretary's Awards page from the
general AIA awards page
at http://www.aia.org/practicing/awards/index.htm.
Questions should be directed to AIA at (202) 626-7586 or
by email to honorsawards@aia.org
 
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Sunday Round-Up

Sunday Round-Up

Posted: 27 Sep 2009 03:42 PM PDT

Here's what we're reading today:

  • From the Wall Street Journal "Of Blight and Men," a piece about settlement in the attempt to "redevelop" in Long Branch, NJ
  • The Land Use Prof blog is back with a new cast of lawprof bloggers. Looking forward to their posts.
  • The NY Times' review of The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution by Professor Barry Friedman.
  • I finally had a chance to read the amici brief of constitutional law professors urging the Supreme Court to review the Seventh Circuit's decision in McDonald v. City of Chicago. In that case, the Seventh Circuit concluded that the Second Amendment's individual right to keep and bear arms is not incorporated against the states. The professors' brief does not focus on the merits vel non of gun control, but on the incorporation doctrine, and asks the Court to "clarify the reach of" the Slaughter-House Cases, 83 U.S. 36 (1873) and its progeny, and hold the Privileges and Immunities Clause of the 14th Amendment incorporated the Bill of Rights wholesale against the states. If accepted for review, McDonald could be the most significant Supreme Court decision in a generation. Best scholarly treatment of the subject is Professor Michael Kent Curtis's No State Shall Abridge: The Fourteenth Amendment and the Bill of Rights (1986).
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September 27, 2009

D.C. Circuit To Consider Challenge To Use Of Eminent Domain To Replace "Lowbrow" Shopping Center With "Gentrified Shopping Experience"

D.C. Circuit To Consider Challenge To Use Of Eminent Domain To Replace "Lowbrow" Shopping Center With "Gentrified Shopping Experience"

Posted: 26 Sep 2009 05:54 PM PDT

On October 16, 2009, the U.S. Court of Appeals for the D.C. Circuit will hear arguments in Rumber v. District of Columbia, No. 09-7035, an appeal challenging an attempt to take property by the District of Columbia and the National Capital Revitalization Corporation. Note: in 2007, the District abolished the NRDC, and the District substituted as the plaintiff in the eminent domain cases in the D.C. Superior Court.

The case arose from the attempt to condemn the Skyland Shopping Center, which is alleged to be a "blighting factor" to the surrounding area, and redevelop the property. The Washington Post reported on the situation here:

A powerful group of affluent Hillcrest residents has succeeded in getting the city to declare eminent domain at Skyland -- a controversial move seen in no other commercial land deal in the District except the new baseball stadium. Skyland will be demolished, under the plan, and a higher-quality shopping center built in its place. Target may be its anchor. There could even be a white-tablecloth restaurant.

The Hillcrest activists say they are sick and tired of Skyland's downtrodden look, its lack of what they call quality products, its old discount stores and liquor stores and sidewalk vendors and assorted illegal or undesirable activity. The folks of Hillcrest say both they and the broader community, prosperous and poor alike, deserve far better.

The case has already resulted in one reported decision in which the court of appeal reversed the district court's holding that the plaintiffs' public use challenge was subject to Williamson County's ripeness requirements. See Rumber v. District of Columbia, 487 F.2d 941 (D.C. Cir. 2007), a case we discussed here.The facts also gave rise to Franco v. Nat'l Capital Revitalization Corp., 930 A.2d 160 (D.C. 2007), a decision which established standards for how to plead and prove a claim for pretext. We detailed Franco here.

On remand, the district court dismissed the complaint and granted the defendants' motions for summary judgment because the taking was for a valid public purpose. The district court based its conclusion on several factors. First, the city council issued "specific conclusions" about the shopping center and the surrounding area, noting the area has lagged behind other areas in economic development, and the shopping center is "poorly maintained." Second, the public testimony before the council was in support of the taking. See Rumber v. District of Columbia, 598 F. Supp. 2d 97 (D.D.C. 2009). The district court's opinion is available here.

On appeal, the property owners assert, among other points, that the district court failed to consider their claims that the asserted public purpose for the taking was pretextual. The district court converted the District's motion to dismiss as one for summary judgment, but did not provide the plaintiffs an opportunity to submit evidence of pretext. The property owners assert that when there are substantial allegations that a taking is pretextual, a trial court has an obligation to review the evidence on a case-by-case basis and cannot simply take the government's word. Opening Brief at 33-36 (citing Kelo v. City of New London, 545 U.S. 469 (2005), and County of Hawaii v. C&J Coupe Family Ltd. P'ship, 198 P.3d 616 (Haw. 2008)). The brief argues that the Skyland redevelopment was not part of a comprehensive plan, and given the present economy, will not likely succeed in its revitalization goals.

The District's Answering Brief first reiterates the Berman-Midkiff deference standards (pp. 29-33), then repeats the District's proffered public purposes for the Skyland taking, reduction of blight and crime and economic redevelopment (pp. 33-38). The brief asserts these public purposes are "substantial," and that alone defeats any claim of pretext. Brief at 38. Next, the brief argues the circumstances of the District's decision to take show its "declared public purposes were its actual public purposes." Id. at 38-43.

Here are the briefs of the parties:

We'll have more after the Court of Appeals issues its decision.

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September 25, 2009

COMMERCIAL ISSUES

COMMERCIAL ISSUES
FED Accessing Vulnerability of Mid-Size Banks' Commercial Loans
Policy makers estimating timing for bank lending revival in and emergency credit and stimulus withdraw. Despite billions of Fed dollars, bank credit to the economy grew just 2% percent vs. a year ago, according to Fed data. Banks had $1.08 trillion of commercial loans on their books at June's end, according the FED. Read more...
http://www.realtor.org/narlservredirect.nsf/pages/NT0000148E?OpenDocument&WT.mc_id=LS092309&CAT=Comm

Insights from NAR Treasurer, Commercial Practitioner & Jimmy Buffet Fan!
Commercial real estate is not pretty right now. But, as Jim Helsel writes in his blog, those who love this work find a way to... get around or decorate those walls. Need some inspiration? Read more...
http://narblog1.realtor.org/mvtype/president/2009/09/and_the_walls_that_wont_come_d.html?&WT.mc_id=LS092309&CAT=Comm
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September 24, 2009

Intrenal Revenue Service Auction Banner
orange banner graphic
 
Commercial/Industrial Property, Equipment and Supplies
 
 
Under authority of the Internal Revenue Code, the property described here has been seized or acquired for nonpayment of internal revenue taxes and will be sold.
Please read the LEGAL NOTICES covering the NATURE OF TITLE, REDEMPTION RIGHTS, EFFECT OF JUNIOR ENCUMBRANCES, TITLE OFFERED, and FORMS OF PAYMENT before making your bid.
 
 
Search Auctions  
FAQ| Search| IRS Auction Home| Treasury Home Page| Previous Page


Icon: Envelope  Subscribe to Treasury Auctions e-mail updates.
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Intrenal Revenue Service Auction Banner
orange banner graphic
 
Real Estate - Seeking Guaranteed Bids
 
 
Under authority of the Internal Revenue Code, the property described here has been seized or acquired for nonpayment of internal revenue taxes and will be sold.
Please read the LEGAL NOTICES covering the NATURE OF TITLE, REDEMPTION RIGHTS, EFFECT OF JUNIOR ENCUMBRANCES, TITLE OFFERED, and FORMS OF PAYMENT before making your bid.
 
 
Search Auctions  
FAQ| Search| IRS Auction Home| Treasury Home Page| Previous Page


Icon: Envelope  Subscribe to Treasury Auctions e-mail updates.
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September 23, 2009

Lawsuits Filed - Real Estate

Lawsuits Filed - Real Estate

  • Wachovia Home Owners Launch Mortgage Class Action (Feb-19-09)
  • Grand River Dam Authority Faces Class Action over Flood Damage (Dec-19-08)
  • Chevy Chase Bank lawsuit claims the bank is in violation of the Truth in Lending Act (Jun-30-08)
  • Wesley A. Snyder et al. alleging the consultants perpetrated a Ponzi scheme by encouraging borrowers to lend more than they needed. (May-24-08)
  • Engle Homes accused of deceiving homebuilders regarding unexploded bombs in building sites. (May-24-08)
  • City of Warren alleging property damage caused by city mandated trees (May-11-08)
  • US Government alleging land surveyors should not be allowed on private property to build a US Mexican border wall. (Feb-8-08)
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September 22, 2009

From: HUD USER News


From: HUD USER News
 
HUD's Office of Policy Development and Research has
released U.S. Housing Market Conditions for the second
quarter of 2009. The report contains a quarterly analysis
of housing production, marketing, affordability and
interest rates, and the multifamily housing sector. The
data are compared to both the previous quarter and the
second quarter of 2008. This issue also presents updated
national data, overviews of economic and housing market
trends within each HUD region, and reviews historical
trends in national and regional housing markets. The
feature article highlights and expands upon new tables in
the U.S. Housing Market Conditions. These tables, which
document the Federal Housing Administration's share of 1-
to 4-family mortgage originations, are featured in both
the National and Historical Data Sections.
 
In-depth, housing market profiles explore the following
areas: Boston-Cambridge-Quincy, Massachusetts-New
Hampshire; Colorado Springs, Colorado;
Indianapolis-Carmel, Indiana; Las Vegas-Paradise, Nevada;
Memphis, Tennessee-Mississippi-Arkansas; New Orleans-
Metairie-Kenner, Louisiana; Pittsburgh, Pennsylvania; and
Raleigh, North Carolina.
 
This and previous U.S. Housing Market Conditions reports
are available online and can be downloaded for free
at www.huduser.org/periodicals/ushmc.html. Printed copies
will be available shortly and can be ordered at no cost
by calling HUD USER at 800-245-2691, option 1.
 
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Commercial Real Estate Data Laboratory (CREDL)

Commercial Real Estate Data Laboratory (CREDL) http://web.mit.edu/cre/research/credl/

In order for government and industry to make good decisions about real estate public policy and business, they need accurate information about the real-estate world and methods to predict and measure the results of those decisions. Good data and the tools to understand that data are essential for government and businesses to choose the best courses of action for business success and the greater public good. These data and tools are often non-existent, unavailable, or difficult to interpret.

The purpose of the CREDL project is to gather this data, measure the performance of commercial real estate, and develop practical methodologies and tools to help govern business and policy decisions.  CREDL also provides a public space for analysis and perspective on issues of commercial real estate, bringing together academic research and industry practices in an innovative collaboration.

 

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Commercial Real Estate Prices Fell Further in July

Commercial Real Estate Prices Fell Further in July

Pace of property sales at nearly one-third of 2008 pace

By Aleksandrs Rozens, IDDMagazine.com
September 22, 2009
¦
Advertisement

Prices of commercial real estate like office buildings, malls and hotels fell further in July, according to a measure published by Moody’s on Monday.

The rating agency’s Moody's/REAL Commercial Property Price Indice was down 5.1% from June, following a 1% drop in the prior month. This gauge is now 30.8% below a year earlier and 38.7% below the peak measured in October of 2007.

At the same time, the volume of sales has dropped this year by nearly a third from a year ago. According to Moody’s, there were 375 sales a month in the first seven months of the year, down from 1,100 a month in 2008.

Moody's Regional Property Type Indices show prices for apartments in the East performing significantly better than in other markets. In the East, apartments have declined 6% in the past year, and 10.5% in the past two years. Nationally, apartment prices have declined 24.4% in the past year.

Other notably weak markets include the office and industrial markets of Southern California. In that region, office property values have declined 25.8% and industrial property values have decreased 24.2% from a year ago.

Moodys/REAL Commercial Property Price Index (CPPI)

Methodology developed at MIT's Center for Real Estate  http://web.mit.edu/cre/research/credl/rca.html

 

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September 21, 2009

FUNDING SUSTAINABLE COMMUNITIES:

FUNDING SUSTAINABLE COMMUNITIES:
FINANCIAL TOOLS FOR BROWNFIELD & INFILL REDEVELOPMENT

These two half-day workshops are designed for municipalities, local governments, nonprofit and private developers, and anyone involved in redeveloping brownfield sites. The workshop brings together each of the major providers of public and private funding for environmentally-challenged properties including Environmental Protection Agency, Department of Housing & Urban Development, State Water Resources Control Board, Department of Toxic Substances Control, Stone & Youngberg LLC, and Center for Creative Land Recycling. Learn more >

2009 WORKSHOP SCHEDULE

gasworks

LOS ANGELES
October 29, 2009

The California Endowment Center
1000 North Alameda Street
Los Angeles, CA

8am - 12pm
Fee: $150

Register now >

rincon SAN FRANCISCO
November 12, 2009

Ferry Building
1 Ferry Building
San Francisco, CA

8am - 12pm
Fee: $150

Register now >

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September 17, 2009

The Perils of Prior Appraisal

The Perils of Prior Appraisal
This article appeared in the ABA's Probate & Property Magazine, May/June 2008 and is reprinted here with the permission of the author.

The Perils of Prior Appraisal

By Michael Rikon, Esq.

Appraisers typically send a draft of their appraisal report to attorneys or other real estate professionals for prior review or comment before finalizing their reports. There are several good reasons to do so. This review can be extremely helpful to ascertain if something is missing or inaccurate in the appraisal in terms of the comparable sales or comparable leases used by the appraiser. In addition, the law may require a certain formula for the assessment of damages that the lawyer should check. New York law, for example, requires a two-step appraisal of partial takings, the before and after method, which involves two calculations made by identical methods. Diocese of Buffalo v. State of New York, 248 N.E.2d 155 (N.Y. 1969). Many appraisers, incorrectly, will simply calculate direct damages and subtract them to determine the remainder. A review also may reveal that factual information is inaccurate or incomplete. The appraiser may not be aware that the property should be valued as part of a larger holding. Furthermore, consequential damages to the remainder may have resulted from the use to which the taken property had been devoted; for example, a change in access to the highway may have created consequential damages if it changed the highest and best use of the remainder property.

Although an attorney’s review of an appraisal is valuable, the downside to such process is that draft appraisals create written “prior appraisals” and a paper trail of changes. The danger is that the reviewer may totally revise the report and, in doing so, put the appraiser’s credibility in question. It becomes increasingly difficult for any expert to continue to provide meaningful, reliable testimony when it is shown that the appraiser drastically changed his or her opinion of value after the submission of a draft appraisal. Woe to the obsequious appraiser who increases or reduces value without reason.

USPAP Standards

The extent of risk of impeachment from “prior appraisals” is directly related to the scope of materials discoverable. The Appraisal Foundation has adopted requirements regarding appraisal report retention. The Appraisal Foundation is an independent organization established in 1987 by the appraisal profession and authorized by Congress as the source of appraisal standards and appraiser qualifications. The Appraisal Standards Board of the Foundation has established requirements for appraisers by adopting Uniform Standards of Professional Appraisal Practice (USPAP) to promote and maintain a high level of public trust in appraisal practice. USPAP addresses the ethical and performance obligations of appraisers through definitions, rules, standards, and statements. The Appraisal Standards Board also provides a process for the issuance of advisory opinions.

USPAP requires an appraiser to maintain a work file for each appraisal. The work file must contain the name of the client and related information; true copies of any written reports, documented on any type of media; summaries of oral reports or testimony, or a transcript of testimony; and all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions. Uniform Standards of Prof’l Appraisal Practice Ethics Rule—Recordkeeping (Appraisal Standards Bd. 2008–09).

The appraiser must retain the work file for a period of at least five years after preparation or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last. Id. This is a mandatory part of USPAP’s ethics rule. Thus, the failure to maintain copies of prior reports may violate the appraiser’s ethics, which alone may result in substantial impeachment.

Impeachment by a Prior Appraisal

Once it has been determined that a prior opinion of value exists, such opinion must be produced for use on cross examination. It does not matter what label has been put on the prior report—“draft,” “attorney’s work product,” “confidential,” or any other notation. If prepared by the witness, it qualifies as a prior appraisal. Allowing a prior appraisal to be produced provides opposing counsel with a fair opportunity for effective cross-examination, consistent with a party’s constitutional right of confrontation.

The rules of evidence allow a party to impeach the credibility of the adversarial witness on cross-examination through the use of prior inconsistent statements. “Once a proper foundation is laid, a party may show that an adversary’s witness has, on another occasion, made oral and written statements which are inconsistent with some material part of the testimony, for the purpose of impeaching the credibility and thereby discrediting the testimony of the witness.” Prince Richardson on Evidence § 6-411 (11th ed.) (citing People v. Duncan, 385 N.E.2d 572 (N.Y. 1978)).

In New York, it is well established that a prior appraisal prepared by an expert witness testifying at trial may be introduced into evidence to impeach the credibility of the expert’s testimony. See Gerosa, Inc. v. State of New York, 580 N.Y.S.2d 280 (App. Div. 1992); Hicksville Props., Inc. v. Bd. of Assessors, 498 N.Y.S.2d 24, 25 (App. Div. 1986) (citing Swartout v. State of New York, 354 N.Y.S.2d 254 (App. Div. 1974) (“where an unfiled appraisal report was prepared by a party’s trial expert and is inconsistent with his trial testimony, the unfiled report may be introduced into evidence for impeachment purposes and used to cross-examine the witness”)).

One court believed that impeachment by a prior report was extremely important and held that there is no question regarding the use of any other appraisals made by witness himself relevant and pertinent to the proceeding to impeach his credibility by showing that he made a prior statement inconsistent with his testimony on the trial. They are required to be produced for that purpose and to be used to that limited extent on the witness’ cross-examination, which will afford him the opportunity to explain any apparent inconsistency.

In re City of New York (Brooklyn Bridge Sw. Urban Renewal Project), 270 N.Y.S.2d 703, 707 (Sup. Ct. 1966).

One very well-regarded New York judge stated:

[A]ll prior appraisals prepared by an expert witness called to testify or by the appraisal firm by whom that appraiser is employed must be produced upon proper demand. Such appraisals are admissible, if relevant and germane to the proceeding, when utilized to impeach said witness’s credibility by developing prior statements inconsistent with his testimony at the trial.

Sullivan v. State of New York, 292 N.Y.S.2d 244, 247 (Ct. Cl. 1968).

Another court reversed an award because of the trial judge’s failure to allow the impeachment of an appraiser by a prior appraisal. The court noted, “the trial court erred in refusing to direct production of the prior appraisal of the subject property made by the expert witness called by the State to testify and in refusing to permit inquiry into an appraisal made of neighboring land by the State appraiser.” Wettlaufer v. State of New York, 411 N.Y.S.2d 775, 778 (App. Div. 1978).

Conditional Immunity of Prior Reports

Prior appraisals generally remain protected until the appraiser testifies. A New York appellate court held that a motion court improvidently ordered the state to turn over an appraisal report prepared in contemplation of the settlement of an eminent domain proceeding. The court stated that the report enjoy[s] the conditional immunity from disclosure which is conferred on material prepared for litigation . . . . To the extent that the report might become relevant and discoverable for the purpose of impeaching the State’s appraisal expert at trial, disclosure at this juncture is premature. We note that if the State chooses to call the expert to testify, a reasonable adjournment will sufficiently protect claimant’s right to cross-examination, but we also note the possibility that the State may choose not to call the expert as a witness. In sum, we cannot agree with the dissent that the cloak of immunity protecting the State’s appraisal report may presently be removed merely because, at some point in the future, the material sought may become discoverable.

CMRC Corp. Ltd. v. State of New York, 704 N.Y.S.2d 219 (App. Div. 2000).

Other states do not have the same conditional immunity of appraisal reports. Kansas, for example, allows appraisals to be used for impeachment if the appraiser was retained by the owner even if another appraiser testifies at court. The court held the valuation opinion is a statement attributable to the landowners that is an admission. Mooney v. City of Overland Park, 153 P.3d 1252 (Kan. 2007).

Reliance on Another’s Appraisal

If an appraiser relies on another appraiser’s report, that report may be used for impeachment.

[W]hile it is true that materials prepared for litigation by an appraiser who is not called as a witness are protected from disclosure as attorney work product . . ., here, petitioners established that Lagassa’s prior appraisal relied upon and incorporated information contained in Thompson’s prior appraisals of the subject hydroelectric power facilities. As such, these prior appraisals are relevant for the purpose of impeaching Lagassa on cross-examination and, thus, are subject to disclosure.

In re Niagara Mohawk Power Corp. v. Town of Moreau Assessor, 779 N.Y.S.2d 608, 610 (App. Div. 2004) (citing CMRC Corp., Ltd., 704 N.Y.S.2d at 219). The interesting thing about this holding is that the prior appraisals were to be used to cross-examine a different appraiser.

In another New York case, the court held:

The rule in New York is that an appraisal prepared by an expert witness who is not called as a witness and which was intended to be used solely for litigation, or for negotiation in an effort to accomplish a settlement prior to trial, or to establish a basis for a pretaking advance payment is not admissible at trial, as the appraisal enjoys a conditional immunity from disclosure as material prepared for litigation . . . . The one exception to that rule is that all appraisals prepared by an expert witness who is called to testify must be produced as such are admissible when used to impeach said witness’s credibility by developing prior statements inconsistent with his testimony at trial.

Erie County Indus. Dev. Agency v. Muszynski, 629 N.Y.S.2d 646 (Sup. Ct. 1995). It also stated:

Because earlier courts have relied so heavily on the concept of allowing, for impeachment purposes, the discovery of prior inconsistent statements by the opposing party, this court must conclude that statements made prior to the within litigation by the litigation appraiser relative to the value of the contested properties may form the basis to permit discovery thereof.

Id. at 647.

Conclusion

USPAP standards require an appraiser to maintain a work file for each appraisal. The file must included all prior appraisals, including working drafts. Once the appraiser testifies, any conditional immunity of a prior report disappears. An appraiser can be substantially impeached by the prior appraisal. All of this should be kept in mind when requesting draft appraisals for review.

Michael Rikon, Esq. is a partner in the New York, firm of Goldstein, Goldstein, Rikon & Gottlieb, P.C. Mr. Rikon is the New York Member of the Owners' Counsel of America and a frequent author of and lecturer on eminent domain and property rights.

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‘MY TENANT WENT AWOL – WHAT DO I DO?

‘MY TENANT WENT AWOL – WHAT DO I DO?
 By Lee Dresie
Attorney at Law
Greenberg Glusker

A situation that commercial landlords encounter all too often is the tenant who suddenly disappears.  The tenant simply vacates the premises and leaves no forwarding address.  The possibility of recovering damages seems remote.  The landlord’s immediate goal is to get possession as quickly as possible so that a new tenant can be brought in.  But the landlord may be uncomfortable in simply changing the locks and taking possession without clear confirmation that the tenant has actually abandoned.  This article attempts to give some guidance on what to do in this situation.

Consider the hypothetical tenant who is month or two behind in its rent and has apparently vacated the premises with no forwarding address.  The tenant has left behind various items of personal property, which can range from outdated furniture to expensive manufacturing or computer equipment.  What should the landlord do upon discovering that the tenant has left?

The answer to this question involves both a legal and practical component.  When a tenant has actually abandoned the premises, it is not normally necessary to pursue an unlawful detainer lawsuit.  Instead, the procedure provided by statute is to serve a “Notice of Belief of Abandonment.”  This notice may be given if (a) the rental has been unpaid for at least 14 consecutive days and (b) the landlord “reasonably believes” that the tenant has actually abandoned the premises.  If those two criteria are met, and the tenant does not respond to the notice within 18 days of mailing, or 15 days after personal service, the premises are presumed to be abandoned.  Thus, the conservative landlord will give the notice and wait the 18 days prior to actually taking physical possession of the premises.  Click here for the entire article.


AIR Cites Comps Data Improvements
Member Benefit

Responding to directives from its Board of Directors and listening to the positive feedback from its membership, the AIR management reports notable improvements in the quality of its Comp Data.

“Twelve months ago, AIR implemented an aggressive plan for gathering lease and sale Comp Data for all listings that pass through our systems.  We are currently receiving Comp information for approximately 65 percent of all properties that are leased or sold.  Although this performance is significantly improved over where we were a year ago, we are not where we need to be.  Our goal is to have 90 percent of all done-deal information in our data base.  In order to achieve that goal we need the ongoing cooperation of every broker and agent in every member firm,” Tim Hayes, executive director of AIR, said.  He cited the efforts of MULTIPLE Manager Margo Castaneda for the improvements.      

Hayes stated that as part of AIR’s effort to strengthen the Comp Database, each time a listing is removed from the system as sold or leased, the listing brokers receive an e-mail from the AIR asking for every basic comp information.

He explained that for a lease, that information includes: transaction completion date, starting lease rate, length of the initial term, rental adjustments, free rent, where the tenant came from, and the procuring broker’s name.

For a sale transaction that information includes:  date escrow closed, sale price, seller’s name, buyer’s name, and the procuring broker’s name.

“AIR members benefit significantly if the Association can deliver a comprehensive Comp Database.  The only way we are going to do that is if our members contribute a few key pieces of Comp information each time they complete a transaction.  So we need, and would be grateful, to receive the cooperation of all brokers in responding to our e-mails as quickly as possible.  If we can continue to improve the quality, the AIR will deliver an excellent Comp Product with the potential to put our member firms in a position to reduce overhead by not having to purchase Comp information from sources outside the AIR. 

“By sharing the information and creating a comprehensive Comp Data base that is owned and controlled by AIR members, every member enjoys better data at their fingertips, giving them the ability to better serve their clients.  It is this spirit of cooperation among AIR members that has made the AIR the greatest “broker only” organization in the country.  It is this same philosophy that has made our listing database so valuable,” Hayes said.

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September 16, 2009

Appraisal Fraud

http://www.californiarealestatefraudreport.com/archives/category/appraisal-fraud

Appraisal Fraud

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list of permitted loan modifications

TD 9463 contains final regulations that expand the list of permitted loan modifications to include certain modifications that are often made to commercial mortgages.  Changes to the regulations are necessary to better accommodate evolving practices in the commercial-mortgage industry.  These changes will affect lenders, borrowers, servicers, and sponsors of securitizations of mortgages in REMICs.

 

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9463]
RIN 1545-BG77


Modifications of Commercial Mortgage Loans Held by a Real Estate
Mortgage Investment Conduit (REMIC)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulation.

-----------------------------------------------------------------------

SUMMARY: This document contains final regulations that expand the list
of permitted loan modifications to include certain modifications that
are often made to commercial mortgages. Changes to the regulations are
necessary to better accommodate evolving practices in the commercial-
mortgage industry. These changes will affect lenders, borrowers,
servicers, and sponsors of securitizations of mortgages in REMICs.

DATES: Effective Date: These regulations are effective on or after
September 16, 2009.
    Applicability Date: For date of applicability, see Sec.  1.860A-
1(b).

FOR FURTHER INFORMATION CONTACT: Diana Imholtz or Susan Thompson Baker
at (202) 622-3930 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this final regulation
has been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545-2110. The collection of information
in this final regulation is in Sec.  1.860G-2(b)(7). This information
is required in order to show that certain modifications to mortgages
permitted by this final regulation will not cause the modified mortgage
to cease to be a qualified mortgage. The collection of information is
voluntary to obtain a benefit.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
OMB control number.
    Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains amendments to 26 CFR part 1 under section
860G of the Internal Revenue Code (Code). In Notice 2007-17 (2007-1 CB
748 (March 19, 2007)), the IRS and the Treasury Department requested
input on whether the present REMIC regulations should be amended to
permit additional types of modifications incurred in connection with
commercial mortgage loans. See Sec.  601.601(d)(2)(ii)(b). The IRS and
the Treasury Department received several comments in response to this
request (the Notice 2007-17 Comments). After consideration of the
Notice 2007-17 Comments, the IRS and the Treasury Department published
in the Federal Register (72 FR 63523) on November 9, 2007, proposed
regulations (REG-127770-07) that would expand the list of permitted
loan modifications to include certain modifications that are often made
to commercial mortgages. The IRS and the Treasury Department received
additional comments in response to the proposed regulations (the
Proposed Regulation Comments). A public hearing was requested and was
held on April 4, 2008 (73 FR 12041). After consideration of the
Proposed Regulation Comments, the proposed regulations are adopted as
revised by this Treasury decision.

Summary of Comments and Explanation of Provisions

    Except as specifically provided in Sec.  1.860G-2(b)(3), if there
is a significant modification of an obligation that is held by a REMIC,
then the modified obligation is treated as one that was newly issued in
exchange for the unmodified obligation that it replaced. See Sec. 
1.860G-2(b)(1). For this purpose, the rules in Sec.  1.1001-3(e)
determine whether a modification is ``significant.'' See Sec.  1.860G-
2(b)(2). Because of when it is treated as having been acquired in the
deemed exchange, a significantly modified obligation generally fails to
be a qualified mortgage. Section 1.860G-2(b)(3), however, contains a
list of modifications that are expressly permitted without regard to
the section 1001 modification rules.
    The final regulations expand this list of permitted exceptions to
include changes in collateral, guarantees, and credit enhancement of an
obligation and changes to the recourse nature of an obligation. These
changes are permitted so long as the obligation continues to be
principally secured by an interest in real property. The final
regulations also clarify when a release of a lien on real property
securing a qualified mortgage does not disqualify the mortgage.
    The Proposed Regulation Comments included requests for
clarification and recommendations relating to the following: (i) The
lien release rule; (ii) the requirement to retest the collateral value;
(iii) the appraisal requirement; (iv) changes in the nature of an
obligation from nonrecourse to recourse; (v) investment trusts; and
(vi) other proposals set forth in the Notice 2007-17 Comments that were
not included in the proposed regulations.

1. The Lien Release Rule

    The proposed regulations would provide that a lien release pursuant
to certain changes in collateral would not cause a qualified mortgage
to cease to be a qualified mortgage on the date the lien is released.
Commentators indicated that, as drafted, the proposed regulations could
be interpreted to prohibit other types of lien releases, including lien
releases that are occasioned by a default or reasonably foreseeable
default under Sec.  1.860G-2(b)(3)(i) and lien releases that are
permitted pursuant to the terms of the mortgage loan and are not
modifications for purposes of Sec.  1.1001-3. In response

[[Page 47437]]

to these comments, the final regulations clarify that a release of a
lien on real property that does not result in a significant
modification under Sec.  1.1001-3 (for example, a release or
substitution of collateral pursuant to the borrower's unilateral option
under the terms of the mortgage loan) is not a release that
disqualifies a mortgage loan, so long as the mortgage continues to be
principally secured by real property after giving effect to any
releases, substitutions, additions, or other alterations to the
collateral. Similarly, the final regulations clarify that a lien
release occasioned by a default or a reasonably foreseeable default is
not a release that disqualifies the mortgage, so long as the
principally-secured test continues to be satisfied.

2. The Requirement To Retest the Collateral Value

    Section 1.860G-2(a)(1) of the regulations provides that an
obligation is principally secured by an interest in real property if
the fair market value of the real property that secures the obligation
equals at least 80 percent of the adjusted issue price of the
obligation. The regulations require the 80-percent test to be satisfied
either at the time the obligation was originated or at the time the
sponsor contributes the obligation to the REMIC. After the startup day,
the regulations do not require ongoing satisfaction of the 80-percent
test.
    Because certain types of modifications permitted by the proposed
regulations could affect the value of the collateral securing the
mortgage loan, the proposed regulations would require the 80-percent
test to be satisfied at the time the mortgage loan is modified with
respect to changes in collateral, guarantees, and credit enhancement of
an obligation or with respect to changes to the recourse nature of an
obligation. Commentators indicated that retesting should be required
only when the modification could cause a decrease in the value of real
property collateral relative to the mortgage loan amount. For this
reason, commentators further indicated that changes in guarantees,
credit enhancements or the recourse nature of an obligation, as well as
the addition of collateral, do not have the effect of decreasing the
value of the real property securing the mortgage loan and, therefore,
these types of changes should not require retesting.
    To ensure that a modified mortgage loan continues to be principally
secured by an interest in real property, the IRS and the Treasury
Department continue to believe that it is appropriate to retest at the
time of the modification. Accordingly, the final regulations retain the
retesting requirement, but amend the proposed standards for satisfying
the principally secured test as described in section 3 in this
preamble. In addition, to provide a more flexible standard for changes
that do not decrease the value of real property securing the mortgage
loan, the final regulations provide an alternative method for
satisfying the principally secured test.
    For these types of changes (for example, a change from recourse to
nonrecourse, or vice versa), the final regulations provide that a
modified mortgage loan continues to be principally secured by real
property if the fair market value of the interest in real property that
secures the loan immediately after the modification equals or exceeds
the fair market value of the interest in real property that secured the
loan immediately before the modification. This alternative test is
consistent with the general rule that a decline in the value of
collateral does not cause a mortgage loan to cease to be principally
secured by real property. The final regulations provide an example to
illustrate the application of this alternative method for satisfying
the principally secured test.
    The final regulations also require retesting with respect to a lien
release that is not a significant modification for purposes of Sec. 
1.1001-3 (for example, a release of real property collateral pursuant
to the borrower's unilateral option under the terms of the mortgage
loan). Here as well, the principally secured test is satisfied if
either the 80-percent test is satisfied based on the current value of
the real property securing the mortgage or the value of the real
property collateral after the modification is no less than the value of
the real property collateral immediately before.
    For purposes of retesting with respect to alterations to real
property collateral, the transaction causing the alteration is looked
at in its entirety in determining the value of the real property
collateral. For example, if, as part of an overall plan to make
improvements to real property collateral that secures a mortgage loan,
a borrower demolishes an existing building and constructs a new
building on that real property, the fair market value of the real
property collateral is determined by taking into account both the
demolition of the existing building and the construction of the new
building.

3. The Appraisal Requirement

    For purposes of retesting as of the date of modification, the
proposed regulations would require a current appraisal determined by an
independent appraiser. Several commentators indicated that requiring a
formal appraisal in connection with a loan modification is a stricter
standard than is currently required for satisfying the 80-percent test
at the startup day. See Sec.  1.860G-2(a)(3). For a number of business
reasons, commentators indicated that servicers need more flexibility in
complying with this retesting requirement and, therefore, requested
that the proposed regulations be amended to permit servicers to use
other types of reasonable valuation methods.
    In response to these comments and to make the retesting requirement
more consistent with the current rules for satisfying the 80-percent
test at the startup day, the final regulations provide that the
principally-secured test will be satisfied if the servicer reasonably
believes that the modified mortgage loan satisfies the 80-percent test
at the time of the modification. The final regulations provide that a
servicer must base a reasonable belief upon a commercially reasonable
valuation method. The final regulations set forth a nonexclusive list
of commercially reasonable valuation methods that can be used by
servicers for retesting purposes. These same commercially reasonable
methods can be used under the alternative test to establish that the
value of the real property collateral immediately after the
modification is no less than the value of the real property collateral
immediately before it.

4. Changes in the Nature of an Obligation From Nonrecourse to Recourse

    The final regulations clarify that changes in the nature of an
obligation from nonrecourse (or substantially all nonrecourse) to
recourse (or substantially all recourse) are permitted so long as the
obligation continues to be principally secured by an interest in real
property.

5. Investment Trusts

    Section 301.7701-4(c) of the Procedure and Administration
Regulations provides that an investment trust is not classified as a
trust if there is a power under the trust agreement to vary the
investment of the certificate holders. The IRS and the Treasury
Department understand that changes to the terms of commercial mortgage
loans held by investment trusts may raise issues as to whether a
``power to vary'' is present, and commentators recommended that the
scope of the regulation project be expanded to permit investment trusts
to modify

[[Page 47438]]

commercial mortgage loans in the same manner as REMICs. To avoid a
significant delay in the publication of these final regulations, their
scope has not been expanded to include modifications of mortgage loans
held by investment trusts. In a separate notice to be published in the
Internal Revenue Bulletin contemporaneously with these final
regulations, the IRS and the Treasury Department intend to request
comments on this issue.

6. Other Proposals Set Forth in the Notice 2007-17 Comments

    In the Proposed Regulation Comments, commentators requested that
the IRS and the Treasury Department reconsider other proposed loan
modifications that were set forth in the Notice 2007-17 Comments but
that were not included in the proposed regulations. For the reasons
indicated in the preamble to the proposed regulations, the IRS and the
Treasury Department determined that the remaining changes requested by
commentators should not be included in the final regulations.

Special Analyses

    It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to this regulation.
    It is hereby certified that the collection of information
requirement in this regulation will not have a significant economic
impact on a substantial number of small business entities. This
certification is based on the fact that the REMICs affected by this
regulation will not be classified as small business entities. According
to the Small Business Administration definition of a ``small
business,'' 13 CFR 121.201, a REMIC is classified under Sector 52
(Finance and Insurance), Subsector 525 (Funds, Trusts and Other
Financial Vehicles) under the category ``Other Financial Vehicle'',
NAICS code 525990, and is only considered a small business entity if it
accumulates less than 6.5 million dollars in annual receipts. REMICs
affected by this regulation generally hold pools of commercial mortgage
loans with an average loan size of 18.1 million dollars, and have
greater than 6.5 million dollars in annual receipts. Therefore, a
Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5
U.S.C. chapter 6) is not required.
    Pursuant to section 7805(f) of the Internal Revenue Code, the
notice of proposed rulemaking preceding this regulation was submitted
to the Chief Counsel for Advocacy of the Small Business Administration
for comment on its impact on small business.

Drafting Information

    The principal author of these regulations is Diana Imholtz of the
Office of Associate Chief Counsel (Financial Institutions and
Products). Other personnel from the IRS and the Treasury Department
participated, however, in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of the Amendments to the Regulations

0
Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding
entries in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *.
    Section 1.860A-0 also issued under 26 U.S.C. 860G(e).
    Section 1.860G-2 also issued under 26 U.S.C. 860G(e). * * *


0
Par. 2. Section 1.860A-0 is amended by revising the entry for Sec. 
1.860G-2(a)(8) and adding an entry for Sec.  1.860G-2(b)(7) to read as
follows:


Sec.  1.860A-0  Outline of REMIC provisions.

* * * * *


Sec.  1.860G-2  Other rules.

    (a) * * *
    (8) Release of a lien on an interest in real property securing a
qualified mortgage; defeasance.
* * * * *
    (b) * * *
    (7) Test for determining whether an obligation continues to be
principally secured following certain types of modifications.
* * * * *

0
Par. 3. Section 1.860A-1 is amended by adding paragraph (b)(6) to read
as follows:


Sec.  1.860A-1  Effective dates and transition rules.

* * * * *
    (b) * * *
    (6) Exceptions for certain modified obligations. Paragraphs
(a)(8)(i), (b)(3)(v), (b)(3)(vi), and (b)(7) of Sec.  1.860G-2 apply to
modifications made to the terms of an obligation on or after September
16, 2009.

0
Par. 4. Section 1.860G-2 is amended by:
0
1. Revising paragraphs (a)(8), (b)(3)(iii) and (b)(3)(iv).
0
2. Adding paragraphs (b)(3)(v), (b)(3)(vi) and (b)(7).
    The additions and revisions read as follows:


Sec.  1.860G-2  Other rules.

    (a) * * *
    (8) Release of a lien on an interest in real property securing a
qualified mortgage; defeasance. If a REMIC releases its lien on an
interest in real property that secures a qualified mortgage, that
mortgage ceases to be a qualified mortgage on the date the lien is
released unless--
    (i) The REMIC releases its lien in a modification that--
    (A) Either is not a significant modification as defined in
paragraph (b)(2) of this section or is one of the listed exceptions set
forth in paragraph (b)(3) of this section; and
    (B) Following that modification, the obligation continues to be
principally secured by an interest in real property as determined by
paragraph (b)(7) of this section; or
    (ii) The mortgage is defeased in the following manner--
    (A) The mortgagor pledges substitute collateral that consists
solely of government securities (as defined in section 2(a)(16) of the
Investment Company Act of 1940 as amended (15 U.S.C. 80a-1));
    (B) The mortgage documents allow such a substitution;
    (C) The lien is released to facilitate the disposition of the
property or any other customary commercial transaction, and not as part
of an arrangement to collateralize a REMIC offering with obligations
that are not real estate mortgages; and
    (D) The release is not within 2 years of the startup day.
* * * * *
    (b) * * *
    (3) * * *
    (iii) Waiver of a due-on-sale clause or a due-on-encumbrance
clause;
    (iv) Conversion of an interest rate by a mortgagor pursuant to the
terms of a convertible mortgage;
    (v) A modification that releases, substitutes, adds, or otherwise
alters a substantial amount of the collateral for,

[[Page 47439]]

a guarantee on, or other form of credit enhancement for, a recourse or
nonrecourse obligation, so long as the obligation continues to be
principally secured by an interest in real property following the
release, substitution, addition, or other alteration as determined by
paragraph (b)(7) of this section; and
    (vi) A change in the nature of the obligation from recourse (or
substantially all recourse) to nonrecourse (or substantially all
nonrecourse), or from nonrecourse (or substantially all nonrecourse) to
recourse (or substantially all recourse), so long as the obligation
continues to be principally secured by an interest in real property
following such a change as determined by paragraph (b)(7) of this
section.
* * * * *
    (7) Test for determining whether an obligation continues to be
principally secured following certain types of modifications. (i) For
purposes of paragraphs (a)(8)(i), (b)(3)(v), and (b)(3)(vi) of this
section, the obligation continues to be principally secured by an
interest in real property following the modification only if, as of the
date of the modification, the obligation satisfies either paragraph
(b)(7)(ii) or paragraph (b)(7)(iii) of this section.
    (ii) The fair market value of the interest in real property
securing the obligation, determined as of the date of the modification,
must be at least 80 percent of the adjusted issue price of the modified
obligation, determined as of the date of the modification. If, as of
the date of the modification, the servicer reasonably believes that the
obligation satisfies the criterion in the preceding sentence, then the
obligation is deemed to do so. A reasonable belief does not exist if
the servicer actually knows, or has reason to know, that the criterion
is not satisfied. For purposes of this paragraph (b)(7)(ii), a servicer
must base a reasonable belief on--
    (A) A current appraisal performed by an independent appraiser;
    (B) An appraisal that was obtained in connection with the
origination of the obligation and, if appropriate, that has been
updated for the passage of time and for any other changes that might
affect the value of the interest in real property;
    (C) The sales price of the interest in real property in the case of
a substantially contemporary sale in which the buyer assumes the
seller's obligations under the mortgage; or
    (D) Some other commercially reasonable valuation method.
    (iii) If paragraph (b)(7)(ii) of this section is not satisfied, the
fair market value of the interest in real property that secures the
obligation immediately after the modification must equal or exceed the
fair market value of the interest in real property that secured the
obligation immediately before the modification. The criterion in the
preceding sentence must be established by a current appraisal, an
original (and updated) appraisal, or some other commercially reasonable
valuation method; and the servicer must not actually know, or have
reason to know, that the criterion in the preceding sentence is not
satisfied.
    (iv) Example. The following example illustrates the rules of this
paragraph (b)(7).

    Example. (i) S services mortgage loans that are held by R, a
REMIC. Borrower B is the issuer of one of the mortgage loans held by
R. The original amount of B's mortgage loan was $100,000, and the
loan was secured by real property X. At the time the loan was
contributed to R, property X had a fair market value of $90,000.
Sometime after the loan was contributed to R, B experienced
financial difficulties such that it was reasonably foreseeable that
B might default on the loan if the loan was not modified.
Accordingly, S altered various terms of B's loan to substantially
reduce the risk of default. The alterations included the release of
the lien on property X and the substitution of real property Y for
property X as collateral for the loan. At the time the loan was
modified, its adjusted issue price was $100,000. The fair market
value of property X immediately before the modification (as
determined by a commercially reasonable valuation method) was
$70,000, and the fair market value of property Y immediately after
the modification (as determined by a commercially reasonable
valuation method) was $75,000.
    (ii) The alterations to B's loan are a significant modification
within the meaning of Sec.  1.1001-3(e). The modification, however,
is described in paragraphs (a)(8)(i) and (b)(3) of this section.
Accordingly, the modified loan continues to be a qualified mortgage
if, immediately after the modification, the modified loan continues
to be principally secured by an interest in real property, as
determined by paragraph (b)(7) of this section.
    (iii) Because the modification includes the release of the lien
on property X and substitution of property Y for property X, the
modified loan must satisfy paragraph (b)(7)(i) of this section
(which requires satisfaction of either paragraph (b)(7)(ii) or
paragraph (b)(7)(iii) of this section). The modified loan does not
satisfy paragraph (b)(7)(ii) of this section because property Y is
worth less than $80,000 (the amount equal to 80 percent of the
adjusted issue price of the modified mortgage loan). The modified
loan, however, satisfies paragraph (b)(7)(iii) of this section
because the fair market value of the interest in real estate (real
property Y) that secures the obligation immediately after the
modification ($75,000) exceeds the fair market value of the interest
in real estate (real property X) that secured the obligation
immediately before the modification ($70,000). Accordingly, the
modified loan satisfies paragraph (b)(7)(i) of this section and
continues to be principally secured by an interest in real property.
* * * * *

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 5. The authority citation for part 602 continues to read as
follows:

    Authority: 26 U.S.C. 7805.


0
Par. 6. Section 602.101, paragraph (b) is amended by adding the entry
in numerical order to the table to read as follows:


Sec.  602.101  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
   CFR part or section where identified and described       control no.
------------------------------------------------------------------------

                                * * * * *
1.860G-2................................................       1545-2110

                                * * * * *
------------------------------------------------------------------------


    Approved: September 9, 2009.

Linda M. Kroening,
Acting Deputy Commissioner for Services and Enforcement.
Michael Mundaca,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E9-22215 Filed 9-15-09; 8:45 am]
BILLING CODE 4830-01-P

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proposed regulations on the definition of solid waste disposal facilities

REG-140492-02 contains proposed regulations on the definition of solid waste disposal facilities for purposes of the rules applicable to tax-exempt bonds issued by State and local governments.  These proposed regulations provide guidance to State and local governments that issue tax-exempt bonds to finance solid waste disposal facilities and to taxpayers that use those facilities.  This document also withdraws the notice of proposed rulemaking that was published in the Federal Register on May 10, 2004 (69 FR 25856), proposes to remove certain existing regulations that provide rules for determining whether a facility is a solid waste disposal facility, and contains a notice of public hearing on these proposed regulations.
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September 15, 2009

Section 8 income limits

From: HUD USER News
 
A Federal Register Notice published on Monday,
September 14, 2009, is seeking comments on a proposal
to end HUD's policy of maintaining Section 8 income
limits at the previously published level in cases
where they would otherwise decrease. HUD adopted this
"hold harmless" policy to ensure that Multifamily Tax
Subsidy Projects (MTSPs) would not be subject to
income-limit decreases. MTSPs are affordable rental
housing projects subsidized with the Low-Income
Housing Tax Credits (Internal Revenue Code section 42)
and/or financed by Tax-Exempt Private Activity Bonds
issued by states (Internal Revenue Code section 142).
The rents of MTSPs were tied to Section 8 income
limits and a decrease would jeopardize the financial
feasibility of existing housing projects. The Housing
and Economic Recovery Act of 2008 changed the tax code
to protect existing MTSPs from decreases in income
limits and rents by creating project-level hold-
harmless calculation of income limits for existing
MTSPs, thus obviating the need for HUD to continue the
hold-harmless policy for the benefit of MTSPs.
 
Maintaining artificially high-income limits has had an
adverse impact on other federal programs. Higher
income limits increase the number of eligible
participants, making it harder to target limited HUD
resources to those most in need. More than 99 percent
of HUD-assisted households have incomes below the
extremely low-income level (30 percent of area median
family income), so modest decreases in the Section 8
income limits from these changes would have minimal
impact on families residing in assisted housing.
However, there are many other programs that use HUD's
Section 8 income limits to determine program
eligibility and these programs may benefit from the
proposed change. A listing of these programs is in the
notice (www.huduser.org/datasets/il/incomelimits_hh_fr.pdf),
with more detail available
at www.huduser.org/datasets/il/il09/IncomeLimitsBriefingMaterial_FY09.pdf.
 
A 30-day comment period has been provided, ending
October 14, 2009. Any change in HUD's policy in this
regard would become effective only upon publication of
a future notice by HUD.
 
--------------------------------------
Please contact us at:
HUD USER
P.O. Box 23268
Washington, DC 20026-3268
1-800-245-2691
1-800-927-7589 (TDD)
202-708-9981 (fax)
--------------------------------------
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September 14, 2009

How to Read and Understand the Commercial Appraisal Reports

How to Read and Understand the Commercial Appraisal Reports

Introduction

The King County Department of Assessments is required by State law to appraise all property at its full market value. For commercial property, the primary method used is mass appraisal. The Area Reports produced by the Department of Assessments are intended to fulfill the requirements of State law and conform to generally accepted appraisal principles. Specifically, the property values are appraisals and the Area Reports are mass appraisal reports prepared under the guidance of Standard 6 of the Uniform Standards of Professional Appraisal Practice which governs the Department's appraisal work.

Standard 6 states: In developing a mass appraisal, an appraiser must be aware of, understand, and correctly employ those recognized methods and techniques necessary to produce and communicate credible mass appraisals. According to Standard 6, a mass appraisal includes:

  1. identifying properties to be appraised
  2. defining market area of consistent behavior that applies to properties
  3. identifying characteristics (supply and demand) that affect the creation of value in that market area
  4. developing a model structure that reflects the relationship among the characteristics affecting value in the market area
  5. calibrating the model structure to determine the contribution of the individual characteristics affecting value
  6. applying the conclusions reflected in the model to the characteristics of the property(ies) being appraised
  7. reviewing the mass appraisal results
  8. The Area Reports are designed to fulfill step 7 of the requirement by allowing the Assessor to review the mass appraisal results for completeness and accuracy before accepting the recommendation of appraisal staff for valuation changes.

    In reviewing a mass appraisal a primary tool is the ratio study. The ratio study compares appraised values to market values. The ratios themselves are formed by dividing appraised values by sales prices. As an example, a property recently sold for $10,500,000 (S) was last appraised at $10,000,000 (A) by the Assessor. The ratio of A/S is $10,000,000 / $10,500,000 = 0.95 or 95.0%. The two primary aspects of mass appraisal accuracy measured by ratio studies are level and uniformity. Appraisal level refers to the typical ratio at which properties are appraised. Appraisal uniformity refers to the fair and equitable treatment of individual properties. Uniformity requires equity within groups and between groups. Uniformity within groups is determined by measuring the magnitude of the differences between each ratio and the average or middle ratio. Uniformity between groups of properties can be evaluated by comparing appraisal levels.

Measures of central tendency form the basis for estimates of appraisal level. Three widely used measures are the median, the mean and the weighted mean. In the Area Reports, these three measures, among others, are found in the Model Validation Section as calculated on spreadsheets labeled Improved Parcel Ratio Analysis. Measures of dispersion form the basis of uniformity estimates. Widely used measures of dispersion include:

  1. range, quartiles, and percentiles
  2. coefficient of dispersion
  3. coefficient of variation
  4. price-related differential

All of these measures are also calculated and presented in the Model Validation Section. Basically, fulfilling the Assessor's lawful responsibility requires the achievement of measures of assessment level at or near one and measures of dispersion as small as possible.

One other element is necessary before we can move on to explain the contents of the Area Reports. As noted above, State law requires property be valued at full market value. State law also provides for a variety of reappraisal cycles among the counties. The King County reappraisal cycle is based upon annual revaluation with a six-year physical inspection schedule. Essentially, approximately one-sixth of the properties are both physically reviewed and revalued each year. The other approximately five-sixths of the properties are revalued using the existing data. With this brief introduction we can move on to a discussion of individual sections of the Area Reports.

Executive Summary Report

The Executive Summary provides a highly condensed version of the information presented in the Area Report. The appraisal date is specified and the date of the previous physical inspection is listed. The market area of concern is identified by name and number. The prominent box contains the "Sales--Improved Valuation Change Summary" which shows summary statistics from the Ratio Study Reports which are found in the Model Validation Section of the Report. This exhibit presents at a glance the comparison between assessment level and assessment uniformity as measured by the relationship between sales prices and assessed values before and after the revaluation effort has been completed. Thus, for both years the average sale price is the same but the average assessed values are different. The change in ratio - here the weighted mean ratio -- should be in the direction of a level measurement of 1.0 and the change in assessment uniformity at least as small as the prior measure. In this box we are looking at the sales sample.

In the next section of the Executive Summary we see the change in average value in the population of commercial parcels in the area as a result of applying the newly estimated valuation from the sales sample to the population as a whole. Finally, the Executive Summary contains the recommendation of the appraisal staff to the Assessor for a change in values in accordance with the mass appraisal performed.

Report Body

Revaluation Process

The revaluation process is a complete application of the mass appraisal process as described by Standard 6 including physical review of the properties. The appraisal staff analyze sales, cost of construction, and prevailing levels of rents and operating expenses as they seek to apply the Sales Comparison Approach, the Cost Approach and the Income Approach to valuation. Statistical methods may be used to establish the relationships between factors which influence values of commercial property. The Assessor's staff collects a large amount of data on many characteristics of commercial properties. Statistical methods may allow for the estimation of coefficients for a considerable number of factors which have a role in explaining the value of property.

The Income Approach

The single most important difference between the valuation of commercial properties and residential properties is the importance of the Income Approach to value as applied to commercial property. Appraisal principles and Washington State Law are in agreement; the income approach is relevant for property which is primarily income-producing in nature. The basic steps in the income approach are as follows:

  1. Estimate potential gross income
  2. Deduct for vacancy and credit loss.
  3. Add miscellaneous income to get the effective gross income.
  4. Determine operating expenses.
  5. Deduct operating expenses from the effective gross income to determine net operating income before discount, recapture, and taxes.
  6. Select the proper capitalization rate.
  7. Determine the appropriate capitalization procedure to be used.
  8. Capitalize the net operating income into an estimated property value.

Model Validation

A display of confidence intervals on these pages are designed to indicate the degree of reliability which may be assigned to the estimated coefficients. The confidence intervals shown present about the statistical low and high limits which contain the estimated adjustments.

The ratio study analysis presents both the ratio results which would have resulted from conducting the analysis in terms of the existing assessed values and the results which result from conducting the analysis in terms of the new assessed values. The key is in the box on the exhibit labeled Lien Date which is synonymous with appraisal date. In the case of the "before" analysis we are looking at an appraisal date one year prior to the current valuation date. In the case of the "after" analysis we are looking at an appraisal date which coincides with the current valuation date.

For example, if our concern is with values estimated as of January 1, 2002 for taxes payable in 2003, the "lien date" box for the "before" analysis will show January 1, 2001 while for the "after" analysis the date shown will be January 1, 2002. We then consider we are looking at the same sales which have occurred over a two year period.

The Ratio Analysis Reports included present a complete set of calculations which enable evaluation of the mass appraisal results. Measures of level, uniformity, regressivity or progressivity as well as measures of the adequacy of the sample size and normality of its distribution are all presented.

The statistical process is complex, and adheres to professional standards of appraisal and the requirements of state law.

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U.S. SUES FIVE MANHATTAN HOTELS FOR VIOLATIONS

 

United States Attorney Southern District of New York FOR IMMEDIATE RELEASE

JANUARY 13, 2009

 

U.S. SUES FIVE MANHATTAN HOTELS FOR VIOLATIONS OF

THE AMERICANS WITH DISABILITIES ACT

LEV L. DASSIN, the Acting United States Attorney forthe Southern District of New York, announced today that theUnited States has brought suit against the owners and operatorsof five Theater District hotels – the MODERNE, the AMERITANIA,the AMSTERDAM COURT, the HOTEL CARTER, and the RADIO CITY SUITES

– for violations of the Americans with Disabilities Act of 1990("ADA").

According to the Complaints filed in Manhattan federalcourt:

Although the MODERNE (243 West 55th Street) wasdesigned and constructed after the ADA was passed, it suffersfrom numerous violations of the ADA Standards for AccessibleDesign. In particular, its main entrance, registration counter,and public restroom are inaccessible for people withdisabilities. The Complaint seeks relief against AmsterdamHospitality LLC, DKE Realty Corporation, and Jennas LLC, as theowners and operators of the MODERNE hotel.

The AMERITANIA (230 West 54th Street) also has numerousviolations of the ADA Standards for Accessible Design. Inparticular, in violation of the ADA Standards, not one of theAMERITANIA’s 219 rooms is accessible for people withdisabilities. Nor are its main entrance, registration counter,and public restroom accessible for people with disabilities. TheComplaint seeks relief against Amsterdam Hospitality LLC, andBrittania 54th Street Hotel Corporation, as the owners andoperators of the AMERITANIA hotel.

The AMSTERDAM COURT (226 West 50th Street) likewisesuffers from numerous violations of the ADA Standards. Inparticular, its main entrance, registration counter, and publicrestroom are also inaccessible for people with disabilities. TheComplaint seeks relief against Amsterdam Hospitality LLC, and AliBaba Hotel Corporation as the owners and operators of theAMSTERDAM COURT hotel.

The HOTEL CARTER (250 West 43rd Street) also hasnumerous violations of the ADA Standards. In particular, not oneof the HOTEL CARTER’s 614 rooms is accessible for people withdisabilities. In addition, its main entrance, registrationcounter, and public restroom are also inaccessible for peoplewith disabilities. The Complaint seeks relief against AlphonseHotel Corporation as the owner and operator of the HOTEL CARTER.

Finally, RADIO CITY SUITES (142 West 49th Street), alsohas numerous violations of the ADA Standards for AccessibleDesign. In particular, not one of the RADIO CITY SUITES hotel’s113 rooms is accessible for people with disabilities. Inaddition, its main entrance and public restroom are alsoinaccessible. The Complaint seeks relief against 49th StreetHotel Corporation as the owner and operator of the RADIO CITYSUITES hotel.

Each Complaint seeks a declaration that the hotel is inviolation of the ADA, an injunction requiring the owners andoperators of the hotels to remove all ADA violations, and civilpenalties, which by law may be as large as $55,000.

The United States Attorney’s Office commenced acompliance review of approximately 50 Theater District hotels in2005. As a result of that review, the United States Attorney’sOffice has entered into voluntary compliance agreements with 15of those hotels, and is in the process of finalizing anadditional 29 agreements. The five hotels mentioned above arethe first to be sued in connection with that review.

"Our Office has worked for more than three years withTheater District hotels to improve accessibility for persons withdisabilities, and numerous hotels have entered into voluntarycompliance agreements that have greatly expanded the number ofaccessible rooms in New York’s Theater District. The complaintsfiled today demonstrate our intention fully to enforce theAmericans with Disabilities Act in the important area of accessto hotel accommodations." Mr. DASSIN said.

Assistant United States Attorneys LAWRENCE H. FOGELMAN,CAROLINA A. FORNOS, DAVID J. KENNEDY, and HEATHER K. McSHAIN arein charge of the cases.

09-03 ###

http://www.usdoj.gov/usao/nys/pressreleases/January09/hoteladacivilcomplaintspr.pdf

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September 13, 2009

COMMERCIAL ISSUES

COMMERCIAL ISSUES
Zell -- Grave Dancing?
Sam Zell, undaunted by the Tribune Co. bankruptcy, put together a $625 million fund to buy distressed securities backed by assets including commercial real estate. The Zell Credit Opportunities Fund LP, described as a private-equity fund that received its initial backing from a pair of unidentified investors, represents Zell's return to distressed investing -- Bloomberg reports. Read more...
http://www.realtor.org/narlservredirect.nsf/pages/NT0000145E?OpenDocument&WT.mc_id=LS090909&CAT=Comm

FDIC Head Calls Commercial RE Loans a Looming Problem
Sheila Bair said commercial real estate loans remain a problem for banks' balance sheets and she expects the area to increasingly be a driver for bank failures during the remainder of this year and 2010. So far, this year 84 U.S. banks have failed, compared to 25 last year and only three in 2008. The FDIC is coping with a rising tide of bank failures as the industry continues to grapple with deteriorating loans. Read more...
http://www.realtor.org/narlservredirect.nsf/pages/NT00001462?OpenDocument&WT.mc_id=LS090909&CAT=Comm

Improve Cash Flow and Defer Taxes
NAR Commercial members have an opportunity to hear Paul White, CCIM, CPM present a Cost Segregation session at the annual conference this coming November in San Diego. Be sure to conduct cost segregation on existing properties to achieve tax relief! Prepare yourself to explain the potential benefits to the property investors and users that you represent and increase your professional value to your clients! Advance registration required; additional $20.00 administrative fee for C.E. registration only. Read more...
http://www.realtor.org/educsess.nsf/PagesLUNew/09confce04?OpenDocument&WT.mc_id=LS090909&CAT=Comm
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September 10, 2009

Inverse Condemnation

Upcoming Seminar: Practical Guide to Zoning and Land Use Law (9/16/2009)

Posted: 10 Sep 2009 03:01 AM PDT Inverse Condemnation

On Wednesday, September 16, 2009, I'll be on the faculty of "Practical Guide to Zoning and Land Use Law," a day-long seminar in Honolulu. This is an annual program dealing with zoning approvals, constitutional limitations on land use regulations, and administrative procedure.

I will be leading sessions on "Current Case Law and Legislative Update," and "Appealing an Administrative Zoning Decision."

Also on the faculty are A. Bernard Bays and Naomi Kuwaye, who will be covering "Constitutional Limitations on Zoning Actions," "Challenging a Rezoning Decision," "Special Zoning Issues," and "Adoption and Amendment of Zoning Ordinances and Maps. "

I hope you can make it. If you do, stop by and say hello.

More information including a detailed agenda and registration information here.

Connecticut Property Rights Ombudsman Falls To Budget Axe

Posted: 09 Sep 2009 04:01 PM PDT

We've just received word that the Office of Ombudsman for Property Rights is closed effective September 8, 2009 "[b]ecause of budgetary constraints." The office was created two years ago "to assist[] private property owners and public agencies in understanding and applying the law in matters concerning eminent domain and relocation assistance, including mediation."

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September 09, 2009

Finite mathematics & Applied Calculus

Applied calculus utility: function evaluator and grapher (v 3.1)
http://www.zweigmedia.com/RealWorld/functions/func.html
    Use of this system is pretty intuitive. Enter your functions yi(x) in graphing calculator format (press the "example" button to see some examples).
  • NEW in 3.1 To compute or graph derivatives, use "deriv()". For instance, deriv(y1) entered for, say, y2 gives the derivative of the function you entered in y1, and deriv(x^3) will give the function 3x^2.
  • To compute values of your functions, specify some values of x in the "Evaluator" box (use the Tab key to go from one value to the next), and press "Evaluate".
  • To see the graphs of your functions, enter a range of x-values (Xmin and xMax) and press "Graph." (You can use formulas (like "pi" or "sqrt(2)") for Xmin, Xmax, and other fields.)
  • To include plotted points, add them in the area provided (press Example to see the format) or just paste in a two-column table from Excel.

    Note: This grapher uses excanvas, a new feature in Javascript, and it may not run in some older browsers. If you see no large coordinate plane on the right, your browser does not understand excanvas, and so you will need to use this older version 2.0 until you move to a new standards-compliant browser like the latest Firefox.  

 

 

Finite mathematics    &
Applied calculus


Welcome Mathematics Students! Finite Mathematics & Applied Calculus Resource Page 
 


 

Visit our: | Topic Summaries | On Line tutorials
New!: | Diet Problem Solver | Calculus Tutorials as Games | Function evaluator and Grapher | Surface Grapher


http://www.zweigmedia.com/RealWorld/index.html

 

finite mathematics: everything!  http://www.zweigmedia.com/RealWorld/tcfinitep.html 


 

Following the table of contents in
Finite Mathematics 4e   by
Stefan Waner and Steven R. Costenoble
 
You can get back here from anywhere by pressing the "Everything for Finite Math" link.

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September 08, 2009

Inverse Condemnation

Kansas Supreme Court: Property Damaged For Public Use Requires Compensation

Posted: 08 Sep 2009 02:40 AM PDT

The constitutions and statutes of most states require just compensation to be paid whenever property is taken or damaged for public use. See, e.g., Cal. Const. art. I, § 19 ("Private property may be taken or damaged for a public use and only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner."); Haw. Const. art. I, §20 ("Private property shall not be taken or damaged for public use without just compensation."). The Fifth Amendment also requires compensation when property is damaged as the "direct result" of government action. See Sanguinetti v. United States, 264 U.S. 146 (1924)

Kansas statutes are no different, providing "Private property shall not be taken or damaged for public use without just compensation." Kan. Stat. § 26-513. (Apparently -- and correct me if I am wrong, Kansas lawyers -- the Kansas Constitution does not have a takings clause, and the public use and compensation requirements are creatures only of statute.)

Despite the express statutory command, for years Kansas courts prohibited the recovery of compensation in inverse condemnation actions when property was damaged. Instead, Kansas courts held that compensation was only available when the "damage was...necessary to the taking of the property for public use," meaning the condemnor "needed" to damage to occur in order to complete the project. See Deisher v. Kansas Dep't of Transportation, 958 P.2d 656 (Kan. 1998). Otherwise, the courts only permitted compensation when the government physically invaded land, or actually transferred an interest in property. 

Thus, in Estate of Kirkpatrick v. Olathe, 178 P.3d 667 (Kan. Ct. App. 2008), the Kansas Court of Appeals held that a property owner was not entitled to compensation when his property was damaged by the city's construction of a roundabout next to his land. The construction resulted in drainage problems on Kirkpatrick's property, and applying the damage statute, the trial court concluded the city inversely condemned the property. But the Court of Appeals, following Kansas precedents, reversed.

 

 

In Estate of Kilpatrick v. City of Olathe, No. 96,229 (Sep. 4, 2009), the Kansas Supreme Court reversed years of its (erroneous) case law, and held that property owners in an inverse condemnation action may seek just compensation for damage to their property.  The court first noted "The conclusion that compensation is only required where a transfer of property rights has occurred or where property damage is needed to complete a public improvement project is not based in the language of the [statute], however. Rather, the definition comes from this court's case law predating the adoption of the eminent domain statutes." After walking through the case law, the court concluded:

Instead of recognizing the statutory language of K.S.A. 26-513(a), which plainly states that compensation must be paid for property damage resulting from a public improvement project, each of these decisions adhered to pre-EDPA case law defining "'take" (or 'taken') in Kansas eminent domain law to mean the acquiring of possession as well as the right of possession and control of tangible property to the exclusion of the former owner." 234 Kan. at 125 (citing Steck and Foster). This disregard for the EDPA provisions has led to legal acrobatics in many of our recent inverse condemnation decisions, illustrated most pointedly by the court's opinion in Deisher, 264 Kan. 762.

. . .

In order to give full effect to K.S.A. 26-513 and the other provisions of the EDPA, we disapprove of our prior case law that fails to take into account the statutory requirement that just compensation be provided for property damaged for public use.

 

The court also confirmed the trial court's award of attorneys fees and costs to the property owner pursuant to 42 U.S.C. § 4654(c) (2006) (the roundabout project received federal funds). A pdf copy of the court's opinion is available here. A report on the decision from the Kansas City Star here.

For a cogent criticism of the court of appeals decision, see Jonathan D. Stokes, Taking Back the Fifth: Why Kansas' Approach to Inverse Condemnation Violates the United States Constitution and Leads to Unnecessary Confusion [Estate of Kirkpatrick v. Olathe, 178 P.3d 667 (Kan. Ct. App. 2008)], 48 Washburn L. J. 241 (2008) (available here).

Inverse Condemnation
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September 07, 2009

INVERSECONDEMNATION

Can Government Use Inverse Condemnation To Take Property Without Compensation?

Posted: 06 Sep 2009 09:16 PM PDT INVERSECONDEMNATION

We can't figure out this Kafkaesque decision from the Appellate Division of the New Jersey Superior Court. We really can't.

In Klumpp v. Borough of Avalon, No. A-2963-07 (per curiam), the court held that the government can assert inverse condemnation in order to take property without compensation. 

If you had to read that twice to comprehend it, you're not alone. 

The Klumpps are long-time owners of a parcel in the Borough of Avalon, New Jersey; they built a summer house in 1960 which was destroyed two years later in a storm. Since that time, the Borough constructed a protective sand dune system on the Klumpp's and other properties, and enacted regulations allowing officials to enter the property and "do such acts as may be required, including removing, destroying or otherwise disposing of any property located thereon without first paying any compensation therefor." The dunes and the accompanying regulations prevented the Klumpps from rebuilding their home, and denied them access to the land, but the Borough never asserted the Klumpps didn't own the land. The property was rezoned from residential to "public use" in 1979. In 1997, the Borough acknowledged they could not rebuild, but denied the regulations took the property.

In 2003, the Klumpps applied for a development permit to build a single family home on their land, but the application could not be processed because they could not show they had access to the land. They sued, seeking a declaratory judgment that they had the access necessary to develop the property. The Borough asserted it had adversely possessed the property, or had gained an easement by prescription or under the public trust doctrine.

After the trial judge granted the Borough's motion for summary judgment, the Appellate Division reversed, holding there was no proof the Borough adversely possessed the property. On remand, the property owners amended the complaint to add claims for ejectment and trespass, and the Borough amended its counterclaim, seeking declarations that it had taken the property in 1962, and that it owned the property outright.

After a bench trial, the court determined the 1979 rezoning was a regulatory taking, but because the property owners did not demand compensation, they were not barred by the six-year statute of limitations. The ejectment and trespass claims, as "continuing offenses," also could not be time barred. The court entered judgment for the Borough, however, since it had taken the property by inverse condemnation.

The Appellate Division first discussed the inverse condemnation cause of action, correctly noting:

In an inverse condemnation case, a property owner alleges that the government took the property without the payment of just compensation. Pappas v. Bd. of Adjustment of Borough of Leonia, 254 N.J. Super. 52, 56 (App. Div.), certif. denied, 130 N.J. 9 (1992). A taking by inverse condemnation "does not occur in compliance with statutorily imposed procedures. The essence of the cause of action is a de facto taking of private property under the power of eminent domain." Van Dissel v. Jersey Cent. Power & Light Co., 152 N.J. Super. 391, 404 (Law Div. 1977), aff'd, 181 N.J. Super. 516 (App. Div. 1981), certif. denied, 89 N.J. 409 (1982), vacated on other grounds, 465 U.S. 1001, 104 S. Ct. 989, 79 L. Ed.2d 224 (1984). Inverse condemnation thus provides a remedy designed to insure that the owner whose land was taken de facto receives just compensation.

 

 

The court agreed with the trial court that the "conduct of the Borough since 1962 has made plaintiffs' property completely useless, and essentially unavailable to them for any purpose," and "that inverse condemnation has occurred, and that the Borough is the true owner of the property." Having found that the Borough inversely condemned the Klumpp's property and that it had taken their land, the next step was to award just compensation, right?  

No (and this is the part we just can't figure) the court held the Borough took the property but didn't owe anything as compensation. Even though it left the earlier decision regarding the statute of limitations and lack of prescriptive easement undisturbed:

Plaintiffs argue that the tax bills, Borough records, and recorded title ownership indicate that they continue to be the true owners of the property. These are indicia of plaintiffs' bare legal title, however, and nothing more. The conduct of the Borough since 1962 has made plaintiffs' property completely useless, and essentially unavailable to them for any purpose.

It is the taking of possession without payment that constitutes the very essence of inverse condemnation. The fact that plaintiffs have legal title does not refute that conclusion. The proposition that "only the holder of legal title can be an 'owner' of property finds no support either in our jurisprudence or in everyday conversation." Jock v. Zoning Bd. of Adjustment of Twp. of Wall, 371 N.J. Super. 547, 556 (App. Div. 2004), rev'd on other grounds, 184 N.J. 562 (2005). Once plaintiffs became aware of the physical occupation of the property by the Borough, the burden shifted to them to recover just compensation.

Not surprisingly, the property owners have petitioned the New Jersey Supreme Court for review (petition available here). We can't say it any better than they do:

The decision below is based upon a fundamental misunderstanding of the inverse condemnation cause of action.  Inverse condemnation is a remedy designed to provide just compensation to landowners whose land has been improperly taken by the government without complying with due process of law through the Eminent Domain Act. In an inverse condemnation action, the aggrieved landowner who has demonstrated a taking of land by the government obtains redress in the nature of mandamus to compel the institution of condemnation proceedings by the government, ultimately leading to the payment of just compensation.

There is no authority for the proposition, espoused by the court below, that inverse condemnation may be utilized by a municipality to take land without complying with the provisions of the Eminent Domain Act, and without paying just compensation. The inverse condemnation remedy, designed to protect landowners, cannot be used by municipalities to steal land in violation of a landowner’s constitutional rights.

Petition at 2-3 (emphasis original). We recommend reading the entirety of the petition.

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September 06, 2009

SIOR PROFESSIONAL REPORT ARCHIVES

SIOR PROFESSIONAL REPORT ARCHIVES

 
SIOR's dynamic quarterly magazine addresses the concerns of industrial and office real estate practitioners. Articles by industry experts focus on topics from the evolving paradigm in commercial real estate brokerage to effectively managing offices and technology. Professional Report will reinforce your professionalism and give you the tools to excel in sales and leasing. You may request a complimentary copy before ordering your subscription.

ANNUAL SUBSCRIPTION
$35 for additional subscriptions for members/candidates (one subscription is included with annual membership dues)
$45 for non-members within the USA
$55 for non-members outside of the USA
Click here for a subscription order form.

ARTICLE ARCHIVES
Professional Report feels that the information contained in the publication is accurate. However, the information is not guaranteed and the Society of Industrial and Office REALTORS (SIOR) does not assume any liability or responsibility for any damages, real or imagined, resulting from inaccurate or erroneous information. Views expressed are not necessarily those of SIOR. Articles are copyrighted by SIOR or, at times, by the author and no part of any article may be reproduced in whole or in part without written permission.

For articles published prior to 2004, please click here.
 
:: Best Practices :::: Environmental Trends :::: Finance :::: Industrial ::
:: International :::: Market & Regional Trends :::: Marketing :::: Office ::
:: Service & Professionalism :::: Technology:::: Tenant Representation :: 

Best Practices
ABCs of Ground Leases (2nd Quarter 2008)
All Appropriate Inquiry - The New Due Diligence Standard (Fall 2006)
Avoiding and Resolving Landlord and Tenant Disputes (Summer 2007)
Brokers Can-and Should-Help Tenants Go Green (2nd Quarter 2008)
Broker Retention: Keep Brokers Motivated and Results Driven (1st Quarter 2008)
Buying vs. Leasing: It's Not Just About Real Estate (Winter 2005)
Contact Centers - Labor Intensive Endeavors (2nd Quarter 2008)
Converting Older Single-Tenant Facilities to Multi-Tenant Facilities (Spring 2006)
Cost Segregation Analysis (Summer 2006)
Finding the Gold in Going Green (2nd Quarter 2008)
How do Regional Real Estate Brokerage Firms Stay Competitive? (2nd Quarter 2008)
How to Create a Masterful Proforma (Winter 2004)
How to Structure and Operate a REIT (Summer 2007)
It's Good to Be Green (Winter 2007)
Lease Negotiations in a Down Market (4th Quarter 2008)
Lease versus Buy Cost Analysis (Spring 2007)
LEED CI - Creating Sustainable Commercial Interiors (Summer 2007)
Life Science - A Decade of Change (4th Quarter 2008)
Maintaining Your Success in a Down Market (4th Quarter 2008)
Managing Your Sales Force to Success (1st Quarter 2008)
Marketing in Tough Times - Now Is Not the Time to Stop (4th Quarter 2008)
Marketing Medical Office Space (Fall 2007)
Sharpening Your Edge through Professional Development (4th Quarter 2008)
Six Sigma and Its Application to Commercial Real Estate (Summer 2004)
SIORs Lead by Example, Share Experience to Keep Teams Upbeat (4th Quarter 2008)
SIORs - Succeeding in Niche Markets - Part II: Niches Come in all Shapes and Sizes (Winter 2005)
Teams and Coaching (2nd Quarter 2008)
The Site to Do Business Online: A Critical Resource for SIORs (Summer 2007)
TICs and 1031 Exchanges: The Basics (Fall 2007)
TICs - Tenants-In-Common: What Is It and Why Is It Popular? (Winter 2005)
Training Commercial Real Estate Sales Professionals for Excellence (Spring 2004)
Triple-Net Sale/Leasebacks (Winter 2004)
Understanding REITs: Creative Approaches and Winning Combinations (Fall 2006)
Using ACT!/ARES as a Listing Reporting System (Spring 2004)
Using ACT!/ARES for Transaction Management (Winter 2004)
Using CRM/Contact Management to Build Your Business (Fall 2007)
Using Your SIOR Designation to Promote a Career as an Expert Witness (Fall 2007)
What Prospects and Referring Brokers Want to Hear in Presentations  (Winter 2005)

Back to top

Environmental Trends
All Appropriate Inquiry - The New Due Diligence Standard (Fall 2006)
Brokers Beware: There Is a New Hazard in Town (Summer 2004)
Brokers Can-and Should-Help Tenants Go Green (2nd Quarter 2008)
Business Case for Environmental Design (Spring 2007)
Distribution Centers Bring Power to the People - Literally - through Use of Solar Panels (3rd Quarter 2008)
Finding the Gold in Going Green (2nd Quarter 2008)
The Green Train Has Left the Station (1st Quarter 2008)
Going Green - The Difference Is in the Details (2nd Quarter 2008)
LEED CI - Creating Sustainable Commercial Interiors (Summer 2007)
It's Good to Be Green (Winter 2007)
Homeland Security (Spring 2004)
Smart Green - Ways to Make Your Medical Office Building Green (4th Quarter 2008)

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Finance
1031 Exchanges and Investor Due Diligence (Spring 2007)
The Auction Process and Commercial Real Estate (1st Quarter 2009)
Bankruptcy Basics for Commercial Real Estate Developments (4th Quarter 2008)
Cost Segregation Analysis (Summer 2006)
The Credit Crisis: The Federal Reserve's Role and the Ultimate Impact on Commercial Real Estate (4th Quarter 2008)
Deleveraging: A Cure for the Subprime and Credit Market Meltdown (3rd Quarter 2008)
How to Create a Masterful Proforma (Winter 2004)
How to Structure and Operate a REIT (Summer 2007)
How the Housing Market Will Affect Commercial Markets (3rd Quarter 2008)
Impact of the Subprime Loan Default and Tighter Underwriting on Commercial Real Estate (2nd Quarter 2008)
Income Tax Saving Ideas for Industrial and Office Property Owners (Fall 2007)
Job Cuts Impact Demand for Space - Some SIORs Shift Strategies (Winter 2004)
Lease Versus Buy Cost Analysis (Spring 2007)
Lenders, TICs, and Bear Markets (Fall 2007)
Maximizing Incentives with Incentive Management (Summer 2005)
Revenue Bond Financing and Incentives for Developer-Driven Projects (Fall 2006)
The Rationality Behind the Exuberance - A Look at Real Estate Investment in this Cycle (Spring 2004)
Save Operating Expense Dollars by Building Green (Fall 2007)
SIOR Firm Operations Survey - Rising Costs Cut into Margins (Fall 2007)
Thinking Outside the Box to Cope with Rising Construction Costs (4th Quarter 2008)
TIC-TAC-No! The TIC Market Today (1st Quarter 2009)
TICs and 1031 Exchanges - The Basics (Fall 2007)
Tax Code Makes It Possible to Exchange Taxes for Profits (Spring 2005)
Triple-Net Sale/Leasebacks (Winter 2004)
Understanding REITs: Creative Approaches and Winning Combinations (Fall 2006)
Using Advanced 1031 Exchange Strategies to Improve Client Investment Returns (Spring 2005)

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Industrial
ABCs of Ground Leases (2nd Quarter 2008)
Advancing India (Spring 2007)
Advancing on All Fronts: SIOR Commercial Real Estate Markets Defying the Speculation of "Bubble Theorists" (Spring 2006)
Buying vs. Leasing: It's Not Just About Real Estate (Winter 2005)
Central Denver Gem - Redevelopment of Infill Industrial Buildings (Summer 2005)
Delivering the Goods: The Rise of High Velocity Distribution Centers (Winter 2005)
Distribution Centers Bring Power to the People - Literally - through Use of Solar Panels (3rd Quarter 2008)
Focusing on a Niche Market - Is It for You? (Fall 2004)
Growing Strength of Railroad Intermodal Facilities (Spring 2007)
How Online Shopping Affects Warehouse Space Needs (Fall 2004)
How the High Cost of Development Causes Market Distortion (4th Quarter 2008)
The Human Resources Aspects of Site Selection (Winter 2005)
Industrial Market Clamors for Rail Access (Spring 2005)
Is There Light at the End of the Manufacturing "Tunnel?" (1st Quarter 2009)
Managing Security and Terrorism Issues (Spring 2007)
The Next Generation of Industrial Space (Summer 2004)
Railroad, Logistics, and Development (1st Quarter 2009)
SIORs - Succeeding in Niche Markets - Part II: Niches Come in All Shapes and Sizes (Winter 2005)
Taking Advantage of Lease Terminations and Lease Renegotiations (Summer 2004)
Thinking Outside the Box to Cope with Rising Construction Costs (4th Quarter 2008)
Top Ten Building Deficiencies (Fall 2006)
Turn, Turn, Turn (Spring 2006)
Thinking Outside the Box to Cope with Rising Construction Costs (4th Quarter 2008)
What's Driving the Need for Intermodal Business Parks? (2nd Quarter 2008)
Value Outside the Box (Summer 2007)

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International
Advancing India (Spring 2007)
Avoiding Cultural Faux Pas in International Transactions (Summer 2007)
The Changing Face of the Industrial Investment Market in Europe (Summer 2007)
Doing Business in China (1st Quarter 2008)
The European Investment Market: How it Is Affected by the US Subprime Crisis (4th Quarter 2008)
Helping the Gulf States Rebuild - Incentives Available for Local Businesses (Spring 2006)
Managing Security and Terrorism Issues (Spring 2007)
Production, Investment Thrive South of the Border (Fall 2006)
Proximity and Savings - A Case for Offshoring to Mexico (Fall 2007)
Strong Economic Growth in China and The United States Means a More Balanced World Economy (Fall 2004)
Technology - The Asia Factor: Two SIORs' Impressions (Summer 2005)
Winning Ways in a Small World (Winter 2007)

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Market & Regional Trends
Advancing on All Fronts: SIOR Commercial Real Estate Markets Defying the Speculation of "Bubble Theorists" (Spring 2006)
Decline in the SIOR Index - A Sign of the Times (1st Quarter 2008)
Developing a Difficult Property (Summer 2006)
Eastern United States - Ahead of the Curve (Fall 2004)
Economic Outlook - the Good, the Bad, and the Ugly 2009 (1st Quarter 2009)
The Elections Are Over - How's the Economy Doing? (Winter 2005)
Fastest Growing U.S. Economy in 20 Years Finds Bears on the Run  (Winter 2004)
Helping the Gulf States Rebuild - Incentives Available for Local Businesses (Spring 2006)
How the High Cost of Development Produces Market Distortion (4th Quarter 2008)
The Investment & Development Landscape - A 2006 Update (Summer 2006)
Job Cuts Impact Demand for Space - Some SIORs Shift Strategies (Winter 2004)
Latest SIOR Index Reveals National Economy Hurting Local Commercial Real Estate (2nd Quarter 2008)
The "Networked" Economy (Summer 2007)
A Pause that Refreshes...?  - SIOR Commercial Real Estate Index Commentary (Winter 2007)
Production, Investment Thrive South of the Border (Fall 2006)
The Real Estate Cycle: Is the Perfect Strom Brewing? (Fall 2006)
SIOR Index - Continuing Decline Prompted by National Economic Conditions (3rd Quarter 2008)
SIOR Index - Office and Industrial Markets Impacted by Financial Crisis (4th Quarter 2008)
SIOR/NAR Synergies - A Case Study in Brokering Space in NAR's Chicago Headquarters Building (4th Quarter 2008)
SIOR Summer Survey Charts a Dip: Are Commercial Property Markets Cooling Off - and for How Long? (Fall 2006)
Strong Economic Growth in China and the United States Means a More Balanced World Economy (Fall 2004)
Supply Chain Management: The Real Driving Force Behind Commercial Real Estate (3rd Quarter 2008)
Twenty Years Onward: Demography and its Implications through 2025 (Summer 2005)
U.S. Economic Indicators Looking Good (Spring 2005)
The U.S. Economy - Gaining Momentum Every Day (Summer 2004)
The U.S. Economy is Doing Extremely Well (Spring 2004)
What Bubble? Central Region SIORs Keep Feet Firmly Planted (Summer 2005)
What's Hot? What's Not? Different Markets Yield Different Answers (Winter 2005)
Western Market Update - Optimism Taking Root (Spring 2004)
Western Market Update - Western U.S. Shows Muscle (Spring 2005)
SIOR Commercial Real Estate Index (Fall 2008)

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Marketing
Advertising Commercial Rental Space (Winter 2007)
The Auction Process and Commercial Real Estate (1st Quarter 2009)
Creativity and Perseverance Make a Winning Combination (Summer 2006)
Hook Clients with the First Tour of Your Space (Spring 2007)
How Do Regional Real Estate Brokerage Firms Stay Competitive? (2nd Quarter 2008)
How to Create a Masterful Proforma (Winter 2004)
Internet and Marketing: SIORs Get More Creative As Expertise Grows (3rd Quarter 2008)
Let Me Stand Out! Increase Your Market Presence (1st Quarter 2009)
Maintaining Your Success in a Down Market (4th Quarter 2008)
Marketing in Tough Times - Now Is Not the Time to Stop (4th Quarter 2008)
Marketing Is a Conversation (Spring 2006)
Pitching corporate Real Estate Departments (3rd Quarter 2008)
Relationship Building and Managing (1st Quarter 2009)
SIORs Enhance Awareness, Generate New Business with Market Data (2nd Quarter 2008)
Teaming Up to Develop Your Own Real Estate Portfolio (3rd Quarter 2008)
Upgrading Your Web Site (3rd Quarter 2008)
What Prospects and Referring Brokers Want to Hear in Presentations (Winter 2005)

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Office
Adaptive Reuse - A Case Study (Winter 2004)
Buying vs. Leasing: It's Not Just About Real Estate (Winter 2005)
Changes Coming in Medical Space Real Estate Needs (2nd Quarter 2008)
Contact Centers - Labor Intensive Endeavors (2nd Quarter 2008)
Converting Older Single-Tenant Facilities into Multi-Tenant Facilities (Spring 2006)
Delivering the Goods: The Rise of High-Velocity Distribution Centers (Winter 2005)
Focusing on a Niche Market - Is it for You? (Fall 2004)
Future Medical Space Needs (Fall 2007)
The Human Resources Aspects of Site Selection (Winter 2005)
Keeping Your Office Space Leased Up - Tips from the Pros (Summer 2007)
Managing Security and Terrorism Issues (Spring 2007)
Marketing Medical Office Space (Fall 2007)
Pre-Selling Build-to-Suits (Spring 2005)
SIORs - Succeeding in Niche Markets - Part II: Niches Come in All Shapes and Sizes (Winter 2005)
The Secret of Why Many Office Space Sublease Spaces Remain Vacant (Fall 2007)
The Success of High Tech Firms in Blighted Areas (Spring 2004)
Taking Advantage of Lease Terminations and Lease Renegotiations (Summer 2004)
Too Much Space? Subleasing May Not Be a Viable Option (Summer 2004)
Top Ten Building Deficiencies (Fall 2006)

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Service & Professionalism
Broker Retention: Keep Brokers Motivated and Results Driven (1st Quarter 2008)
Buying vs. Leasing: It's Not Just About Real Estate (Winter 2005)
Coaching Brokers to Success (Fall 2004)
Corporate Real Estate: In-Depth Knowledge and Excellent Reputation Remain Prime Considerations (Winter 2005)
Creative SIORs Find solutions Where Others Saw Only Obstacles (Spring 2006)
Do C-Level Executives Care About Real Estate? (Spring 2005)
Economic Development Efforts Succeed by Teaming with Real Estate Professionals (Spring 2005)
Focusing on a Niche Market - Is It for You? (Fall 2004)
Going, Going, Gone - Thank Goodness: Real Estate Auctions Emerge As Prudent
Strategy for Corporate Management and Public Officials Conversation
(Spring 2006)
How SIORs Maximize Business in a Slow Market (Winter 2004)
Invaluable Resources, Added Level of Confidence - Networking with Fellow SIORs (Winter 2007)
Managing Your Sales Force to Success (1st Quarter 2008)
Maximizing Incentives with Incentive Management (Summer 2005)
Positioning Yourself for the Future (Spring 2006)
Real Estate and Charitable Giving - Doing Well by Doing Good (Fall 2004)
SIORs - Succeeding in Niche Markets - Part II: Niches Come in All Shapes and Sizes (Winter 2005)
Six Sigma and its Application to Commercial Real Estate (Summer 2004)
Stretching Beyond the Boundaries of Brokerage Service (Spring 2006)
To Train or Not to Train, That Is the Question (Summer 2005)
Training Commercial Real Estate Professionals for Excellence (Spring 2004)
Turn, Turn, Turn (Spring 2006)
The Value of an SIOR from the Perspective of the User (Spring 2005)
What Prospects and Referring Brokers Want to Hear in Presentations (Winter 2005)
Winning Ways in a Small World (Winter 2007)

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Technology
ACT! 2006 - Should You Upgrade or Wait? (Summer 2006)
ARES with ACT! Performance (Spring 2007)
Commercial Brokerage and Technology Innovation - What's Next? (Spring 2007)
Developing Your Own Web Site - The Neophyte's Perspective (3rd Quarter 2008)
Internet and Marketing: SIORs Get More Creative As Expertise Grows (3rd Quarter 2008)
The Internet and Your Business (1st Quarter 2008)
Internet Deals: Farewell to Paper? (Summer 2005)
Internet Research: If You Can't Find it, You Haven't Looked Hard Enough (3rd Quarter 2008)
Setting Knowledge Free... Blogging (Summer 2006)
Smartphones Keep Getting Smarter - An Update on What Phones Can Do Now (Fall 2006)
Technology - The Asia Factor: Two SIOR's Impressions (Summer 2005)
Tech Talk - Tech Trends in Commercial Real Estate Brokerage (Summer 2006)
Treo 650 - Add-On Programs (Spring 2006)
The Site to Do Business Online: A Critical Resource for SIORs (Summer 2007)
Using ACT!/ARES As a Listing Activity Reporting System (Spring 2004)
Using ACT!/ARES for Transaction Management (Winter 2004)
Using CRM/Contact Management to Build Your Business (Fall 2007)

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Tenant Representation
Avoiding and Resolving Landlord and Tenant Disputes (Summer 2007)
Converting Older Single-Tenant Facilities to Multi-Tenant Facilities (Spring 2006)
The Future of Tenant Representation (1st Quarter 2008)
TICs - Tenants-In-Common: What Is It and Why Is It Popular? (Winter 2005)

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INDUSTRIAL PROPERTY FORECAST - 3Q 2009

INDUSTRIAL PROPERTY FORECAST - 3Q 2009

September 3, 2009 on 12:25 am | In CHARTS + STATISTICS, FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, New Developments, Trends, Uncategorized, all, statistics |

INDUSTRIAL PROPERTY FORECAST

By Jodi Summers

Industrial properties in near the Southern California airports and ports were long considered to be secure investments, for seemingly obvious reasons…

1. Two of the country’s three largest ports.

2. An organized, but congested distribution hub.

3. A world of growing economies exchanging products, and the need to store these products as they arrived / departed our shores.

With the world economy at a standstill, this has certainly changed. Currently, the

Industrial market is in serious pain. Los Angeles area industrial vacancy rates are down 8.2%, and the increase in space has led to a drop in rental rates by 10% or more.

It’s a buyer’s market. Investors are saying that SoCal industrial volume sales are at their lowest in a decade. The Society for Industrial and Office Realtors (SIOR) reports, “The Industrial marketplace is suffering from decreased leasing activity, a steeper decline in rental rates, and higher levels of tenant concessions. It is also expecting higher vacancy rates.”  http://www.realtor.org/wps/wcm/connect/83575f004f476966b69ff74e813808c1/FullCREO09August.pdf?MOD=AJPERES&CACHEID=83575f004f476966b69ff74e813808c1

Entire Article: http://www.socalindustrialrealestateblog.com/?p=425#comment-295328

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AIR’s Multi-Purpose Web Site


AIR’s Multi-Purpose Web Site
Member Benefit

Martin Vartanian, the AIR’s IT Director, has issued a reminder to members of the multiple benefits readily available at AIR’s web site at www.airea.com.

Among the most useful links on the site, says Martin, is one enabling you to search all AIR member brokers.  “And if members don’t see their own bio, I invite them to contact me to update their bio or create a new one for them,” Martin said.  He can be reached by email at mvartanian@airea.com or by phone at (213) 687-8777.

Other features of the web site are the capacity to have your own property featured for a nominal fee, a Calendar of Events, a page featuring all members of AIR’s Board of Directors, and the Benefits and Services of AIR.

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2009 Fall Developers Forum November 2-3, 2009

2009 Fall Developers Forum November 2-3, 2009 

 

NH&RA will be convening our 2009 Fall Developers Forum at the Taj Hotel in Boston on November 2-3, 2009. Online registration is now open and the hotel is taking reservations at our group rate. Click here to register online today!

We are planning our curriculum and would like to solicit your input. If there are any topics that you would like to present, or issues or emerging industry trends that you would like to see discussed at the meeting, kindly forward your suggestions to Thom Amdur, tamdur@housingonline.com.

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September 03, 2009

Inverse Condemnation

Amicus Brief In NY Court Of Appeals In Goldstein/Atlantic Yards Case: NY's Public Use Clause Prohibits Judicial Rubber Stamp Of Takings

Posted: 02 Sep 2009 11:22 AM PDT Inverse Condemnation

Willets Point United has filed an amicus brief supporting their fellow New York City property owners in the public use case now pending in the New York Court of Appeals regarding the Atlantic Yards "redevelopment" project in Brooklyn, Goldstein v. New York State Urban Dev. Corp. As we noted here, Willets Point is under the takings gun itself, and has our Owners' Counsel colleague Mike Rikon helping them (he also filed the amicus brief).

The brief argues that the Court of Appeals should not follow the Kelo rule of total deference to economic development takings: "The majority decision in Kelo v City of New London written by Justice Stevens was wrong, wrong in its holding and wrong on its facts." Br. at 7. The New York Constitution's public use clause prohibits economic development takings, and the brief walks through some of the more storied cases from that jurisdiction, including the infamous Courtesy Sandwich Shop, Inc. v. Port of New York and New Jersey Auth., 12 N.Y.2d 379 (1963) (taking for the World Trade Center site) and Yonkers Community Dev. Agency v. Morris, 37 N.Y.2d 478 (1975) (expanding "blight" to include just about anything the condemnor says is blight). See Br. at 11-14. The brief argues:

An independent judiciary should not be limited to a rubber stamp of approval. It is incorrect that the First Department would find that it was bound by a determination that luxury condominiums were "blighted." By precluding its review, a court does violence to the fundamental separation of powers doctrine which represents the constitutional check on power in our form of government.

Furthermore, the decisions made to condemn are not legislative determinations. The determinations are not made by any elected officials, but by a hand full of appointees who are responsible to no one. It is simply incredible that these decisions have been held unreviewable. The decision making process to condemn private property is not made by a representative deliberate assembly.

Br. at 15-16. The merits brief of the Brooklyn property owners is posted here.

The NY Times' report on the Atlantic Yards appeal is posted here, and a recent op-ed on the case is linked from this post.

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September 02, 2009

Free Web Access to Judicial Records Gladdens Public but Worries Some Courts

Free Web Access to Judicial Records Gladdens Public but Worries Some Courts

Spell PACER backwards and you get RECAP, a no-cost alternative to the federal courts' electronic documents database. Its creator says the new service is "turning PACER around" with the goal of "build[ing] the nation's most comprehensive public archive of freely-available federal judicial records."

Though federal court officials are skittish about security, more than 7,000 downloads have been made since Princeton University's Center for Information Technology launched the site, www.recapthelaw.org, on Aug. 14.

Documents in RECAP's database are available at no cost, in contrast to the eight cents per page charged by PACER. Free court records are available elsewhere online at Web sites like justia.com and publicresource.org, but what sets RECAP apart is that it is self-populating. Any document accessed through PACER (short for Public Access to Court Electronic Records) is uploaded automatically to RECAP's online archive.

RECAP started out with more than a million documents, chiefly from the Southern District of New York (238,098), the District of Columbia (219,049), and the District of Massachusetts (217,315). New Jersey has about 5,000.

That represents a smidgeon of the more than 500 million documents that have been electronically filed with the courts. But documents are continually being added, and Stephen Shultze, a fellow at Harvard University's Berkman Center for Internet and Society, who worked on RECAP, estimates that the hundreds of documents uploaded per day at first has grown to thousands.

RECAP is an add-on or plug-in to the Mozilla Firefox browser, which, like RECAP, is a free, open-source program.

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Inverse Condemnation

Kelo Reality Check: "Belief" And "Hope" Aren't All They're Cracked Up To Be

Posted: 01 Sep 2009 03:57 PM PDT  Inverse Condemnation

Justice Stevens' majority opinion in Kelo v. City of New London, 545 U.S. 469 (2005) held the government's public use determination is off-limits if the determination was the result of a "comprehensive plan," regardless of whether than plan has any realistic chance of actually being accomplished. Thus, property owners can be forcibly dispossessed of their homes based merely on the government's "belief"  and "hope" a plan will succeed:

The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including–but by no means limited to–new jobs and increased tax revenue. As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.

For a reality check, see Professor Gideon Kanner's guest column in the National Journal: "The New London Disaster: Why the Supreme Court's 'Kelo' Decision Was A Waste." An excerpt:

The city's contention was characterized by the Connecticut Supreme Court, as well as the U.S. Supreme Court, as an effort "projected to create in excess of 1,000 jobs, to increase tax and other revenues, and to revitalize an economically distressed city, including its downtown and waterfront areas." New London's lawyer took the position in oral argument that even if the city were to take a Motel 6 to replace it with a Ritz Carlton in order to generate higher tax revenues, that would be a permissible "public use." The court's majority agreed, thus deferring entirely to the judgment of municipal redevelopment agency functionaries, and de facto allowing them to pass judgment on the constitutionality of their own handiwork. Thus, it was the perceived quality of the town's redevelopment plans that carried the day.

But as the Kelo case wended its way through the courts, the city's vaunted plans began unraveling. By the time oral arguments were heard by the Supreme Court in April 2005, the proposed five-star hotel that would cater to Pfizer's conjectured upscale guests was scrubbed. It went downhill from there. Even though the redevelopment project was begun in 2000, and the court ruled in favor of the town in 2005, nothing has been done on the ground after the taken neighborhood was razed, except for an attempt to create a Coast Guard museum, which ran out of funds and had to be abandoned. By degrees, the 90-acre tract of waterfront land that comprised the redevelopment area became a trash-strewn, weed-infested urban wasteland. The latest dispatch from New London's newspaper, The Day, reported that the site is becoming a favorite of birds and bird watchers.

Recall that at one point, one of the players on the City's side actually blamed the objecting property owners for killing the project, and as noted in Professor Kanner's column, the site is reverting to its natural state.

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September 01, 2009

CLE

Building Green and Still Making Economic Sense
Date Recorded: 9/23/2008
Hours: 1 Hour of General CLE Credit
Online Privacy:
Maintaining Client Confidence in Online Communication
Date Recorded: 9/10/2008
Hours: 2 Hours of General CLE Credit
 
The Most Important Land Use Legislation in 30 Years: What SB 375 Means For Public Agencies, Developers, and Their Lawyers"
Date Recorded: 12/10/2009
Hours: 1 Hour of General CLE Credit
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LIGHT AT THE END OF THE COMMERCIAL TUNNEL?

LIGHT AT THE END OF THE COMMERCIAL TUNNEL?
Lawrence Yun, NAR chief economist, noted the pace of decline in commercial real estate moderated, but the leading indicator has fallen sharply and quickly from the peak, suggesting much lower business opportunities for commercial real estate practitioners engaged in leasing, sales and property management. See the full Commercial Leading Indicator report: here.
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FOONG ON FINANCE: THE COMING APARTMENT SHORTAGE

FOONG ON FINANCE: THE COMING APARTMENT SHORTAGE There will be a shortage of apartments in 2013. That is the prediction of Trammell Crow Residential’s (TCR) 2009 Outlook for the U.S. Multifamily Market.
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