January 19, 2012

Professional Liability Lawsuits

Professional Liability Lawsuits
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As receiver for a failed financial institution, the FDIC may sue professionals who played a role in the failure of the institution in order to maximize recoveries. These individuals can include officers and directors, attorneys, accountants, appraisers, brokers, or others. Professional liability claims also include direct claims against insurance carriers such as fidelity bond carriers and title insurance companies.

The FDIC follows the policies adopted by the FDIC Board in 1992, Statement Concerning the Responsibilities of Bank Directors and Officers, which can be found at, and require Board approval before actions are brought against directors and officers.

Professional liability suits are only pursued if they are both meritorious and cost-effective. Before seeking recoveries from professionals, the FDIC conducts a thorough investigation into the causes of the failure. Most investigations are completed within 18 months from the time the institution is closed. Prior to filing the claim, staff will attempt to settle with the responsible parties. If a settlement cannot be reached, however, a complaint will be filed, typically in federal court.

As receiver, the FDIC has three years for tort claims and six years for breach-of-contract claims to file suit from the time a bank is closed. If state law permits a longer time, the state statute of limitations is followed.

Professionals may be sued for either gross or simple negligence. The Supreme Court has ruled that the FDIC may pursue simple negligence claims against directors and officers if state law permits (Atherton v. FDIC). Federal law preempts state law that insulates directors and officers from gross negligence or worse conduct. Bank directors are allowed to exercise business judgment without incurring legal liability.

Not all bank failures result in Director and Officer (D&O) lawsuits. The FDIC brought claims against directors and officers in 24 percent of the bank failures between 1985 and 1992.

From 1986 through 2009, the FDIC and Resolution Trust Corporation collected $6.2 billion from professional liability claims. Over that same time, they spent $1.5 billion to fund all professional liability claims and investigations. Early in the process of professional liability claims, expenses will often exceed recoveries due to the costs incurred in handling new investigations. Professional liability program recoveries lag expenses by several years until settlements occur and judgments are awarded.

As of January 18, 2012, the FDIC has authorized suits in connection with 44 failed institutions against 391 individuals for D&O liability with damage claims of at least $7.7 billion. This includes 19 filed D&O lawsuits (2 of which have been dismissed after settlement with the named directors and officers) naming 161 former directors and officers. The FDIC also has authorized 28 other lawsuits for fidelity bond, insurance, attorney malpractice, appraiser malpractice, and RMBS claims. In addition, 189 residential mortgage malpractice and fraud lawsuits are pending, consisting of lawsuits filed and inherited.

For additional background on Professional Liability Suits, please see Chapter 11 of "Managing the Crisis: The FDIC and RTC Experience"

Authorized D&O DefendantsDamage Claims ($ millions)*
Authorized in 200911$366.0
Authorized in 201098$2,122.9
Authorized in 2011264$5,109.92
January 201218$85.8

*Losses typically exceed these amounts and may result in higher damage claims in filed lawsuits. Recovery on these claims is dependent upon available recovery sources, such as insurance and personal assets, and competing claims.

D&O Suits Filed

  1. FDIC as Receiver of IndyMac Bank, F.S.B. v. Van Dellen, et al., Case No. 2:10-cv-04915-DSF-SH (U.S. District Court for the Central District of California Filed Jul. 2, 2010).
  2. FDIC as Receiver of Heritage Community Bank v. Saphir, et al., Case No. 1:10-cv-07009 (U.S. District Court for the Northern District of Illinois Filed Nov. 1, 2010).
  3. FDIC as Receiver of 1st Centennial Bank v. Appleton, et al., Case No. 2:11-cv-00476-DDP-PLA (U.S. District Court for the Central District of California Filed Jan. 14, 2011).
  4. FDIC as Receiver of Integrity Bank of Alpharetta, GA v. Skow, et al., Case No. 1:11-cv-0111 (U.S. District Court for the Northern District of Georgia Filed Jan. 14, 2011).
  5. FDIC as Receiver of Corn Belt Bank and Trust Company v. Stark, et al., Case Number 3:11-cv-03060-JBM–BGC (U.S. District Court for the Central District of Illinois Filed Mar. 1, 2011).
  6. FDIC as Receiver for Washington Mutual Bank v. Killinger, et al., Case No. 2:11-cv-000459 (U.S. District Court for the Western District of Washington Filed Mar. 16, 2011).
  7. FDIC as Receiver for Wheatland Bank v. Spangler, et al., Case No. 10-cv-4288 (U.S. District Court for the Northern District of Illinois Filed May 5, 2011).
  8. FDIC as Receiver of IndyMac Bank, F.S.B. v. Perry, Case No. 11-cv-5561-ODW-MRWx (U.S. District Court for the Central District of California Filed Jul. 6, 2011).
  9. FDIC as Receiver of Haven Trust Bank v. Briscoe, Case No. 1:11-mi-99999-UNA (U.S. District Court for the Northern District of Georgia Filed Jul. 14, 2011).
  10. FDIC as Receiver of Michigan Heritage Bank v. Cuttle, Case No.2:11-cv-13422-BAF-MKM (U.S. District Court for the Eastern District of Michigan Filed Aug. 8, 2011).
  11. FDIC as Receiver of The Columbian Bank and Trust Co. v. McCaffree, Case No. 2:11-cv-02447-JAK-KGS (U.S. District Court for the District of Kansas Filed Aug. 9, 2011).
  12. FDIC as Receiver for Cooperative Bank v. Willetts, Case No. 7:11-cv-00165-BO (U.S. District Court for the Eastern District of North Carolina Filed Aug. 10, 2011).
  13. FDIC as Receiver for Silverton National Bank, N.A. v. Bryan, Case No. 1:11-cv-02790-JEC (U.S. District Court for the Northern District of Georgia Filed Aug. 22, 2011).
  14. FDIC as Receiver for First National Bank of Nevada v. Dorris, Case No. 11-cv-01652-GMS (U.S. District Court for the District of Arizona Filed Aug. 23, 2011).
  15. FDIC as Receiver for Alpha Bank v. Blackwell, Case No. 11-cv-3423 (U.S. District Court for the Northern District of Georgia Filed Oct. 7, 2011).
  16. FDIC as Receiver for Mutual Bank v. Mahajan, Case No: 1:11-cv-07590 (U.S. District Court for the Northern District of Illinois Filed Oct. 25, 2011).
  17. FDIC as Receiver for Westsound Bank v. Johnson, Case No. 3:11-cv-05953 (U.S. District Court for the Western District of Washington Filed Nov. 18, 2011).
  18. FDIC as Receiver for Bank of Asheville v. Greenwood, Case No. 1:11-cv-00337-MR-DLH (U.S. District Court for the Western District of North Carolina Filed Dec. 29, 2011).
  19. FDIC as Receiver for R-G Premier Bank of Puerto Rico v. Victor Galán, Case No. 3:12-cv-01029 (U.S. District Court for the District of Puerto Rico Filed Jan. 18, 2012).
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January 18, 2012



January 18, 2012


Governor Brown Delivers State of the State – January 18th, 10 AM

Governor Edmund G. Brown Jr. will deliver his State of the State address before a joint session of the California legislature on Wednesday, January 18, 2012 at 10:00 A.M. The speech will stream live online on the California Channel at:




SANTA MONICA DAILY PRESS: Unique housing project hits wall

By Ashley Archibald // EASTSIDE — A unique development model meant to make home ownership affordable on Santa Monica's eastside may turn into more rental housing because of financing issues, highlighting the ongoing struggle to make home ownership affordable in Santa Monica. … According to a staff report from 2008, High Place East was a "demonstration project," the first publicly-subsidized development in the city meant to make units affordable for moderate-income households.


SAN GABRIEL VALLEY TRIBUNE: Affordable housing in El Monte, other cities, dealt a blow

By Maritza Velazquez // EL MONTE - When the Legislature passed a bill to dissolve redevelopment agencies last year - a decision upheld by the state Supreme Court last month - it also eliminated a funding stream vital to producing housing for low-income families. Cities up and down the state have been left wondering how they can provide housing opportunities for those who can't pay California's high market-rate prices.



SACRAMENTO BEE: Housing projects perk up Sacramento's central city

By Ryan Lillis // A modest building boom is taking place in Sacramento's central city.

Work is under way on at least a half-dozen projects that will bring more than 250 housing units and thousands of square feet of retail to the grid, even as the market in the rest of the region remains stagnant. Development in midtown and downtown Sacramento includes a large housing and retail complex along one of the grid's busiest thoroughfares …


HALF MOON BAY PATCH: Seniors Seek to Appeal Affordable Housing Project

By Kristine Wong // Seniors upset with the Half Moon Bay Planning Commission's Jan. 10 decision to approve a housing complex for their peers want to stop the project from moving forward in its current configuration by filing an appeal with the City Council. Developed by the Mid-Peninsula Housing Coalition, the project aims to provide 160 units of affordable housing in the area next to existing 63-unit senior apartment community...


THE PRESS-ENTERPRISE: REGION: End of redevelopment worries Habitat for Humanity

By Jeff Horseman [1/17/12] // Inland Habitat for Humanity leaders say their mission of helping working families build their own homes will be derailed by the state’s decision to end redevelopment. Representatives of local Habitat affiliates are in Sacramento today to talk with state lawmakers about affordable housing issues. … Habitat leaders said they’re not sure what source of money — if any — will take redevelopment’s place.



SACRAMENTO BEE: Sacramento-area agencies scramble to prepare for redevelopment's demise

By Loretta Kalb // … Now, cities and counties must decide quickly whether to declare themselves "successors" to redevelopment agencies in their jurisdictions. That means they would receive just enough agency funds to pay its debts, complete the unfinished projects and oversee the assets. Already, city councils in Roseville, Folsom, Woodland and Rancho Cordova have named themselves successor agencies, the first formal step in the dissolution process.


SAN FRANCISCO CHRONICLE: Cities struggle with ending redevelopment agencies

By Stephanie M. Lee [1/17/12] // Thousands of city workers empty their desks. Offices go dark. Rows of deteriorated buildings may sit untouched. This is how California's redevelopment program dies. Six decades ago, redevelopment agencies were formed across the state to revitalize blighted neighborhoods and create low-income housing.…



DATAQUICK NEWS: Bay Area Sales Up, Prices Down

Press Release 1/18/12 // La Jolla, CA -- The Bay Area’s housing market rounded out 2011 much the way it started it: with constricted and atypical sales activity, lots of bottom feeding, and a largely dormant mid- to move-up market. Sales were up slightly last month, while prices dropped, a real estate information service reported. A total of 7,494 new and resale houses and condos sold in the nine-county Bay Area in December. …


LOS ANGELES DAILY NEWS: Investors drive down home prices

By Gregory J. Wilcox // Investors mined Southern California's housing market in record numbers during December, driving prices lower than a year ago, two market trackers said Tuesday. The volume of sales was flat to end 2011, but absentee buyers - i.e. investors - accounted for 26 percent of the purchases in the five-county region, the highest rate since the figure has been tracked over the last decade, according to San Diego-based DataQuick. 


DATAQUICK NEWS: Southland December Home Sales, Prices Fall Short of a Year Earlier

Press Release: 1/17/12 // La Jolla, CA -- Southern California home sales surged last month from November – as they normally do – amid relatively strong activity under $300,000 and a record share of sales to “absentee” buyers, mainly investors. But with the purchase plans of many ordinary buyers and sellers still on hold, the year-end rush couldn’t lift sales above December 2010. Moreover, investors’ focus on lower-cost homes helped push the median sale price back down to its 2011 low point, a real estate information service reported. …


CALIFORNIA ASSOCIATION OF REALTORS: December sales and price report

Press Release: 1/17/12 // LOS ANGELES -- California home sales rose for the third consecutive month in December, marking the highest level since January 2011, according to data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  Sales also were up from a year ago, marking the sixth consecutive annual increase. “With the economy slowly improving, home buyers – investors and first-time buyers alike – took advantage of affordable  interest rates and made a push to close escrow by the end of year,” said C.A.R. President LeFrancis Arnold. …


SACRAMENTO BEE: California home sales hit highest level in a year

By Rick Daysog // The number of homes sold in California rose for the third straight month in December, according to the California Association of Realtors. The association said today that single-family home re-sales statewide hit a seasonally adjusted annualized rate of 520,940 last month, a 3.3 percent increase from November's rate and the highest level since January 2011. …



CONTRA COSTA TIMES: Program allows East Bay family to buy back foreclosed home

By Sean Maher // With the help of an Oakland-based company that is buying up hundreds of bank-owned properties in Contra Costa and Solano counties, an Antioch family is the new owner of the same home it lost to foreclosure almost two years ago -- and at less than half the price it originally paid. "We're so lucky. I mean it's the kind of thing, you tell it to the guy on the next bar stool, he thinks you did something illegal," said Darren Gates, a 40-year-old contractor and father of four. …


SAN JOSE MERCURY NEWS: Mortgage rate drop sparks refinancing wave

By Pete Carey [1/16/12] // Historically low interest rates coupled with a strengthening economy are getting the new year off to a fast start, stirring hopes that the Bay Area's dormant housing and mortgage markets may finally come to life in 2012. After hovering around 4 percent since September, rates reached an "all-time record" low of 3.89 percent for a 30-year fixed-rate mortgage last week. More first-time buyers are shopping for homes, according to brokers …


WALL STREET JOURNAL: Amid Squeeze on Home Equity, A Revival for Reverse Mortgages

By AnnaMaria Andriotis [1/17/12] // Converting home equity into cash has been a challenge for homeowners since the real-estate downturn, but a growing number of lenders are quietly reviving a loan for seniors that does just that: the reverse mortgage. Reverse mortgages allow homeowners who are at least 62 years old to draw down on their home's equity in exchange for cash in several ways, including one lump sum, a line of credit or monthly payments. …



MARKET WATCH.COM: Chase Donates $2 Million to Support Affordable Housing Preservation in Northern California

Press Release: 1/17/12 // SAN FRANCISCO (BUSINESS WIRE) -- Chase has awarded a $2 million grant to Northern California Community Loan Fund (NCCLF), one of the Bay Area's leading Community Development Financial Institutions. NCCLF provides financing and expertise to strengthen low-income neighborhoods which helps to enable disadvantaged people to build a better future. NCCLF will use the funds to provide loans to nonprofit agencies to support larger-scale affordable housing preservation projects …



SOUTH ORANGE: OP-ED: Why South Orange is a Model Downtown

By Alex Torpey [1/14/12] // … In an age where there is so much focus on not only reducing one's carbon footprint but also living healthier lives involving more walking, these concepts couldn't be more salient. South Orange is what some, like the New Jersey Regional Coalition, call a 'First Suburb.' Encouraging development in these first suburbs, often where transit oriented development potential is high, like South Orange (which has two train stations on the New Jersey Transit line), is extremely important.


WASHINGTON POST: Plans for high-speed rail are slowing down

By Michael A. Fletcher // PALO ALTO, Calif. -- Critics began panning the first leg of California’s futuristic high-speed rail network as a “train to nowhere” soon after officials decided to build it not in the major population centers of Los Angeles or San Francisco, but through the state’s Central Valley farming belt. Since then, things have only gotten worse. Spiraling cost estimates and eroding political and public support now threaten a project crucial to a 21st-century vision of train travel …



SANTA ROSA PRESS DEMOCRAT: OPINION: Redevelopment Agency's demise a big loss for Santa Rosa

By Kathleen Millison & David Gouin [1/14/12] // Many in our community have expressed support for jobs and economic sustainability, in-fill development rather than sprawl, affordable workforce housing, environmental cleanup of brownfield sites and infrastructure upgrades for our roads, bike paths and parks. Yet many of these same people are ambivalent about redevelopment and may not fully understand the impact to Santa Rosa's quality of life with the pending Feb. 1 elimination …


SACRAMENTO BEE: Viewpoints: Court closes one door, but redevelopment window is open

By Darrell Steinberg // As the reality of the state Supreme Court's decision on redevelopment settles in, the overarching question looms – what now? The court's controversial judgment may actually provide the single biggest opportunity in decades to remake, for the better, the difficult relationship between the state and city governments. We come to this point because last year, as part of addressing the state's budget deficit, the Legislature eliminated redevelopment …



LOS ANGELES TIMES: Gov. Jerry Brown urges Obama to appoint new housing regulator

By Michael J. Mishak // Joining California's congressional Democrats, Gov. Jerry Brown is calling on President Obama to appoint a new federal housing regulator, saying the acting director is "hindering California's economic recovery and harming state efforts to promote clean energy." In a letter to the White House last week, Brown echoed the concerns of more than two dozen House Democrats, arguing that the Federal Housing Finance Authority under Acting Director Edward DeMarco has "ignored" the Golden State's foreclosure crisis …


CENTRAL VALLEY BUSINESS TIMES: Home builders almost ebullient as confidence rises

Washington, DC // Champagne and confetti may not have been ordered just yet, but the nation’s new-home builders are expressing greater confidence in the market for newly built, single-family homes, according to a report Wednesday from the National Association of Home Builders. Its NAHB/Wells Fargo Housing Market Index for January shows a continued climb for a fourth consecutive month, rising four points to 25. This is the highest level the index has attained since June of 2007. …



NEW YORK TIMES: OP ED: The Next Immigration Challenge

By Dowell Myer [1/12/12] // THE immigration crisis that has roiled American politics for decades has faded into history. Illegal immigration is shrinking to a trickle, if that, and will likely never return to the peak levels of 2000. Just as important, immigrants who arrived in the 1990s and settled here are assimilating in remarkable and unexpected ways. Taken together, these developments, and the demographic future they foreshadow …



LOS ANGELES DAILY NEWS: Dirty freeway air puts Southern California health at risk, say activists

By Melissa Pamer  // A growing body of science has confirmed common-sense instinct that dirty freeway air is seriously bad for health, and that research is now spurring Los Angeles activists and regulators to consider new ways of addressing pollution. Though air quality in Southern California has improved dramatically since the 1970s, more and more evidence shows that pollutants remain concentrated close to traffic corridors, and that these toxins cause a broad variety of health problems. Yet, despite studies showing troubling health effects, it remains a mystery exactly what's in the air …


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Understanding Seismic Modeling Probable Maximum Loss Reports

Understanding Seismic Modeling Probable Maximum Loss Reports
Date: Available On-Demand
Presented By:

This video webinar, presented by with Thought Leader Partner Engineering and Science, Inc., will give commercial real estate investors a thorough overview of seismic Probable Maximum Loss Reports (PMLs). These reports are especially important for those investing in real estate in areas that are at risk for earthquake damage.  Register Now
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Calculated Risk

Calculated Risk


AIA: Architecture Billings Index increased in December

Posted: 18 Jan 2012 09:11 AM PST

Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.

From AIA: Architecture Billings Index Positive for Second Straight Month

After showing struggling business conditions for most of 2011, the Architecture Billings Index (ABI) has now reached positive terrain in consecutive months. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 52.0, following the exact same mark in November. This score reflects an overall increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 64.0, down just a point from a reading of 65.0 the previous month.

“We saw nearly identical conditions in November and December of 2010 only to see momentum sputter and billings fall into negative territory as we moved through 2011, so it’s too early to be sure that we are in a full recovery mode,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Nevertheless, this is very good news for the design and construction industry and it’s entirely possible conditions will slowly continue to improve as the year progresses.”

AIA Architecture Billing IndexClick on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was unchanged at 52.0 in December. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So this suggests further declines in CRE investment in early 2012, but perhaps stabilizing later in 2012.

All current Commercial Real Estate graphs

NAHB Builder Confidence index increases in January

Posted: 18 Jan 2012 07:07 AM PST

The National Association of Home Builders (NAHB) reports the housing market index (HMI) increased in January to 25 from 21 in December. Any number under 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Rises Fourth Consecutive Time in January

Builder confidence in the market for newly built, single-family homes continued to climb for a fourth consecutive month in January, rising four points to 25 on the NAHB/Wells Fargo Housing Market Index (HMI), released today. This is the highest level the index has attained since June of 2007.
Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011,” noted NAHB Chief Economist David Crowe. “That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”
Each of the HMI’s three component indexes registered a fourth consecutive month of improvement in January. The component gauging current sales conditions rose three points to 25, which was its highest point since June of 2007. The component gauging sales expectations in the next six months also rose three points, to 29 -- its highest point since September 2009. And the component gauging traffic of prospective buyers rose three points to 21, its highest point since June of 2007.

The HMI also posted gains in all four regions in January, including a nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest, a two-point gain to 27 in the South and a five-point gain to 21 in the West.

HMI and Starts CorrelationClick on graph for larger image.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the January release for the HMI and the November data for starts (December housing starts will be released tomorrow).

Both confidence and housing starts had been moving sideways at a very depressed level for several years - but confidence has been moving up.

This is still very low, but this is the highest level since June 2007.

All Housing Graphs

Industrial Production increased 0.4% in December, Capacity Utilization increased

Posted: 18 Jan 2012 06:24 AM PST

From the Fed: Industrial production and Capacity Utilization

Industrial production increased 0.4 percent in December after having fallen 0.3 percent in November. For the fourth quarter as a whole, industrial production rose at an annual rate of 3.1 percent, its 10th consecutive quarterly gain. In the manufacturing sector, output advanced 0.9 percent in December with similarly sized gains for both durables and nondurables. The output of utilities fell 2.7 percent, as unseasonably warm weather reduced the demand for heating; the output of mines moved up 0.3 percent. At 95.3 percent of its 2007 average, total industrial production in December was 2.9 percent above its level of a year earlier. The capacity utilization rate for total industry rose to 78.1 percent, a rate 2.3 percentage points below its long-run (1972--2010) average.

Capacity UtilizationClick on graph for larger image.

This graph shows Capacity Utilization. This series is up 10.8 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.1% is still 2.3 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 81.3% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

Industrial ProductionThe second graph shows industrial production since 1967.

Industrial production increased in December to 95.3, and previous months were revised up slightly.

The consensus was for a 0.5% increase in Industrial Production in December, and for an increase to 78.1% for Capacity Utilization. This was close to consensus.

All current manufacturing graphs

MBA: Mortgage Refinance Applications increase sharply

Posted: 18 Jan 2012 05:33 AM PST

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

The Refinance Index increased 26.4 percent from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index increased 10.3 percent from one week earlier to its highest level since December 12, 2011.

"Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe," said Michael Fratantoni, MBA's Vice President of Research and Economics. Fratantoni continued, "With mortgage rates reaching new lows, refinance volume jumped and MBA's refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.06 percent from 4.11 percent ...

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.40 percent from 4.34 percent

The following graph shows the MBA Purchase Index and four week moving average since 1990.

MBA Purchase Index
Click on graph for larger image.

The purchase index increased last week, and the 4-week average also increased. This index has mostly been sideways for the last 2 years - and even with the recent increase, this is at about the same level as in 1997.

Residential Remodeling Index declines seasonally in November

Posted: 17 Jan 2012 09:23 PM PST

The BuildFax Residential Remodeling Index was at 137.9 in November, down from 147.6 in October, but up 33.5% from November 2010. This is based on the number of properties pulling residential construction permits in a given month.

From BuildFax Remodeling Index

The Residential BuildFax Remodeling Index rose 33.5% year-over-year in November--for the twenty-fifth straight month of growth--to 137.9. However, this also marked the first month-over-month drop since February, likely due to seasonal factors. Residential remodels in November were down month-over-month 9.7 points (6.6%) from the October value of 147.6, and up year-over-year 34.6 points from the November 2010 value of 103.3.
"Residential remodeling in 2011 grew substantially above 2010 rates and remained strong through the end of the year," said Joe Emison, Vice President of Research and Development at BuildFax. "However, we do expect to see the number of remodeling permits decrease on a month-over-month basis for the duration of the winter."

Residential Remodeling IndexClick on graph for larger image.

Although the index declined in November, this is the highest level for a November since the index started in 2004, even above the levels from 2004 through 2006 during the home equity ("home ATM") withdrawal boom.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

Residential Remodeling Index YoYSince there is a strong seasonal pattern for remodeling, the second graph shows the year-over-year change from the same month of the previous year.

The remodeling index is up 33.5% from November 2010. This is the 25th consecutive month with a year-over-year increase.

Even though new home construction is still moving sideways, two other components of residential investment probably increased in 2011: multi-family construction and home improvement.

Data Source: BuildFax, Courtesy of

QOTD: Housing "markets get healthy from the bottom up"

Posted: 17 Jan 2012 04:43 PM PST

From the WSJ: From Bottom Up, Signs of Housing Recovery (ht Brian)

Across Westchester, the number of buyers in contract to buy homes priced less than $500,000 at the end of 2011 rose by nearly 40% compared to a year earlier, according to a market report issued by the broker Houlihan Lawrence. Sales weakened at higher price points.

Analysts have noted a similar pattern in New Jersey. Sales have picked up due to buyers of properties priced less than $400,000, according to data compiled by the Otteau Valuation Group. The number of such contracts signed during the fourth quarter rose by 11.3% compared to the same period a year earlier.

Analysts said housing-market recoveries often begin at the bottom.

"It is nice when you get the high end of the market doing well," said Chris Meyers, chief operating officer of Houlihan Lawrence, the largest residential brokerage in Westchester, "but in our experience the strong markets get healthy from the bottom up."

The article doesn't discuss the role of investors buying, and investor buying is at record levels in California and other bubble states.

Also the article doesn't mention the higher conforming loan limits from Fannie and Freddie in Westchester. But there is some truth to the quote "markets get healthy from the bottom up".

LA area Port Traffic increases slightly year-over-year in December

Posted: 17 Jan 2012 12:23 PM PST

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported - and possible hints about the trade report for November. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

LA Area Port Traffic
Click on graph for larger image.

On a rolling 12 month basis, inbound traffic is up 0.2% from November, and outbound traffic is up 0.1%.

On a rolling 12 month basis, outbound traffic is moving "sideways" for the last couple of months, and it appears inbound traffic has halted the recent decline.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

LA Area Port TrafficFor the month of December, loaded inbound traffic was up 2% compared to December 2010, and loaded outbound traffic was up 1% compared to December 2010.

Exports have been increasing, although the rate of increase has slowed.

Imports have been somewhat soft - this is the first month with a year-over-year increase since May 2011.

All current trade graphs

DataQuick: SoCal Home Sales decline year-over-year, Record investor buying

Posted: 17 Jan 2012 10:35 AM PST

This report is only for Southern California, but it contains useful information for analyzing the housing market. Over half the sales in SoCal were distressed in December (foreclosures and short sales), over one quarter of the sales were to absentee owners (usually investors), and new home sales were at a record low in December. Note: DataQuick reports new home sales at closing and the Census Bureau reports when contracts are signed - so this is for contracts signed last six months ago.

From DataQuick: Southland December Home Sales, Prices Fall Short of a Year Earlier

Southern California home sales surged last month from November – as they normally do – amid relatively strong activity under $300,000 and a record share of sales to “absentee” buyers, mainly investors. ... A total of 19,247 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in December. That was up 14.0 percent from 16,884 in November but down 1.4 percent from 19,528 in December 2010, according to San Diego-based DataQuick.
While December sales of existing (not new) houses and condos combined fell 0.5 percent from a year earlier, sales of newly built homes fell 12.0 percent year-over-year, to the lowest level on record for a December.

“Last year ended much the way it began, with pitifully low new-home sales, record investor activity, drum-tight credit, and lots of potential buyers and sellers just sitting tight,” said John Walsh, DataQuick president.
Distressed property sales accounted for 52.5 percent of the Southland resale market last month, up from 51.2 percent in November but down from 53.8 percent a year earlier. Nearly one out of three homes resold last month was a foreclosure, while about one in five was a “short sale.”
Absentee buyers, mainly investors and vacation-home buyers, purchased a record 26.4 percent of the Southland homes sold in December, paying a median $200,000. ... The December absentee figure was up from 25.1 percent in November and up from 23.4 percent a year earlier.

The National Association of Realtors (NAR) will report December existing home sales on Friday. The consensus is for sales of 4.6 million on seasonally adjusted annual rate basis.

Economist Tom Lawler estimates the NAR will report sales of 4.64 million, up about 5% from November’s pace. He also expects the NAR to report inventory declined to around 2.44 million, down 5.4% from November and down 19.2% from last December. This would put months-of-supply at around 6.3 months (lowest since early 2006), and would put listed inventory at the lowest level since early-2005.


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January 13, 2012

Litigation and disputes between hotel owners and operators are on the rise? Why?

The root cause of owner-operator disputes

While each dispute has a specific cause or issue, at the heart of the matter you will find the belief that the operator is not operating the hotel in a satisfactory manner and is treating the owner unfairly.

Operators don't want to give up their lucrative management agreements and many of them can't or won't change their actions to satisfy owners who bear all the financial risk of the hotel investment. In times like these, owners may find themselves dipping heavily into other funds to meet negative operating cash flows or mortgage payments. Many face foreclosure -- and loss of their entire investment -- with the operator's sub-par performance. They feel cheated when operators continue to take all their money "off the top" (from gross revenues) and the operators won't cooperate to improve the situation.

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January 09, 2012

CMBS Delinquencies in the “Calm Before the Storm”

CMBS Delinquencies in the “Calm Before the Storm”

CMBS delinquencies dropped sharply in November after rising the previous two months, but it may be the last good news for a while as researchers expect that as 2007-vintage loans mature further delinquencies will set in.

Two outlets that specialize in monitoring CMBS delinquencies, Trepp and Morningstar, each issued reports last week with Trepp’s report updated through November and Morningstar’s review covering through the end of October. Through October, Trepp reported the CMBS delinquency rate at 9.77 percent—the second highest point on record trailing only July’s figure of 9.88 percent. Morningstar, meanwhile, said the delinquency rate had hit 8.35 percent in October. Both firms measured rates rising in September and October after having fallen in August. In addition, Trepp’s latest report showed that the delinquency rate dropped 26 basis points to 9.51 percent in November.

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January 9, 2012



NATIONAL LEAGUE OF CITIES: New housing in Irvine represents focus on integration, accessibility

By Sandi Burtseva // Irvine, Calif., recently unveiled a new complex of 60 permanent, affordable homes, the first to be built in partnership with the recently founded Irvine Community Land Trust (ICLT). The Doria Apartment Homes were developed and completed in a joint venture by the ICLT and the Jamboree Housing Corporation, one of California’s largest active affordable housing developers.


NAPA VALLEY REGISTER: County will fund study of farmworker housing

By Peter Jensen // Napa County’s housing director is asking the Board of Supervisors to spend about $110,000 to study the housing needs of farmworkers in the Napa Valley. The board is slated to vote on the proposal at its meeting Tuesday, and the money would come from the county’s affordable housing fund.



SANTA CRUZ SENTINEL: Bay area home process expected to stabilize in 2012

By Pete Carey // After years of decline, housing prices are expected to stabilize or even increase in some parts of the Bay Area this year, according to a new forecast. Stabilizing prices are a sign of a healthier market, even though homebuyers still face challenges -- tight credit, not many homes for sale and competition from investors paying cash.



CENTRAL VALLEY BUSINESS TIMES: State's foreclosure help program adds servicers

The number of mortgage servicers participating in the state’s Keep Your Home California program has increased to 55, up five-fold since it started in February 2011, according to the California Housing Finance Agency Monday. The 55 mortgage servicers represent 90 percent of the mortgages in California, CHFA says.

SACRAMENTO BEE: You may owe federal income taxes in 2013 if you have a short sale, foreclosure

Now is the time to make the hard decision: Are you going to walk away from your underwater home? Uncle Sam is still giving homeowners until Dec. 31, 2012 to go through a short sale or foreclosure without tax consequences - as long as the lender officially releases the debt. But on Jan. 1, 2013, the rules change: The amount a lender forgives, ether in a short sale or foreclosure, on a primary residence will be taxable on federal income taxes.



SWITCH BOARD: A strong case for rail and transit-oriented California

By Kaid Benfield // The envisioned benefits would come from a “growing smart” scenario that would leverage the construction of a planned high-speed rail network with smart land use around and near the network's stations and additional intra-city transit systems.  The scenario would include a more balanced housing mix, more infill development, and greater transportation options  than under a business-as-usual scenario, which assumes a continuation of dispersed, auto-oriented development patterns (albeit with continued modest improvements in automobile, building, and energy generation efficiency).  Even greater comparative benefits would be realized under a more ambitious “green future” alternative.



TRANSPORTATION NATION: California budget supports bullet train, would create new transportation agency

California Governor Jerry Brown released his 2012-2013 budget yesterday — six days earlier than planned — after the document was accidentally posted on the state’s Department of Finance website. And yes: it still funds high-speed rail. The proposal calls for $15.9 million in administrative support for the High-Speed Rail Authority, regardless of what happens with the current funding. The high-speed rail project is still in a review period.



HESPERIA STAR: City was prepared for state's redevelopment agency shutdown

By Beau Yarbrough  // Cities around California got a double-dose of bad news on Dec. 29, when the state supreme court both upheld Gov. Jerry Brown’s ability to shut down their redevelopment agencies and struck down an Assembly bill that had allowed them to “ransom” back their agencies from the state — which Hesperia had done in August, to the tune of $7.1 million.


SAN GABRIEL VALLEY TRIBUNE: Demise of redevelopment ends privatization of local governments, critic says

With redevelopment agencies possibly going the way of prohibition, city officials from around the state are saying the change will rip away their main tool to fix blighted areas. But to foes of redevelopment - who range from libertarians to left-leaning academics - the decision means something different. To them, the decision last week by the California Supreme Court to abolish redevelopment agencies turns off a spigot of power and money they say has polluted the spirit of civic duty and altruism that should guide public service.



NORTH COUNTY TIMES: Housing: California attracts more families than it loses

By Eric Wolff // For the first time in 11 years, the four major moving companies that release data agree: More families are moving to California than are leaving it. For a decade, high housing prices made it hard for people to stay in the state, even if they wanted to. But falling house prices and increased hiring are enticing former Californians to come home, moving company officials said.



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January 06, 2012

REITs Fairly Valued

REITs Fairly Valued

REITs are fully valued under current market conditions, according to Rod Hinze, KeyPoint Capital Management’s founder and portfolio manager.

In a video interview with at REITWorld 2011: NAREIT’s Annual Convention For All Things REIT in Dallas at the Hilton Anatole hotel, Hinze provided an analysis of the current state of the REIT market. He noted that implied cap rate on REITs stands at approximately 6 percent, whereas the average historical implied cap rate is roughly 8 percent. Hinze attributed the disparity to “artificially low” Treasury 10-year yields.

“I think that’s a function of people looking for dividend yield in their portfolios, and I think REITs are a good place to find that yield,” Hinze said.

Hinze also discussed some of the sectors he currently favors. For example, he singled out data center REITs as an attractive investment in the current market.

Data centers are not getting credit for the growth that’s out there in the marketplace,” he said. “They trade at the same multiples as suburban office REITs, yet the demand for that space is three to four times greater than suburban office REITs.”

Additionally, in light of the trend towards universities outsourcing the on-campus housing, Hinze said he is high on student housing REITs. Hinze also said there may be value in student housing REITs, which have been affected by the potential for government spending cuts.

Hinze picked out two sectors where he is proceeding with caution. First, he indicated that suburban office REITs are trading at higher multiples than growth projections would suggest. Second, he said he is concerned about retail REITs that have exposure to big box tenants.
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January 04, 2012

Economy Watch: FOMC to Start Publishing Predictions

Economy Watch: FOMC to Start Publishing Predictions

January 4, 2012
By Dees Stribling, Contributing Editor

The Federal Reserve Open Market Committee released the minutes from its Dec. 13 meeting on Tuesday, after the central bank’s typical delay of a few weeks. Much of the minutes involved commonplace observations — the U.S. economy’s growing slowly, unemployment is still too high, housing is still depressed.

Regarding CRE, the FOMC said that “financing conditions for commercial real estate appeared to remain strained … Issuance of commercial mortgage-backed securities (CMBS) was light amid deteriorating liquidity conditions in the CMBS market. Prices of most types of commercial properties continued to be depressed, while both vacancy rates and delinquency rates for commercial properties stayed close to their recent highs.”

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January 4, 2012




GRASS VALLEY UNON: Holiday gift for 3 families: New Homes in the New Year

By Trina Kleist // With a surge of help from western Nevada County contractors and volunteers, Habitat for Humanity received occupancy permits for three new houses before year's end -- snagging more grant money for future work. Habitat for Humanity of Nevada County has had a rough year in 2011, when plans called for finishing four houses at the Heritage Oaks project off Whiting Street in Grass Valley. The local office of the affordable housing nonprofit plans to build 16 houses over the next few years…


NORTH COUNTY TIMES: SAN MARCOS: Highway, housing projects ahead for city in 2012

By Deborah S. Brennan // San Marcos will begin the new year with groundbreakings for a major highway upgrade and an affordable-housing project, but without the redevelopment money that has fueled the city's growth for decades. On Jan. 24, the city will break ground on the Residences and Shoppes at Creekside, a nearly $50 million mixed-use project that will be the first development in the planned Creek District. Two days later, San Marcos will celebrate the start of work on the Nordahl Road-Highway 78 interchange. …


NAPA VALLEY REGISTER: St. Helena affordable housing makes no progress in 2011

By Jesse Duarte [12/31/11] // ST. HELENA -- Another year of rough-and-tumble city politics proved that St. Helena is more than just a strip of high-end boutiques, classy restaurants and a pretty tree tunnel. The city’s reputation for slow growth was borne out in 2011 as political skepticism and neighborhood opposition killed one potential housing project, stalled another one indefinitely and continues to jeopardize a third one. Only one affordable housing unit has been built in St. Helena in the past seven years. …


NOVOCO.COM: Journal of Tax Credits / News Briefs

The Internal Revenue Service (IRS) published the amounts of unused low-income housing tax credit (LIHTC) carryovers for calendar year 2011 that were allocated to 28 qualified states under Internal Revenue Code §42(h)(3)(D). Revenue Procedure 2011-57 details how nearly $3.66 million of unused LIHTCs were divided among the states in the national pool. California received the largest allocation, with $570,425 in LIHTCs. A copy of the notice is available at



EUREKA TIMES-STANDARD: Council approves affordable housing items

By Thadeus Greenson //The Eureka City Council took a step Tuesday toward creating more affordable housing in town. The council voted unanimously -- with Councilwoman Marian Brady recusing herself -- to approve a pair of items aimed at making it easier for homeowners to build secondary dwelling units on their properties. The council's hope -- laid out during its strategic visioning sessions last year -- is that building more of the units would add to the city's stock of affordable housing. …


SAN DIEGO UNION-TRIBUNE: Oceanside council to set aside $93k for rent control vote

By Nathan Scharn // OCEANSIDE — Months after a divided City Council decided to give voters the last word on whether to phase out mobile home rent control, the elected officials will have to decide how to pay for it. The council opted in August to place vacancy decontrol on the June ballot, which will cost the city about $93,000, City Clerk Barbara Riegel Wayne said in a report. The city has no extra money in its $112.3 million general fund …



SAN JOSE MERCURY NEWS: Huge loss in home values cratered the Bay Area economy

By Pete Carey [1/3/12] // Bay Area homes have lost more than a third of a trillion dollars in value since the housing bubble burst about four years ago. And in the process, they have taken a big chunk of the economy with them. During the boom, homeowners borrowed against that mountain of money, fueling a huge surge in everything from yacht sales in Silicon Valley to home heating upgrades in Antioch. Later, when home prices collapsed, their loss of money and confidence crushed …


REUTERS.COM: Real estate pros find hope, hot spots for 2012

By Lou Carlozo [1/3/12] // This new year might be the one in which the housing market starts to strengthen, according to the 2012 predictions of several housing industry observers and experts. Jed Kolko, chief economist at, a real estate search and research website, says he sees rising rents, a humble recovery in housing prices and even some unexpected "hot" spots where he thinks price increases will exceed the average this year. …



LOS ANGELES TIMES: Low mortgage rates likely to continue through 2012, experts say

By E. Scott Reckard [1/3/12] // The mortgage market told a sad story throughout 2011: record low rates, but few people taking advantage of them to buy homes. The likely scenario in the new year, according to many analysts, is more of the same. Although the Federal Reserve has pledged to keep rates low through 2013, the experts say high unemployment and home prices that are still falling in many areas provide little incentive for stressed-out consumers to surge back into the housing market. …


SAN FRANCISCO CHRONICLE: Fed to regularly forecast interest-rate changes

By Martin Crutsinger [1/3/12] // WASHINGTON (AP) -- In a major shift, the Federal Reserve will start announcing four times a year how long it plans to keep short-term interest rates at existing levels, according to minutes from its December policy meeting. The shift marks the Fed's latest effort to make its communications with the public more open and explicit. The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. …


AMERICAN BANKER: California Agencies Warn Consumers About Mortgage Fraud

By Evan Nemeroff // As 2012 begins, the California Dept. of Real Estate is still warning consumers to be wary of promises for loan modification, mortgage relief and foreclosure rescue scams as fraudsters to continue prey on vulnerable, financially stressed homeowners. The agency, whose mission is to protect the public interests in real estate matters, continues to file several cases against individuals and entities that are illegally offering loan modification & mortgage relief services. With the economy still struggling, tactics that con artists and third-party operators are using to bilk homeowners …



MULTIHOUSING NEWS: HUD Grants to Benefit People with Disabilities in SF

By Jeffrey Steele // San Francisco -- The U.S. Department of Housing and Urban Development (HUD) has awarded two 811 funding grants to help make possible the development of a pair of permanent supportive Mercy Arc Housing residences for non-elderly adults with developmental disabilities in San Francisco. The announcement was made earlier this week by Mercy Housing California (MHC) and The Arc San Francisco. “The need in San Francisco for this type of housing with rent subsidies is huge,” Barbara Gualco, director of housing development for Mercy Housing California, tells MHN. …


SAN DIEGO UNION-TRIBUNE: Castle Park neighborhood gets a chance

By Jen Lebron Kuhney // CHULA VISTA — The children of central Harlem weren’t supposed to have a chance, but the program that helped 90 percent of high school seniors in that area get accepted to college in 2010 is coming to a Chula Vista neighborhood that is one of the poorest in the county. President Barack Obama gave a $500,000 planning grant to South Bay Community Services on Dec. 19 to help Castle Park improve its schools and revitalize the neighborhood. … During the planning process, South Bay Community Services will be working closely with the San Diego Association of Governments to collect data on the neighborhood’s demographics …



CONTRA COSTA TIMES: Experts: Don't build $99 billion California bullet train

By Mike Rosenberg // Warning of an "immense financial risk" to the state, a renowned group of transportation and financial experts advised lawmakers Tuesday to pull the emergency brake on funding California's $99 billion high-speed train. The Legislature created the high-speed rail peer review group to weigh the project's chances for success, and its sobering conclusions are the most striking -- and perhaps most influential -- analysis yet of the pivotal plan lawmakers will evaluate in coming months. …



SAN DIEGO UNION-TRIBUNE: Redevelopment ruling will slow affordable housing construction

By Susan R. Tinsky // No one can argue that San Diego is a highly desirable place to visit. San Diego has for many decades capitalized on its optimal weather and picturesque landscape to foster a healthy local tourism and hospitality sector. Our natural assets make our region the envy of tourism thirsty cities throughout the country. For many of the same reasons that San Diego has become a desirable vacation and convention destination, San Diego is also a wonderful place to call home.


LOS ANGELES TIMES: California cities seek restoration of some redevelopment spending

By A. York, D. Zahniser & J. Garrison [1/1/12] // Days after the California Supreme Court moved to shut down about 400 municipal redevelopment agencies, local officials are scrambling to convince the same Legislature that abolished the agencies to resurrect some of their spending powers. Some local officials predict that if the Legislature doesn't act within the next month, there will be a flurry of lawsuits …


SAN GABRIEL VALLEY TRIBUNE: Elimination of redevelopment imperils ongoing projects

By Juliette Funes [12/31/11] // When the California Supreme Court on Thursday issued a ruling that essentially annihilated local redevelopment agencies, it also killed the single-most important economic development tool that more than 400 cities statewide have, city officials said. With the ruling that the Legislature can eliminate redevelopment agencies, many San Gabriel Valley and Whittier area leaders wonder how their communities are going to move forward with ongoing projects.


SAN FRANCISCO CHRONICLE: End of redevelopment may bring Oakland layoffs

By Matthai Kuruvila [12/31/11] // Oakland Mayor Jean Quan said the city may issue dozens of layoff notices to city employees as soon as mid-January unless the state Legislature commits to salvaging the redevelopment program. The California Supreme Court ruled Thursday that the state was within its rights to abolish the 60-year-old economic development program, a $5.7 billion program that cities across the state have come to rely on. In Oakland, redevelopment funds have been used to pay for 160 full-time city workers…


SAN JOSE MERCURY NEWS: Redwood City braces for loss of redevelopment dollars after court ruling

By Bonnie Eslinger [12/31/11] // Redwood City officials said the California Supreme Court's decision Thursday to allow the state to dismantle local redevelopment agencies and redirect funding will hurt the city's affordable housing and downtown revitalization efforts. "It's not good news," said Mayor Alicia Aguirre. "We've done some amazing things with redevelopment in Redwood City." Redwood City brings in about $12.3 million a year in revenue …


SAN FRANCISCO CHRONICLE: Redevelopment should be changed, not eliminated

[Editorial – 12/31/11] // No one knows the value of California's redevelopment law better than Gov. Jerry Brown. As mayor of Oakland, he employed its financing schemes liberally to advance his goal of bringing housing and vitality into long-moribund stretches of downtown. That was then, when his attention was at the Main Street level. On Thursday, the governor was applauding a state Supreme Court decision that upheld his plan to abolish 400 local …



SAN FRANCISCO CHRONICLE: S.F. Parklets: a little tour of a major trend

By John King [12/29/11] // The most significant change to San Francisco's landscape in 2011 involves a conjuring act that turns parking spaces into pedestrian nooks. They go by the name of parklets, a word that didn't exist two years ago, and when 2011 arrived there were only four. Now there are 22, with six more approved and 44 in various stages of review. Their reach extends from Potrero Hill to the Outer Sunset … So you want to build a parklet - officially described as "space for people to sit, relax and enjoy the city around them." …


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January 02, 2012

Calculated Risk

Calculated Risk


Comments on the Housing Vacancies and Homeownership Survey

Posted: 02 Jan 2012 09:15 AM PST

This morning Dean Baker wrote about the Housing Vacancies and Homeownership Survey: Robert Samuelson Oversells the Case for Economic Optimism (ht Joe)

[W]e are still far from making up for the overbuilding of the bubble years as indicated by the fact that the vacancy rate remains at near record levels.

(There have been some questions raised about the accuracy of the Census Department's data, claiming that it overstates the number of housing units in the country. Those raising the issue fail to note that measures of housing starts do not include housing units that were created by conversion of commercial or industrial property, such as an old warehouse being turned into condos. The rehabilitation of dilapidated units would also not be included in housing start numbers. There were many cases of both ways of adding to the housing stock during the bubble years. Also, it is important to note that the Census data is giving the percentage of units that are vacant. The critics of this measure must show how the Census methodology would lead it to overstate the share of units that are vacant.)

First, the main criticism of the HVS is it doesn't match the decennial Census results. The Census Bureau has acknowledged this and promised to investigate the differences. Here are some recent comments from the Census Bureau:

The most recent research has shown that the CPS/HVS and the 2010 census produced significant differences for vacancy characteristics. The rental vacancy rate from the April 2010 census was 9.2 percent, whereas the CPS/HVS reported the rental vacancy rate of 10.6 percent for the first half of 2010. The April 2010 census had a homeowner vacancy rate of 2.4 percent, while the CPS/HVS had a vacancy rate of approximately 2.6 percent for the first half of 2010. For occupied housing, the April 2010 census produced a homeownership rate of 65.1 percent, while for the first half of 2010, the CPS/HVS produced a rate of 67.0 percent.

It is important to note that the HVS is benchmarked to the decennial Census, so the most recent vintage for housing inventory was benchmarked to the 2010 Census. So clearly the Census Bureau thinks that is a better estimate of the total housing inventory.

Although the HVS is probably useful in showing the trends for the vacancy and homeownership rates, I wouldn't rely on the absolute numbers - and I look forward to the investigation by the Census Bureau on the differences. Unfortunately this report is commonly used by analysts to estimate the excess vacant supply for housing, but - because the vacancy rates do not match the Census data (or the much larger ACS data) - it doesn't appear to be useful for that purpose.

Here are some previous posts about some of the HVS issues by economist Tom Lawler:
Lawler to Census on Housing Data: "Splainin" Needed Not Just on Vacancy Rate
Census Bureau on Homeownership Rate: We've got “Some 'Splainin' to Do”
Be careful with the Housing Vacancies and Homeownership report
Lawler: Census 2010 and the US Homeownership Rate
Lawler: Census 2010 Demographic Profile: Highlights, Excess Housing Supply Estimate, and Comparison to HVS
Lawler: The “Excess Supply of Housing” War
Lawler: Census Releases Demographic Profile of 12 States and DC: Confirms Bias of HVS
Lawler: Census 2010 and Excess Vacant Housing Units
Lawler: On Census Housing Stock/Household Data
Lawler: Housing Vacancy Survey appears to massively overstate number of vacant housing units
Lawler: US Households: Why Researchers / Analysts are “Confused”

Europe Update

Posted: 02 Jan 2012 06:01 AM PST

Europe is probably already in a new recession and the next meeting between Merkel and Sarkozy is on Jan 9th.

From the WSJ:
Euro-Zone Manufacturing Activity Falls for Fifth Month

Manufacturing activity in the euro zone declined for the fifth straight month in December, although less sharply than earlier in the fourth quarter, according to a survey of purchasing managers released Monday.

The survey is consistent with other indicators of recent activity, and together the numbers suggest the euro-zone economy contracted during the final three months of the year.

Markit Economics said its Purchasing Managers Index for the sector rose to 46.9 from 46.4 in November ...

And from Bloomberg: Germany Says Greek Debt Talks Near End

Germany’s government declined to comment on a report that it may push for creditors to accept bigger losses on Greek debt than previously agreed upon, saying only that talks on lowering Greece’s debt level may end soon.

Germany is studying a proposal to write down 75 percent of Greek government bonds held by private creditors as part of a planned debt swap to ensure greater debt sustainability, Greek news website reported today ...

And the next key dates from the NY Times: Austerity Reigns Over Euro Zone as Crisis Deepens

The Continent’s economic outlook will take center stage on Jan. 9, when Mrs. Merkel and President Nicolas Sarkozy of France will discuss a new fiscal treaty intended to impose stringent budget requirements on European Union nations. Then on Jan. 30, European Union leaders will gather in Brussels to discuss ways to spur growth.
The first test for the Continent will come this Thursday, when France is expected to raise as much as 8 billion euros. On Jan. 12, Spain plans to auction 3 billion euros worth of euro debt, followed by Italy the next day with 9 billion euros.

Summary for Week Ending December 30th
Schedule for Week of Jan 1, 2012

Merkel: 2012 "more difficult than 2011"

Posted: 01 Jan 2012 03:36 PM PST

Not much of a "happy new year" in Europe ...

From the Financial Times: Europe’s leaders warn of tough 2012

... Nicolas Sarkozy, president of France, said the gravest crisis Europe has faced since the second world war “is not over” and Angela Merkel, German chancellor, told German voters “next year will no doubt be more difficult than 2011”.
excerpt with permission

More quotes from Reuters: EU Officials Begin New Year With Calls to Save the Euro

And some more unfortunate comments from German Finance Minister Wolfgang Schaeuble:

German Finance Minister Wolfgang Schaeuble called the euro "a clear success story" and pledged the currency would remain stable ... "This is not a euro crisis, it is a debt crisis in some euro states," Schaeuble told German newspaper Bild ...

Summary for Week Ending December 30th
Schedule for Week of Jan 1, 2012

Some Housing Forecasts

Posted: 01 Jan 2012 10:15 AM PST

One plus in 2011 was that residential investment made a small positive contribution to GDP growth for the first time since 2005 (mostly due to apartments). And construction employment probably added a few jobs in 2011, for the first time since 2006.

Now there is a growing consensus that new home sales and housing starts will increase in 2012. I think a small increase is likely, even with the large number of distressed homes, and I will be writing about the reasons soon.

Here is a forecast from Wells Fargo Friday:

"Even with continued worries about competition from foreclosure sales, we expect single-family construction to rise 7 percent in 2012. Sales of new homes should rise nearly 15 percent. Strong demand for apartments should help boost multi-family starts by at least 25 percent in 2012. Overall starts should rise to 690,000 units, which would be the best year since 2008."

From Goldman Sachs:

"We believe that housing starts have probably bottomed already, while nominal house prices are likely to bottom in the course of 2012."

And Doug Duncan at Fannie Mae is forecasting new home sales of 322 thousand in 2012.

A 15 per cent increase for new home sales would be to about 350 thousand. That would help, but it would still be third worst year since the Census Bureau started tracking new home sales in 1963. Doug Duncan's forecast of 322 thousand would be the 2nd worst year since 1963. Here are the worst years:

Worst Years for New Home Sales



Sales (000s)


2011 est














Sales were really low in 1981 and 1982, and then bounced back strongly in 1983 to 623 thousand. That will not happen this time because the dynamics are very different - interest rate had been very high in '81 and '82 and declined sharply in '83 to 13%. And there wasn't a huge backlog of distressed homes in 1983. So don't expect a huge increase for new home sales, but we might see some increase in 2012.

Summary for Week Ending December 30th
Schedule for Week of Jan 1, 2012


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Fed. Dist. Court Holds Zoning Board’s Denial of Use Variance Did Not Violate the Telecommunications Act



New post on LAW OF THE LAND


Fed. Dist. Court Holds Zoning Board’s Denial of Use Variance Did Not Violate the Telecommunications Act

by Patricia Salkin

Liberty Towers appealed denial of a use variance request by the Zoning Hearing Board of Falls Township, Pennsylvania alleging the denial of the variance in a residential zone district violated the Telecommunications Act of 1996 as the determination was not supported by substantial evidence and has the effect of prohibiting personal wireless service within the municipality.  The United States District Court, Eastern District of Pennsylvania denied Liberty’s motion for summary judgment and granted the Board’s cross motion for summary judgment, dismissing the case.

Liberty sought to build a one hundred and fifty foot cellular tower that would provide service for four co-locating carriers.  The subject parcel is one acre and is designated as Neighborhood Residential Conservation – a zone district crafted to retain the residential character of the neighborhood.  This zone district permits a single family dwelling to be constructed on the property.  Given the use designation and dimensions of the parcel, Liberty sought both use and area variances to facilitate the tower and its accompanying structures.  After a hearing, the Board denied the use variance request as Liberty failed to show any circumstances in which the subject parcel could not be used as the zone district permitted.  This determination was based on the findings that the property was currently used as provided in the code and the use of a tower on the site was strictly prohibited.

The court first addressed whether the Board’s denial was supported by substantial evidence, applying a deferential standard of review, validating the determination if it is based on “such evidence as a reasonable mind might accept as adequate to support a conclusion.”  In reviewing the record, the court found substantial evidence in support of the Board’s determination that Liberty did not meet the variance requirements in the Town’s zoning code.  This was because Liberty could not provide any evidence that the subject parcel could not be used as zoned.  Thus, the court held that municipalities can deny variances for towers, and not violate the substantial evidence provision, by simply following the municipality’s variance procedure.  If the applicant does not meet the variance procedure, then the municipality is not required to grant the variance under the Telecommunications Act of 1996.

The court then addressed whether the denial had the effect of prohibiting cellular service in the area.  Liberty had the burden to prove that there is a significant gap in coverage and the proposed use is the least intrusive means to fill this gap.  In determining whether there is a gap in coverage, one of two approaches can be used: whether a specific carrier or whether all carriers are lacking coverage in a given area.  The court did not make a decision on what standard applies, as the court determined that Liberty failed to provide sufficient evidence to meet either standard.  The evidence provided by Liberty to show gaps in coverage were maps that were conclusory, only showing where coverage was reliable or unreliable.  The maps contained no factual components.  In addition, where Liberty provided testimony on the unreliability or inadequacy of the coverage, this testimony failed to provide the size or contours of the gaps.  Further supporting this determination, the court noted that Liberty failed to provide any figures on dropped calls, call failures, and failed to conduct a drive test measuring coverage in the area.  Liberty also failed to show that utilizing the subject parcel was the least intrusive means possible.  Thus, Liberty failed to show the Board’s determination resulted in a prohibition of personal wireless service in the area. As a result, both of Liberty’s TCA claims were dismissed.

Liberty Towers v. Zoning Hearing Board of Falls Township, No. 10-7149, 2011 WL 6091081 (U.S.D.C., E.D.Pa. 12/6/2011),

The opinion can be accessed at:

Patricia Salkin | January 2, 2012 at 1:39 am | Categories: Current Caselaw, Wireless Communications | URL:


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December 28, 2011


December 28, 2011



SAN DIEGO UNION-TRIBUNE: New affordable senior housing center opens in Oceanside

By Nathan Scharn // OCEANSIDE — Less than two months after opening, Lil Jackson Senior Community affordable housing complex already has more applicants than rooms. With its barbecue patio and tranquil fountain area, the three-story, 80-unit facility looks like a modern apartment complex where rents could easily exceed $1,000 a month. But tenants in the Lake Boulevard complex are low- to moderate-income residents older than 62. …



SAN FRANCISCO CHRONICLE: BART planners begin work on new vision for future

By Michael Cabanatuan // Way back in 1957, Bay Area planners were thinking big. Concerned about the booming population and worsening traffic congestion, they proposed a round-the-bay rapid transit network that eventually spawned today's BART. Now, 54 years and 4 million people later, it's BART's turn to think big. Planners are working on a new vision for the future - one that could include express trains, all-night service, new stations along existing lines, trains traveling different routes …


LOS ANGELES TIMES: High-rise planners do the Hollywood ruffle

By Steve Lopez [12/25/11] // If this is the season to be merry, many residents of Hollywood did not get the memo. Instead, they got a community development plan they look upon as their very own nightmare before Christmas. It happened earlier this month, when the Los Angeles City Planning Commission approved zoning changes that could make it easier to erect skyscrapers in the heart of Hollywood, forever changing the scale of a historic neighborhood with international cachet. …


CENTRAL VALLEY BUSINESS TIMES: Some of Lake Tahoe's private beaches can remain private

[12/27/11] // Four beaches on the Nevada side of Lake Tahoe -- Burnt Cedar Beach, Incline Beach, Ski Beach, and Hermit Beach – are private and can exclude non-property owners, the 9th U.S. Circuit Court of Appeals says. The beaches are part of a 1968 improvement district that was funded by property owners in the immediate area. Part of the 1968 property restrictions says that rights to use the beaches go only to property owners and their descendents. …



THE DESERT SUN: U.S. home prices fall two months in a row

By Derek Kravitz (AP) // Washington -- U.S. home prices fell in most major cities for the second straight month, further evidence that the housing recovery will be bumpy and weigh on the broader economy in 2012. The Standard & Poor's/Case-Shiller index released Tuesday showed prices dropped in October from September in 19 of the 20 cities tracked. The decline reflects the typical fall slowdown after the peak buying season. …



HOUSING FINANCE NEWS: Homelessness Drops 2 Percent in 2011

By Donna Kimura // On a single night last January, 636,017 people were homeless in America, a 2.1 percent decline from the year before, announced federal officials.  The annual “point-in-time” estimate of the number of homeless individuals and families is based on data reported by more than 3,000 cities and counties. Between 2010 and 2011, homelessness has gone down by every measure, said Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD).  Most notably homelessness among veterans declined by nearly 12 percent …


WHITTIER DAILY NEWS: New service promises hope to homeless families

By Steve Scauzillo // …They are one of three families taken in by Family Promise of San Gabriel Valley, a new kind of homeless shelter plus wrap-around services that opened Dec. 4 in Rosemead. Family Promise offers down-and-out families a lot more than a manger and hay. Their operating model takes from the old and the new in homeless ministries, said Lynnea Hughes, network director. Hughes is also a social worker who provides case-worker services to each family. "We are considered a shelter because we provide interim housing for families for 30 to 90 days. We're different because a lot of shelters don't provide those daytime services," Hughes said Wednesday …


SACRAMENTO BEE: Sacramento finds more beds for homeless

By Ryan Lillis // With frigid nights gripping the area, Sacramento city officials have come up with nearly 60 additional shelter beds for homeless men and women. The new beds are the result of a meeting last week between City Council members Steve Cohn and Jay Schenirer, along with homeless advocates, members of the faith community and downtown business leaders. Officials said they were prompted to find more beds …


HANFORD SENTINEL: Homeless emerge from holiday shadows

By Kevin Kennedy [12/26/11] // Asphalt Assault, a motorcycle club based in Kingsburg, came to Hanford Saturday to donate holiday meals to needy families and try to make a small dent in the county's growing homeless problem. Amid the hustle and bustle of the Christmas season, the location of the event behind the CVS Pharmacy next to Highway 198 was largely hidden - much like the homeless problem throughout the county. But it was right where many homeless spend their days and nights, next to the freeway …



LONG BEACH PRESS-TELEGRAM: Welfare hit by perfect storm in California: slashed funds, dismal job market

By Sheila V. Kumar (AP) // SACRAMENTO -- Advocates of welfare reform in California often cite one, eye-popping statistic as they have pressed for cuts and changes to the program in recent years: The state has one-eighth of the nation's population but one-third of all welfare recipients. Yet steps taken in recent years to cut costs and get more recipients back in the workforce have run head-on into the worst economic conditions since the Great Depression. Recipients have been left with fewer training programs, shrinking welfare checks and a shorter period during which they are eligible …



THE PRESS-ENTERPRISE: SAN BERNARDINO: Enterprise Zone gives record hiring credits

By Brian Rokos / The San Bernardino Valley Enterprise Zone, which provides businesses with financial incentives to locate and hire locally, has in 2011 far exceeded the number of hiring credits it issued in 2010, which is good news for difficult-to-hire workers. … Enterprise zones were created in 1986, and the San Bernardino zone is one of 42 in California. It includes most commercial and industrial areas in the cities of San Bernardino and Colton, as well as some unincorporated areas of San Bernardino County in Bloomington…


THE PRESS-ENTERPRISE: ENERGY: Long awaited solar construction jobs are snapped up

By Leslie Berkman [12/25/11] // … About two years ago, Russell, a former trucker, was struggling to find work and scrimping to make ends meet when he read about solar projects proposed in Inland Southern California’s Mojave Desert that would be the foundation for a burgeoning new industry for construction workers. … Russell is among 700 union craft workers employed by Bechtel Corp to build the $2.2 billion thermal solar power plant, which is expected to be the largest in the world. They will install thousands of mirrors called heliostats to focus the power of the sun on water-filled boilers that sit atop three giant steel towers under construction within view of motorists on Interstate 15.



NORTH COUNTY TIMES: REGION: Census finds car-pooling decline as billions spent on lanes

By Chris Nichols [12/27/11] // New census data shows the number of car-pool commuters in San Diego and Riverside counties dropped significantly over the last decade, although billions of taxpayer dollars were earmarked for new car-pool lanes across the region. The percentage of San Diego County residents who carpooled to work fell from 13 percent in 2000 to 10.6 percent in 2010. In Riverside County, the drop was from 17.6 percent to 14.6 percent over the same period, according to the U.S. Census Bureau's 2010 American Community Survey…


PR NEWSWIRE: What's Ahead for Transportation in 2012?

WASHINGTON [11/28/11] // In the calm between the holidays, it's time to consider what lies ahead in the new year for the transportation community – federal and state legislators, state departments of transportation, and the transportation industry at large.  Many of these issues mirror the challenges facing the entire nation:  job creation, funding shortfalls, integrating new technology into older systems, aging infrastructure.  From its vantage point as the voice of transportation, the American Association of State Highway and Transportation Officials [AASHTO] offers this look at the top 10 issues …



SAN FRANCISCO CHRONICLE: Overturning of Prop. 13 sought in lawsuit

By Bob Egelko // …If the suit succeeds, it would restore majority-vote legislative approval for state tax increases - while leaving Prop. 13's property tax reductions intact. It would also change the balance of power in Sacramento, where minority Republicans routinely unite to prevent any increased levies. Prop. 13's chief advocate, the Howard Jarvis Taxpayers Association, is taking the suit seriously, said Jonathan Coupal, the association's president and a member of the legal team defending the measure. …



SACRAMENTO BEE: Cities battle proposal to tighten rules on storm water runoff

By Ed Fletcher [12/26/11] // Anonymous Lake Tahoe activists are marketing an odd keepsake - a calendar displaying photos of pipes dumping road water runoff into the lake. The storm drain calendar, produced by the mysterious Tahoe Pipe Club, features 12 outlets that activists contend are poisoning the lake with toxins and fine particles.

Storm water issues also have people up in arms in western Placer County. …


THE DAVIS ENTERPRISE: UC Davis urban forester engages youth in greening inner city

[By Pat Baily – OAKLAND] // …Tarver, who comes from what he calls “a very traditional forestry background of fighting fires and taking people on backpacking trips,” now focuses his attention on urban forestry -- the role that trees play in city and suburban communities. … But he also wants them to catch the excitement of all that science encompasses and understand the many benefits that trees offer for the urban environment. “Trees in urban areas not only lower the temperature, draw carbon dioxide from the atmosphere and produce oxygen, they also result in reductions in respiratory illnesses like asthma,” Tarver said. “And they reduce the amount of surface water and pollutants that run into the bay.”


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December 06, 2011

Welcome to eMultiple Guest Search

Welcome to eMultiple Guest Search

This Listing search service is provided to guests free of charge and is brought to you by the AIR Commercial Real Estate Association (AIR). To return to the AIR Homepage, simply click the AIR Logo.

Use this search page to find listings that match your criteria. You may then contact the representing AIR Association Participant for further information.

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December 03, 2011

10 Things to Know About Commercial Real Estate Appraisal

10 Things to Know About Commercial Real Estate Appraisal

A commercial real estate appraisal can be complicated–from knowing what to ask for as well as what to provide to the appraiser–here's what you need to know.

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December 02, 2011

// What is

// What is is a national listings platform owned by the National Association of REALTORS® (NAR) and operated by ePropertyData (ePD) LLC, a NAR wholly-owned subsidiary. partners with for Commercial Property Search at, providing commercial listings exposure at the #1 real estate web site in total visits, unique visitors, page views and time on site. For fast facts on statistics go to strives to be the most comprehensive, cost-effective, and user-friendly global website for REALTORS® and the commercial real estate industry.

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November 21, 2011

Tenant Loyalty Highest Since 2008—Use EER to Show Tenants Value

Tenant Loyalty Highest Since 2008—Use EER to Show Tenants Value

According to a recent report by Kingsley Associates, tenant loyalty is the highest it has been since 2008. There is no better incentive for a tenant to stay put than excellent operations and management, which helps to keep tenants’ total occupancy costs under control. Use the Experience Exchange Report® (EER) data to show your tenants and owners that your building outperforms the market.

More than 61 percent of tenants in U.S. office buildings intend to renew their leases, according to Q3 2011 Office Industry Trends, a newly released report by Kingsley Associates. During the four quarters starting October 1, 2010 and ending September 30, 2011, 61.3 percent of tenants indicated that they "definitely" or "probably" would renew their leases, the highest level of loyalty since the fourth quarter of 2008. Furthermore, 64.8 percent of tenants reported either "good" or "excellent" value for the amount paid in the third quarter, up from 63.9 percent last quarter.

Other signs hint at a strengthening office market. Nearly 15 percent (14.9) of tenants anticipate the need for more space, an increase of 2.8 percentage points since Q4 of 2009, the recent low. Furthermore, 37.8 percent of tenants expect to add headcount at their location.

Read the full report.

With data from more than 6,500 buildings and 278 markets and market–level reports from more than 140+ cities, the EER can be a valuable tool to help demonstrate good value to tenants.

Demonstrate superior management to your tenants and use the EER to…

  • Communicate total occupancy costs to tenants
  • Verify market data from brokers
  • Benchmark your asset’s financial performance
  • Do scenario planning and forecasting
  • Analyze and underwrite acquisitions
  • And, identify opportunities to increase operational efficiency

EER reports are available online at You may purchase markets individually or subscribe to all.

*EER subscriptions are valid until the next year’s EER becomes available.

Subscribe Today.
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Americas commercial real estate markets

Americas commercial real estate markets

The United States dominates the Americas commercial real estate (CRE) market with respect to legislative scope, capital markets maturity, and transaction flows. However, following the 2008-09 recession and the emergence of Latin American countries as the Americas growth engine, investors' interest in Brazil and Mexico has increased.

In the report
Americas Commercial Real Estate Markets, we examine CRE market trends across four key Americas markets - Brazil, Mexico, Canada, and the U.S. — with a focus on the comparative investment attractiveness of each country.

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October 27, 2011

Construction Law

Legal Updates by JD Supra

Construction Law

Another (Non-Dragas) Chinese Drywall Decision

Christopher G Hill, LEED AP and Virginia construction lawyer discusses a recent Suffolk, VA case relating to Chinese Drywall claims. The economic loss rule...more

by Christopher G. Hill


Getting Infrastructure Projects Right from a Contractual Perspective

Many producers/traders harbour ambitious plans to acquire, expand or build larger and better networked infrastructure for the production, transportation,...more

by Reed Smith


Why Construction Attorneys Should Outsource Litigation Support

Construction law is notoriously complicated, drawn out, and technical. Attorneys involved with construction proceedings in Texas are going to have a lot on...more

by DepoTexas


Scope of your Design Services: Make Yours Detailed to Save Cavities Later! (Law note)

I’ve written in the past about the benefits of having not only an explicit Scope of Work, but also a set of Exclusions from the Scope of Work, in your...more

by Melissa Dewey Brumback

See more Construction Law articles »

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October 24, 2011

Commercial Appraiser (@AppraiserCommer) on Twitter
Sign up for Twitter to follow Commercial Appraiser (@AppraiserCommer). Commercial Appraiser, LA-Los Angeles, A Full Service Commercial Appraiser and Real Estate Consultant, Commercial Appraisal. 310.337.1973
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October 20, 2011

Better Government

Better Government


Municipal Regulation of Urban Agriculture

Posted: 20 Oct 2011 09:34 AM PDT

Urban agriculture has taken on a new life recently, driven by an emphasis on local and organic food, as well as the economic downturn.  Small vegetable gardens in the back yard are rarely a cause for concern.  But, what if an owner replaces lawns with row after row of crops?  What if that same owner sells the crops at the local farmers' market?  Finally, what if a property owner decides to raise chickens, goats, or other livestock?  Are these agricultural uses consistent with a municipality's existing zoning regulations? 


Municipalities are addressing the zoning issue in a variety of ways.  Some municipalities have cited property owners for illegal agricultural uses in a residential district.  For example, DeKalb County, Georgia cited a property owner for growing too many vegetables on his two-acre residential lot.  The issue centered on the owner's sale of the crops at the farmers' market, turning this otherwise lawful use into an illegal commercial use.  The owner was fined $5,000, but eventually was successful in rezoning his property to allow the commercial agricultural use.  Similarly, Lee County, Florida cited a property owner for keeping 10 chickens on a residential property.  In Hollywood, Florida, a lawsuit was filed by a property owner challenging the legality of his neighbor keeping 15 chickens on the property. 


Other communities have amended their zoning ordinances to allow limited agricultural uses in residential zoning districts.  Denver, Colorado enacted an ordinance that allows residents to keep chickens and goats.  Northbrook, Illinois amended its zoning ordinance to allow front yard vegetable gardens.  The City Council in Naperville, Illinois declined to amend its zoning ordinance to require permits for chicken coops and to establish a 25-foot distance between a chicken coop and any neighboring home.   Chicago amended its zoning code earlier this year to expressly authorize urban farming of fruits, vegetables, and fish.


What does this mean for local governments?  As an initial matter, the municipality should determine its position on urban agriculture.  Are vegetable gardens acceptable but not the commercial sale of crops?  Does a municipality want to allow livestock in residential districts?  Should a municipality impose lot size or locational restrictions on urban agricultural uses?  Once a municipality has identified the scope of acceptable agricultural uses, then it should examine its existing zoning regulations to determine whether amendments are necessary.  A municipality should be prepared for citizen opposition to any proposal to expand agricultural uses involving livestock or other animals (chickens, bees, goats) in residential zones. 


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October 19, 2011

Retail Investments Begin to Stabilize;

Retail Investments Begin to Stabilize;
Insights and Analyses on 40 Major Markets

With construction near record lows in most markets, reemerging national retailer expansion offered positive momentum to retail operations. Targeting infill space in urban centers and dark, big-box space vacated during the recession, rising activity by major retailers has offset space vacated by weakened local stores. Sales activity has been dominated by opportunistic REIT and institutional acquisitions, but rising transaction levels have facilitated price discovery in many markets. While vacancies remain relatively flat in many markets, some metros have begun to recover, enticing investors to come off the sidelines.

These positive trends, alongside solid sales, are emerging in retail operations, supporting the a broadening stabilization of retail investments.

To help you capitalize on the opportunities available in the retail investment market, Marcus & Millichap presents the Third Quarter Local Retail Reports, which detail key performance measures within 40 retail markets across the country.

Please click here to access these reports. 

Marcus & Millichap provides research reports on the Research Services page of If you would like additional information on a certain market, please contact your local office to speak with an investment specialist.

Best wishes for your continued success, and we look forward to serving your investment needs.

John Chang
Vice President, Research Services
2398 E. Camelback Road, Suite 550
Phoenix, Arizona 85016
Ph: (602) 687-6700 | Fax: (602) 687-6710 | E-mail:

Follow Marcus & Millichap Research Services on Twitter!

To change your e-mail address or update your research report distribution preferences,

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October 10, 2011


October 10, 2011



BURBANK LEADER: City kicks off affordable housing project

By Maria Hsin // Officials this week broke ground on a new affordable housing development that will feature 20 one- and two-bedroom apartments. The Catalina Development will be the first all-new residential project for the nonprofit Burbank Housing Corp. The nonprofit typically rehabs existing buildings to use for low-income housing, but the property on the 2200 block of Catalina Avenue was “so substandard and severely blighted” that nothing could be salvaged, Burbank Housing Corp Executive Director Judith Arandes said.



MARIN INDEPENDENT JOURNAL: New Marin county development regulations would affect everything from homeless shelters to tree cuttung

By Nels Johnson // New development regulations that guide projects in local neighborhoods, cut red tape and add new rules while affecting proposals ranging from homeless shelters and second units to subdivisions and tree cutting are nearing the finish line at Marin County Civic Center. After six hearings by county planners, Marin supervisors will get their first look Tuesday at development code revisions that in many cases are aimed at clarifying, updating and simplying rules while meeting new state edicts and implementing county planning policies.


SACRAMENTO BEE: Six years after bust, many have paid more into homes than they're worth

By Phillip Reese // Forget owing more than your home is worth -- many have already paid more than it's worth. Hundreds who bought homes just six years ago have already made enough payments to buy their homes outright at their current values. Almost all of those payments, though, have taken the form of interest. These same residents often still owe about twice what their homes are worth. The ranks of such unfortunate homeowners will probably grow sharply during the next year as their payments continue amidst declining prices.



SANTA MARIA TIMES: Board, panel to discuss block grants

By Brian Bullock // Since 2009, Santa Maria’s Homelessness Prevention and Rapid Re-Housing Program has allocated federal grant money to help about 1,500 people keep a roof over their heads. On Tuesday, the City Council and its Block Grants Advisory Committee will hold a special meeting to discuss the city’s priorities for distributing Community Development Block Grant and HOME Investment Partnership funds for the 2012-13 fiscal year.


CALIFORNIA WATCH: Bullet train's environmental benefits remain murky

Tim Sheehan // High-speed rail could help cut air pollution in California – if the system succeeds in getting enough people out of their cars. Planners with the state’s High-Speed Rail Authority expect that the electric trains could reduce traffic on the state’s roadways by 2.5 percent by 2035. Each vehicle-mile traveled creates emissions that foul the air with greenhouse gases, smog-forming chemicals and fine particles like soot and dust.



DESERT SUN: Grant to fund water, sewer services to Duroville mobile home park

By Debra Gruszecki // The families of Desert Mobile Home Park, a site on the Torres Martinez tribal reservation often called Duroville, will soon have access to safe drinking water and sewer services. Three federal grants, totaling $6.3 million, will assure major service upgrades in Mountain View Estates, a nearby mobile home park to which residents of Duroville are being asked to relocate.


PRESS ENTERPRISE: Low income households get solar incentive

By Leslie Berkman // The California Public Utilities Commission on Thursday implemented a $25 million program that provides increased incentives to low income households and owners of low income apartments who install solar water heating systems that reduce the need for burning natural gas.


SACRAMENTO BEE: Wood is the greenest building material, USDA says

By Susan Carpenter // A report from the U.S. Forest Service, released Oct. 3, found that using wood in building products yielded fewer greenhouse gases than other common building materials, such as concrete and steel. According to the report, which analyzed dozens of peer-reviewed scientific studies, 2.1 tons of greenhouse gases were saved for each ton of carbon in wood products versus non-wood materials.




California Dept. of Finance – Governor’s Budget


California Dept. of Housing & Community Development - Press Releases


California Dept. of Housing & Community Development – Housing Policy Development Bibliographies


California Dept. of Housing & Community Development – HCD Web News


California Housing Financing Agency


California Tax Credit Allocation Committee


California Debt Limit Allocation Committee


HUD Newsroom


Fannie Mae Foundation- KnowledgePlex


Federal Register, Table of Contents


U.S. Census Bureau


California Supreme Court Decisions / California Courts of Appeal Decisions (last 100 days are posted in full text)



California Department of Housing & Community Development WEB NEWS service coverage:


Mondays, Wednesdays and Fridays each week includes electronic format articles retrieved from newspapers or news services that report housing and community development news in California and some national services. Coverage is for California newspapers that are available electronically via the Internet – and any significant related breaking news.


(C) Copyright 2011, California Department of Housing & Community Development, Division of Housing Policy Development

Links to web sites do not constitute an endorsement from The California Department of Housing and Community Development. These links are provided as an information service only. It is the responsibility of the user to evaluate the content and usefulness of information obtained from these sites.  HCD does not provide full text articles – user must access expired articles via newspaper archives online or local public library.


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August 15, 2011

The California State Supreme Court issued a stay on an important piece of legislature that could eliminate redevelopment agencies statewide

The California State Supreme Court issued a stay on an important piece of legislature that could eliminate redevelopment agencies statewide. Filed by the League of California Cities and the California Redevelopment Association, the suit would stop Assembly bills 26 and 27 from taking effect.

Sometimes called the "extortion bill," AB 27 requires cities that wish to keep their redevelopment agencies to "voluntarily opt into mandatory payments to preserve agency status." Under the bill, Danville would have to pay the state $837,877 for first year (2011-12) and approximately 23.5 percent of that amount each year thereafter, or a little over $200,000 beginning in 2013.

"We're very disappointed to lose the redevelopment agency option and there's no question with the strings they have put on it…. you're between a rock and hard place," said Mayor Karen Stepper.

This latest development in Sacramento provides a glimmer of hope for town officials, who will file an appeal to change the amount of money they would have to pay the state each year. Town Manager Joe Calabrigo said the basis of the appeal is the misdesignation of funds paid to the town by its redevelopment agency in 2008.

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August 11, 2011

August 11, 2011



Dear Interested Party,


It is a pleasure to invite you to a high-speed rail industry forum set for September 8, 2011, at the Save Mart Center on the California State University, Fresno campus: 2650 E Shaw Ave Fresno, CA 93710. For more information as it becomes available, an agenda and to pre-register, please visit this website:


In collaboration with the Economic Development Corporation serving Fresno County and CSU Fresno, the California High-Speed Rail Authority is hosting this forum to give the private sector an opportunity to hear more about the project – the first of its kind in the nation – and the bidding process. Construction is on track to begin next year in the Central Valley.


We are also providing the opportunity for firms that may be interested in submitting a proposal as a prime contractor for any of the contracts to meet with small businesses that may be interested in subcontracting with them. Firms interested in submitting a proposal as prime contractors will be able to provide a booth or kiosk in the exhibition area to meet with potential subcontractors after presentations by the California High-Speed Rail Authority and Parsons Brinckerhoff.


If your firm has an interest in submitting as a prime contractor on any of the Authority’s projects and wishes to have an exhibition table or kiosk at the industry forum to meet potential subcontractors for the project, please respond to this e-mail indicating your interest no later than September 1, 2011, using “Prime Contractor Exhibit” in the subject line. We are already working with more than a dozen prospective prime contractors who have already submitted interest to host a table. Prospective primes should include complete contact information for their firm, including identification of an individual designated as the firm’s point of contact. Claudio Dallavalle of our Procurement Team will contact those individuals to finalize the necessary arrangements for your exhibition.


For general inquiries about this event, please reply to this email address with “Central Valley Industry Forum” in the subject line.


Thank you again, and we look forward to a very beneficial event on September 8 in Fresno.




Roelof van Ark

Chief Executive Officer

California High-Speed Rail Authority

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August 10, 2011

Deutsche Bank and UBS AG are testing the waters by selling a $1.4-billion pool of public and private commercial mortgage-backed securities,

NEW YORK CITY-Deutsche Bank and UBS AG are testing the waters by selling a $1.4-billion pool of public and private commercial mortgage-backed securities, SEC filings show on Wednesday afternoon. The move is a sign that investors are beginning to experiment with the CMBS once again after Goldman Sachs and Citigroup Inc. yanked $1.5 billion in CMBS off the market after ratings agency Standard & Poor’s declined to rate it just two weeks ago.

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August 01, 2011

Moodys/REAL Commercial Property Price Index (CPPI)

Moodys/REAL Commercial Property Price Index (CPPI)

Methodology developed at MIT's Center for Real Estate

Monthly National All Properties Index

Latest Results

July 28, 2011 update: The latest results of the Moodys/REAL CPPI (published by Moody's on July 20) show a price change return of positive 6.28% inMay for the all properties national index. (This is a record for one month.)

The Moodys/REAL CPPI will be published first by Moodys and will appear here on the MIT/CRE website shortly afterwards. The MIT/CRE is publishing the Moodys/REAL commercial property index results monthly as a service to the real estate academic and industry research communities. It should be noted that these indices are a statistical product that may contain estimation error, and that MIT makes no claim or warranty regarding its accuracy or use. The MIT/CRE is publishing the CPPI due to our role in the development of this pioneering commercial property repeat-sales price index (launched December 2006 on this site). MIT does not endorse, nor recommend this particular index over other econometrically valid such indices that may be developed subsequent to the CPPI.

What is the Moodys/REAL Commercial Property Index (CPPI)?

The Moodys/REAL commercial property index (CPPI) is a periodic same-property round-trip investment price change index of the U.S. commercial investment property market based on data from MIT Center for Real Estate industry partner Real Capital Analytics, Inc (RCA). The methodology for index construction has been developed by the MIT/CRE through a project undertaken in cooperation with a consortium of firms including RCA and Real Estate Analytics, LLC (REAL). The index has been developed with the objective of supporting the trading of commercial property price derivatives. The index is designed to track same-property realized round-trip price changes based purely on the documented prices in completed, contemporary property transactions. The index uses no appraisal valuations. The methodology employed to construct the index is a repeat-sales regression (RSR), as described in detail in Geltner & Pollakowski (2007). The data source for the index is described in detail in a white paper available from RCA.

The set of indices developed so far includes a national all-property index at the monthly frequency, national quarterly indices for each of the four major property type sectors (office, apartment, industrial, retail), selected annual-frequency indices for specific property sectors in specific metropolitan areas, and primary markets quarterly indices for the top 10 metropolitan areas in the major property types. The annual indices are produced in four versions, beginning in January, April, July, and October of each year. These are respectively named the calendar year (CY) index, the fiscal year ending March (FYM) index, the fiscal year ending June (FYJ) index and the fiscal year ending September (FYS) index.

The RCA Database

The commercial property index is based on the RCA database which attempts to collect, on a timely basis, price information for every commercial property transaction in the U.S. over $2,500,000 in value. This represents one of the most extensive and intensively documented national databases of commercial property prices ever developed in the U.S.

The Moodys/REAL CPPI and the TBI

The Moodys/REAL CPPI index is a complementary information product to the transaction based index (TBI) also published on the MIT/CRE web site. Both the CPPI and the TBI are based purely on transaction price data. The TBI is based on NCREIF property sales prices data, while the CPPI is based on RCA sales prices data. Thus, the TBI is based on a smaller population of more purely institutionally held properties. The TBI is based on a hedonic regression methodology whereas the CPPI is constructed with a repeat-sales methodology. The TBI is published with history going back to 1984 but only at the quarterly frequency, and only at the national level (for the four major property types), whereas the CPPI includes monthly and annual frequencies and more geographic regional break outs. The CPPI is a variable-liquidity price-change (appreciation return) index, while the TBI includes total return and demand and supply-side indexes.


The Basic Set of Indexes

National and Regional Level Indices

All (National) Download data View Monthly
National View Quarterly View Quarterly View Quarterly View Quarterly
East Region View Annual View Annual View Annual View Annual
South Region View Annual View Annual View Annual View Annual
West Region View Quarterly View Quarterly View Quarterly View Quarterly

MSA Level Indices

Top 10 MSAs View Quarterly View Quarterly View Quarterly View Quarterly
View Annual View Annual View Annual View Annual
DC Metro View Annual
NYC Metro View Annual
San Francisco
View Annual
Florida View Annual

Index Reports: Time Allowed to Gather Price Data

Experience with the developmental database suggests that within 45 to 75 days of the close of an index reporting period, a sufficient quantity and proportion of the second-sale transactions that RCA will ultimately gather from the given month will be available for index construction. Based on this consideration, for indexes where the data availability is sufficiently dense (generally, the monthly and quarterly indexes), 45 days will be allowed to elapse after the end of the reporting period to accumulate data for index computation. For indexes where the data availability is less dense (generally the annual indexes), 75 days will be allowed to elapse. In all cases, the index report will be considered to be final once it is published, and any second sales occurring beyond the end of the subject period will be excluded from the index computation (no “backward adjustment”).

Index Methodology and Further Details

The CPPI are based on a repeat-sales regression model (RSR), with conventional modifications and enhancements that are widely used in the real estate indices estimated in the academic community. In an RSR index, the database on which the regression is estimated consists purely of properties that transact at least twice in the historical sample. The fundamental data on which the index is based thus consists of the price changes actually experienced by individual properties which are the same type of price changes as actually experienced by direct propery investors. While the indexes may contain normal statistical estimation error, all index returns are based purely and completely on actually realized investment round-trip price changes recorded in the RCA transaction price database, as described in the MIT and RCA white papers noted above.


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November 22, 2010

Commercial Appraiser

California Health Facilities Financing Authority

Please click on the link below for the California Health Facilities Financing Authority's December 2, 2010 Meeting Agenda.

CHFFA's Agenda

Commercial Appraiser

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Shopping for data? Commercial Appraisal

November 22, 2010
Shopping for data?

Our guest blogger today is Raphael Bostic, Assistant Secretary for Policy Development and Research

As consumers flock to the shopping malls this holiday season, have you thought about shopping

I’m a numbers guy. To me, data can tell a story about what’s happening in the real world and that, in turn, can drive our decisions on a whole host of issues. Obviously, this holiday season finds a lot of folks worried about the economy and the housing market. Never before has there been a greater demand for economic and housing data among state and local leaders, businesses, researchers and even students. But now, this kind of data is only a click away!

Today, the U.S. Department of Housing and Urban Development (HUD) unveiled a new website that consolidates a wide variety of economic and housing market data at the regional, state, metropolitan area and county levels. Using information from the Census Bureau, Labor Department, State and Local governments, housing industry sources, as well as HUD’s own field economists, the new website employs interactive maps that allow visitors easy access a variety of reports – from a region-wide look at employment and housing activity to individual county-level figures on population trends, rental activity and vacancy rates.

This is a powerful new tool that’s easy to use and offers the public a remarkable look at their local economic and housing markets. This is precisely why this site will be so helpful to state and local leaders, developers, the real estate industry, and the general public who need the latest available data on their markets.

To view the reports mentioned above for a each region of the country, or for particular states, metropolitan areas or even counties, visit

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November 19, 2009



Policy Statement on

Prudent Commercial Real Estate Loan Workouts

The financial regulators1 recognize that financial institutions face significant challengeswhen working with commercial real estate (CRE)2 borrowers that are experiencing diminished

operating cash flows, depreciated collateral values, or prolonged sales and rental absorption

periods. While CRE borrowers may experience deterioration in their financial condition, many

continue to be creditworthy customers who have the willingness and capacity to repay their

debts. In such cases, financial institutions and borrowers may find it mutually beneficial to work

constructively together.

The regulators have found that prudent CRE loan workouts are often in the best interest

of the financial institution and the borrower. Examiners are expected to take a balanced

approach in assessing the adequacy of an institution’s risk management practices for loan

workout activity. Financial institutions that implement prudent CRE loan workout arrangements

after performing a comprehensive review of a borrower’s financial condition will not be subject

to criticism for engaging in these efforts even if the restructured loans have weaknesses that

result in adverse credit classification. In addition, renewed or restructured loans to borrowers

who have the ability to repay their debts according to reasonable modified terms will not be

subject to adverse classification solely because the value of the underlying collateral has declined

to an amount that is less than the loan balance.I. Purpose

This statement updates and replaces existing supervisory guidance to assist examiners in

evaluating institutions’ efforts to renew or restructure loans to creditworthy CRE borrowers.3 It

is intended to promote supervisory consistency, enhance the transparency of CRE workout

transactions, and ensure that supervisory policies and actions do not inadvertently curtail the

availability of credit to sound borrowers. This guidance addresses supervisory expectations for

an institution’s risk management elements for loan workout programs, loan workout

arrangements, classification of loans, and regulatory reporting and accounting considerations.

1 The financial regulators consist of the Board of Governors of the Federal Reserve System (FRB), the Federal

Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the

Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), and the Federal Financial Institutions

Examination Council (FFIEC) State Liaison Committee (collectively, the regulators).

2 Consistent with the FRB, FDIC, and OCC joint guidance and the OTS guidance on Concentrations in CommercialReal Estate Lending, Sound Risk Management Practices (December 2006), CRE loans include loans secured by

multifamily property, and nonfarm nonresidential property where the primary source of repayment is derived from

rental income associated with the property (that is, loans for which 50 percent or more of the source of repayment

comes from third party, nonaffiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing

of the property. CRE loans also include land development and construction loans (including 1- to 4-family

residential and commercial construction loans), other land loans, loans to real estate investment trusts (REITs), and

unsecured loans to developers. For credit unions, “commercial real estate loans” refers to “member business loans,”

as defined in Section 723.1 of the NCUA Rules and Regulations, secured by real estate.

3 This statement replaces the Interagency Policy Statements on the Review and Classification of Commercial Real

Estate Loans (November 1991) and Review and Classification of Commercial Real Estate Loans (June 1993).

Page 2 of 33

The statement also includes references and materials related to regulatory reporting,4 but it does

not change existing regulatory reporting guidance provided in relevant interagency statements

issued by the regulators or accounting requirements under generally accepted accounting

principles (GAAP). These general principles also could apply to commercial loans that are

secured by real property or other business assets of a commercial borrower.



C. Assessing Collateral ValuesAs the primary sources of loan repayment decline, the importance of the collateral’s

value as a secondary repayment source increases in analyzing credit risk and developing an

appropriate workout plan. The institution is responsible for reviewing current collateral

valuations (i.e., an appraisal or evaluation) to ensure that their assumptions and conclusions are

reasonable. Further, the institution should have policies and procedures that dictate when

collateral valuations should be updated as part of its ongoing credit review, as market conditions

change, or a borrower’s financial condition deteriorates.

For CRE loans involved in a workout situation, a new or updated appraisal or evaluation,

as appropriate, should address current project plans and market conditions that were considered

in the development of the workout plan. The consideration should include whether there has

been material deterioration in the following factors: the performance of the project; conditions

for the geographic market and property type; variances between actual conditions and original

appraisal assumptions; changes in project specifications (e.g., changing a planned condominium

project to an apartment building); loss of a significant lease or a take-out commitment; or

increases in pre-sales fallout. A new appraisal may not be necessary in instances where an

internal evaluation by the institution appropriately updates the original appraisal assumptions to

reflect current market conditions and provides an estimate of the collateral’s fair value for

impairment analysis.9

The market value in a collateral valuation and the fair value in an impairment analysis are

based on similar valuation concepts. However, the market valuation may differ from the

collateral’s fair value for regulatory reporting purposes. For example, differences may result if

the market value and the fair value estimates are determined as of different dates or the fair value

estimate reflects different assumptions than those in the market valuation. Such situations may

occur as a result of changes in market conditions and property use since the “as of” date of the


9 According to the FASB ASC Master Glossary, “fair value” is “the price that would be received to sell an asset or

paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

Page 6 of 33

The documentation on the collateral’s market value should demonstrate a full

understanding of the property’s current “as is” condition (considering the property’s highest and

best use) and other relevant risk factors affecting value. Collateral valuations of commercial

properties typically contain more than one value conclusion and could include an “as is” market

value, a prospective “as complete” market value, and a prospective “as stabilized” market value.

The institution should use the market value conclusion (and not the fair value) that

corresponds to the workout plan and the loan commitment. For example, if the institution

intends to work with the borrower to get a project to stabilized occupancy, then the institution

can consider the “as stabilized” market value in its collateral assessment for credit risk grading

after reviewing the reasonableness of the appraisal’s assumptions and conclusions. Conversely,

if the institution intends to foreclose, then the institution should use the fair value (less costs to

sell) of the property in its current “as is” condition in its collateral assessment.

Examiners will analyze collateral values based on the institution’s original appraisal or

internal evaluation, any subsequent updates, additional information, and relevant market

conditions. An examiner should review the appropriateness of the major facts, assumptions, and

valuation approaches in the collateral valuation and in the institution’s internal credit review and

impairment analysis.

If weaknesses are noted in the institution’s supporting documentation or appraisal or

evaluation review process, examiners should direct the institution to address the weaknesses,

which may require the institution to obtain a new collateral valuation. However, if the institution

is unable or unwilling to address these deficiencies in a timely manner, examiners will have to

assess the degree of protection that the collateral affords in analyzing and classifying a credit.

This may result in examiners making adjustments, if applicable, to the collateral’s value to

reflect current market conditions and events. When reviewing the reasonableness of the facts

and assumptions associated with the value of an income-producing property, examiners should


• Current and projected vacancy and absorption rates

• Lease renewal trends and anticipated rents

• Effective rental rates or sale prices, considering sales and financing concessions

• Time frame for achieving stabilized occupancy or sellout

• Volume and trends in past due leases

• Net operating income of the property as compared with budget projections, reflecting

reasonable operating and maintenance costs

• Discount rates and direct capitalization rates (refer to Attachment 3 for more


Page 7 of 33

Assumptions, when recently made by qualified appraisers (and, as appropriate, by the

institution) and when consistent with the discussion above, should be given a reasonable amount

of deference by examiners. Examiners also should use the appropriate market value conclusion

in their collateral assessments. For example, when the institution plans to provide the resources

to complete a project, examiners can consider the project’s prospective market value and the

committed loan amount in their analysis.

Examiners generally are not expected to challenge the underlying valuation assumptions,

including discount rates and capitalization rates, used in appraisals or evaluations when these

assumptions differ only in a limited way from norms that would generally be associated with the

collateral under review. The estimated value of the underlying collateral may be adjusted for

credit analysis purposes when the examiner can establish that any underlying facts or

assumptions are inappropriate or can support alternative assumptions.

Many CRE borrowers may have other indebtedness secured by other business assets such

as furniture, fixtures, equipment, inventory, and accounts receivable. For these commercial

loans, the institution should have appropriate policies and practices for quantifying the value of

such assets, determining the acceptability of the collateral, and perfecting its security interest.

The institution also should have appropriate procedures for ongoing monitoring of the value of

its collateral interests and security protection.

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August 06, 2009

commercial appraiser, commercial appraisal

Top Commercial Real Estate News
July 30, 2009 - August 05, 2009
Provided by Commercial Real Estate Direct

Sales Volume Plunges As Cap Rates Rise
Investment-sales activity in the first half declined to $17.6 billion, down 78 percent from the same period a year ago, as capitalization rates continued their two-year rise, according to Real Capital Analytics. The office sector led the decline, with an 82 percent drop to $5.7 billion of completed sales, while multifamily fell 79 percent to $4.8 billion. Industrial dropped 74 percent to $3.6 billion and retail registered a 72 percent decline to $3.5 billion.
Read Full Story

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August 05, 2009

Commercial Appraiser, Commercial Appraisal

Renovate and build for the future. Commercial Appraiser, Commercial Appraisal
Join us for our webcast series about Building Information Modeling (BIM) for renovation and building performance.
Autodesk BIM solutions provide commercial and public sector building owners with powerful analysis tools so you can build a model to determine alternatives for sustainability and efficiency.
Gain valuable insight into how BIM software solutions from Autodesk can help save you time and money. Register now.
Understanding the State of Your Building's Energy Performance
Date: Wednesday, Aug 19, 2009
Time: 10:00 - 11:00 a.m. PDT
See a demonstration on how Autodesk BIM software can:
Integrate real world data into your model for an accurate look at the current state of your building's energy performance.
Help you understand deficiencies in your building's energy performance.
Teach you the key questions to ask designers and Energy Services Companies seeking your business.
Register Now                    
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August 04, 2009

commercial appraiser,commercial appraisal

August 2009
commercial appraiser,commercial appraisal

  • NAR Presents Monthly Commercial Updates
  • Retrofitting Older Buildings - A Niche
  • S & P Reverses CMBS Downgrades
  • Connect With NAR Commercial in San Diego


  • Key Issues Addressed in August Webinars
  • LinkedIn - Where Professionals Connect on Business Issues
  • Commercial Real Estate Investing: 12 Easy Steps to Getting Started


  • Ken Riggs, CCIM Gives Views on Economy
  • Save 40% on Commercial Education


To keep you aware of a number of commercial initiatives that NAR is working on, Jim Helsel, is producing a podcast each month. Listen to this month’s edition: here.

Obtain a sneak peek at an upcoming RCA Report (the GREEN issue!) article on retrofitting buildings for energy efficiency: here.

In a highly unusual response to investor ire, Standard & Poor reversed some downgrades of widely watched commercial mortgage-backed securities. Read Reuter’s article. here.

Commercial Connect at NAR’s annual Conference and Expo, November 14-6, 2009 in San Diego will feature commercial specific networking events and sessions like, “Foreclosures: The Impact on Housing Opportunity and Property Management”. Create your own personal Event Planner now! Read more, here



August 20: “Commercial Property Financing – How to Get the Deal Done” on August 20, 2009. $49 with REALTOR discount code: fhosuddnkr

August 21: “Impressive Presentations – How to Win Every Assignment” on $49 with REALTOR discount code: rihequpimu

Both webinars will be presented by Bob McComb and Peter Droubay of Top Dogs. To register and see time and details click here

LinkedIn is an online networking tool for professionals. Joining is simple; complete your professional profile and start connecting with clients and colleagues. Already LinkedIn? Join the REALTOR Commercial Group, over 300 members and growing, for the latest news, discussion and connections. Click to join here

This straight forward guide by Jack Cummings with essential tips and an insider’s knowledge of commercial property investing is available now in the REALTOR store. Purchase - here.
commercial appraiser,commercial appraisal

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July 27, 2009

Hotel Appraiser, Hotel Appraisal

Register Now For Free Bonus Content Hotel Appraiser, Hotel Appraisal
Register for RealShare HOTEL INVESTMENT SUMMIT, September 10th at the Marriott Marquis in New York City, and you'll gain networking opportunities with the nation's hospitality-market and market strategies needed to survive the downturn and find opportunities.

You'll also gain free access to Incisive Media's newest hotels webinar, Distressed Hotels: How Bad Will it Get?. During this hour-long session, recorded earlier this month, you'll hear forecasts and strategies from Chuck Bedsole of Alvarez & Marsal Real Estate Advisory Services, Jerome F. Cataldo of Hostmark Hospitality Group, Geoff Davis of HREC Investment Advisors, Jim Holthouser of Hilton Hotels Corp. and Richard A. Warnick of Warnick + Co. LLC.

Simply register online for RealShare HOTEL INVESTMENT SUMMIT and within your confirmation email, you'll be sent a direct, payment-free link to the Distressed Hotels session.

RealShare HOTEL INVESTMENT SUMMIT has become an annual event for over 350 hospitality industry executives. Register now to network with the industry leaders at the premier information and networking conference for the hotel investment industry. Hotel Appraiser, Hotel Appraisal
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July 26, 2009

commercial appraiser, commercial appraisal

What is Net Leased Real Estate?
commercial appraiser, commercial appraisal
Net leased real estate can be everything from a Walgreen Drug Store to a dollar store such as Family Dollar and Dollar General. Other net lease properties include bank buildings such as Bank of America, food such as McDonalds, Burger King or Taco Bell or auto service and part stores like Bridgestone/Firestone or an Advance Auto. Also included are FedEx distribution centers.

Net lease properties are typically free standing buildings that are leased to tenants for a 10 to 25 year term. They offer the benefit of little or no management responsibilities as the tenant pays for all, if not most of the expenses. The investor receives their rent with little to no other involvement.

Who Buys Net Leased Properties?
Investors who wish to have outright ownership of their investments. The alternative would be to own a security in the form of a mutual fund or REIT. A major advantage of 100% direct ownership is control and the ability to defer future capital gains by doing a 1031 exchange when the property is sold. The lack of immediate liquidity that a mutual fund or REIT can offer can be a drawback for some investors and should be considered carefully before investing.

How are Net Leased Properties Valued?
Net lease properties typically are valued using their Capitalization Rate also referred to as Cap Rate. The cap rate reflects the value of a stream of economic benefits discounted for time and risk. Generally this is computed by as a pretax cap rate using the Net Operating Income (NOI). NOI is income less all expenses before debt service. The Cap Rate is the NOI divided by the purchase price. Conversely the NOI divided by the Cap Rate will equal the purchase or selling price.

NOI = $100,000/10% = $1,000,000 Purchase or Selling Price
NOI = $100,000/$1,000,000=10% Cap Rate

How is a Cap Rate Determined?
Some of the major considerations are:

  1. The credit worthiness of the tenant (see Tenant Credit Rating under Resources on upper right)
  2. The length of the lease, typically 10 to 25 years.
  3. The type of lease, triple net (NNN) or double net (NN). See below for definition.
  4. Type bumps or increases if any.
  5. Cost of financing
  6. Strength of the demographics of the property location
  7. Nature of the improvements. Are the improvements easily converted for another tenant or are they special purpose that would require significant expense and time to convert before re tenanting?
  8. Age and condition of the improvements


The more positive the above factors, the lower the Cap Rate or the higher the value of the property related to its income stream. Conversely if the above factors are weak the Cap Rate will be higher and the resulting value will be lower reflecting the greater risk of the investment.

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July 22, 2009

commercial appraiser, commercial appraisal

  RCA Education Connection


If you are looking for affordable commercial education then register today for one of the RCA's upcoming webinars. On July 23 and 24, the RCA in partnership with Top Dogs is offering two webinars at a deeply discounted rate of $49 per session. The two hour sessions are regularly priced at $89, but if you use one of the following discount codes fhosuddnkr or rihequpimu, you will receive an immediate $40 discount. The RCA/Top Dogs webinars will give you the opportunity to learn from Peter Droubay and Bob McComb, the co-creators of the Top Dogs commercial real estate training programs. On August 12, the RCA is offering a FREE one hour webinar featuring Eric Boles, a 2009 RCA Signature Series speaker.


The July 23 webinar "Property Valuation: How to Value Commercial Property" is designed to teach a step by step process for conducting outstanding comparative market analysis within the commercial markets. The July 24 webinar "The Most Under-Utilized Strategy for Generating Leads and Increasing Client Loyalty" is designed to give attendees a step-by-step process for employing one of the most powerful marketing strategies available--public speaking. The August 12 webinar "Momentum Changers" will take a look at how you can change your momentum when you are fearful or in self imposed ruts. Learn some of those "game changing" things you can do to break the cycle and get to "Next Level Living" both personally and professionally.

Webinar Session Description and Registration:

July 23: "Property Valuation: How to Value Commercial Property" (beginner level)

Webinar Session Description and Registration:

July 24: "The Most Under-Utilized Strategy for Generating Leads and Increasing Client Loyalty" (experienced level)
Webinar Session Description and Registration:August 12: "Momentum Changers" (all levels)

All sessions are first come, first-served and limited to 200 attendees. Visit the RCA Education web page to learn more about the education resources available to you from the RCA and commercial affiliates. For Top Dogs webinar registration questions, contact Top Dogs at 888-894-5772. For general questions, contact the RCA at 800-874-6500. commercial appraiser, commercial appraisal
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1.2MSF Project on Former Brownfield Site in California Earns LEED Certification
A 1.2-million-square-foot industrial park touted as the largest speculative industrial project in the U.S. became one of the largest overall projects in California to receive LEED certification. Developed by Dallas-based Hillwood, the project was sold to CB Richard Ellis Investors a year ago, but Hillwood staff recently completed the Silver LEED certification process on behalf of the new buyer.
commercial appraiser, commercial appraisal
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July 21, 2009

commercial appraiser, commercial appraisal

Bargain or Bust - 65% Off Skyscraper

commercial appraiser, commercial appraisal

Last week the media reported that a NYC skyscraper sold for about $600 million, and according to Real Capital Analytics the prior purchase price was $1.74 billion. The property has 1.8 million gross square feet, 1.6 million rentable square feet, and is 50% vacant.

From the information provided by the media, one would conclude the new buyer stole the property. After all, the property was purchased at a 65% discount from its previous purchase price only 2.5 years ago. For the naive, the story would end there and open the door to believing they found the deal of the century. Before running out to buy the next property at a discount to its previous purchase price, or giving money to a proclaimed bottom-feeder buyer, let’s look at all the facts.

Read full article...
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July 20, 2009

James Pontak, Pontak Appraisals - Appraiser

We do not typically pay much attention to the bottom feeders in our industry but for Mr James Bontak, and the public safety, we are making a special mention.  This is how he reacted to a Appraiser Trainee Add we posted on Craig's List:

-----Original Message-----
From: james pontak []
Sent: Monday, July 20, 2009 10:56 AM

"Are you crazy?

This is sure as hell  not what OREA had in mind, this is servitude and illegal.

: james pontak []
Sent: Monday, July 20, 2009 10:56 AM

I have just one question for you is this the kind of person you want working for you?  Remember the name James Pontak, he is an AL which means he is on the bottom rung of the porfessional appraiser licencing ladder.

Address:Pontak Appraisal
11121 Homeway Dr
Garden Grove, CA  92841-1111


Name: Cochise
Subject: Re: James Bontak, Bontak Appraisal-Appraiser, OC, FHA Appro
Body of Message:

James Pontak, responce to another web blog. Limited vocabulary.

Re: [WinTOTAL Group] Broadcast Appraisals
"Hey Mark,

I gave up on this type of outfit, why should we accept work in this fashion? The guy with the fastest Balckberry wins.


Jim Pontak
Real Estate Appraiser
11121 Homeway Drive
Garden Grove, CA 92841
714-590-1537 O.
714-345-5604 C.
714-590-0004 F.

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July 17, 2009

Commercial Appraiser, Commercial

Harris Company, REA/C Custom Search Engine

Commercial Appraiser, Commercial

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 commercial appraiser, commercial appraisal

Guest Blog: LED Lighting on your Property

You may have heard about LED lighting in the news recently. There are several cities around the country converting their street lights to be LED street lights. No more metal halide or high power sodium bulbs. As you would imagine these types of streetlights need to be quite powerful to light up the blacktop 25 feet below the pole. Sure enough they are bright! ScottYahraus

So what about LED lights on your property in the common areas that you are paying the electricity on? Well such replacement bulbs exist and they make CFLs look bad.

There are two types of LED bulbs; high power and low power. You have most likely only seen low powered bulbs which hardware stores and Costco try and sell. The problem with low power bulbs is that they do not give off enough lumens, light. High powered bulbs do exist and are fantastic. Visit to view great options for your property.

Dave F. of Los Angeles, CA, purchased 177 LED bulbs for the common area of this 125 unit complex in Orange, TX.

He replaced 65 watt incandescent bulbs with 6 watt LED bulbs. This measured a savings of over 90% on his utility bill for the portion dedicated to lighting. This positive changed saved Dave F. $37.18 PER BULB per year starting in year 1. At an 8% CAP rate Dave F. raised the value of his property by $82,261! ($37.18 X 177 =6,580.86 ÷ .08 = $82,261)

(Scott Yahraus is the president of Apartment Energy Consultants. Apartment Energy Consultants is the governing body that certifies multifamily properties as being “National Green Apartment Certified visit them at, 818-854-6850, or email Scott directly at commercial appraiser, commercial appraisal

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July 17, 2009 commercial appraiser, commercial appraisal

'Capital Insights' with Jack Kern: The Right to Rent Plan Will Hurt REITs

"I think you're bluffin'." John Wayne in The Man Who Shot Liberty Valance, (1962) (C) John FordJack Kern

In what I can only attribute to political gamemanship, the Right to Rent program is making its way around the Hill, seeking support for what will surely amount to be the epitome of a liberal agenda. According to industry pundits, labor unions and very socially liberal organizations, those renting homes that are foreclosed need protection against losing their housing due to proceedings designed originally to turn the asset and get it back on the market as soon as possible. Rather than just asking for time to get re-established, the new effort seeks to gain time periods as long as 20 years, supposedly with the idea that it will stabilize neighborhoods and help limit housing blight. In some instances, these very renters are the ones that lost their homes through foreclosure in the first place.

In the last Congress (known as the dumb one), Rep. Raul Grijalva introduced the Saving Family Homes Act, designed to offer former homeowners the ability to rent their house after foreclosure for up to 20 years. Grijalva represents the 7th Congressional District in Arizona and is a Democrat, a seemingly deadly combination these days.  commercial appraiser, commercial appraisal

While that effort went no where, it has been replaced by the newly reconstituted Right to Rent Plan, which has as its cornerstone the premise that homeowners in foreclosure can, by right, rent their homes for long periods (perhaps 10 to 15 years) at market rates, determined by independent appraisals. And we all know what has happened with the appraisal industry.

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July 16, 2009

commercial appraiser, commercial appraisal

green |
Hotel Indigo's First LEED Property Debuts in San Diego
The property composts organic matter, offers an on-site recycling program, and features two green roofs. Read more...

Chipotle Is First Restaurant Designated LEED Platinum
The Gurnee, Illinois, location was built last year under the LEED for Retail pilot program.
commercial appraiser, commercial appraisal
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Real Estate & Property Law

Buyers of Former Meth Homes Battle Ailments, File Suits commercial appraiser,commercial appraisal

Posted Jul 15, 2009, 10:18 am CDT
By Debra Cassens Weiss

Possibly tens of thousands of homes have been used to make methamphetamine, causing health problems and financial worries for new owners and unsuspecting landlords.

The New York Times chronicles the problems of homeowners Rhonda and Jason Holt, whose three babies became listless and struggled with breathing problems after they bought a home in Winchester, Tenn. Rhonda Holt battled migraines and her husband had kidney problems.

Later, the Holts learned their home was contaminated with methamphetamine from the previous occupant, and it would cost them $30,000 to clean up the mess. Now Rhonda Holt is working two jobs to pay for the remediation.

At least one unsuspecting homeowner who bought a meth home filed suit against the seller, a real estate agent who bought the home in Stow, Ohio, at a sheriff’s sale before reselling it. Homeowner Andrea Wagner, a single mom, developed eczema and her children had skin rashes and breathing problems after they moved in.

The family quickly left when Wagner discovered the home had been used to make meth, the Akron Beacon Journal (PDF) reported last year. The case later settled under confidential terms, Wagner’s lawyer, Warner Mendenhall, told the ABA Journal.

Mendenhall, who practices in Akron, based his suit on a state law requiring sellers of properties to disclose hazardous materials. After the case drew publicity, Akron and Summit County, Ohio, passed new laws requiring property titles to indicate whether homes have ever contained a meth lab, Mendenhall told the ABA Journal.

The National Law Journal covered Mendenhall’s case and other suits in a story published last year.

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July 15, 2009

Commercial APpraiser, Commercial Appraisal

$________ VERDICT Plaintiff tripped and fell on uneven sidewalk - Ruptured Achilles tendon requiring surgery and casting for eight weeks.

Originally published in The National Jury Verdict Review and Analysis (155535)
Queens County, New York

On March 12, ________, at approximately 11:30 p.m., the plaintiff, a 57-year-old retired licensed practical nurse, was caused to trip and fall on a sidewalk in front of 93-21 2nd Street. She did not seek medical treatment for nine days treated herself at home, believing that she had sustained a sprain of her right ankle. She was subsequently diagnosed with a ruptured Achilles tendon. She sued the City of New York, alleging that she was caused to fall by a broken, uneven sidewalk of which the City had notice. The city acknowledged that it had notice of the defect two years prior to the plaintiff’s fall and that Big Apple had notice of the defect three years prior to the fall, but that the city had failed to make the requisite repairs. The city contended that it was unable to repair the defect in time to prevent the plaintiff’s fall. Commercial APpraiser, Commercial Appraisal

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July 14, 2009

commercial appraiser, commercial appraisal

From: HUD USER News
  commercial appraiser, commercial appraisal
HUD would like to make owners and managers of public and
assisted housing aware of a new grant opportunity being
offered through the Department of Commerce's National
Telecommunications and Information Administration (NTIA).
As more and more types of transactions related to
government, employment, health, job training, and
education deliver services online, access to broadband is
becoming increasingly necessary. In response, the
Broadband Technology Opportunity Program (BTOP) is making
funding available to connect unserved and underserved
populations to this important infrastructure.
BTOP's funding is made available through the American
Recovery and Reinvestment Act (ARRA) to help achieve the
Administration's goal of providing broadband access to
all Americans. Owners and managers of low-income and
affordable housing serve the very populations that BTOP
is attempting to reach, possess existing infrastructure
(including Neighborhood Networks centers), and other
resources that can be leveraged to create a more
competitive grant application, and ultimately, a more
viable and effective project.
There are two grant categories within the BTOP that will
be applicable to housing organizations: the Public
Computer Center Grant and the Sustainable Broadband
Adoption Grant. Owners of multifamily housing properties,
Public Housing Authorities, and other housing groups may
wish to submit applications in partnership with
organizations possessing expertise in information
technology delivery and training.
Grant applications are being accepted from July 14
through August 14, 2009. Electronic applications will be
available on or about July 31st. Paper applications for
grant requests of less then $1 million will be accepted.
To obtain the Notice of Funding Availability and
application materials, please
go to
Informational workshops are being offered by NTIA through
July only. To register, please
For additional information, please contact:
 commercial appraiser, commercial appraisal
The Broadband Technology Opportunities Program
1401 Constitution Ave, NW
Washington, DC 20230
Tel. 202-482-2048
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July 02, 2009



Charles Pixley
Real asset management associates
515 Madison Ave., 5W, New York, NY 10022
Skype: toanangel
585 217 2191

Volume 6 Issue 2


William Shakespeare wrote: “Brevity is the soul of wit.” If you want someone immersed in this industry to pay attention it most likely will not happen if you submit a series of files that take up allot of disc space and would take hours to read and still not convey the basics of the project.

To spare everyone’s time, get you the fastest answer and have the greatest chance of garnering interest, the most effective means of getting your loan or finance request read understood, and approved by an underwriter for in depth review is the Executive Summary. The following is a sample; obviously you have to tailor the summary to the subject type:

1. Date:
2. BORROWER’S NAME whether personal Corporate or LLC:
17. NET OPERATIONG INCOME Projected or Actual:
21. Brief summary of salient facts:


Using a copy of the most recent tax returns for the business, or the specific properties, if there are more than one property incomes reported. Take the Adjusted Gross Income. AGI, and add back: Depreciation, Amortization, Interest Expense and specific non-reoccurring charges used to improve, or maintain the business, or property, (new equipment, new roof, bathroom remodeling, etc.

THIS IS YOUR Net Operating Income, N.O.I.

Probably one of if not the most important valuation ratio is the Debt Service Coverage Ratio, DSCR.

To know if your client, or loan request has a chance of flying, if you know a property or business

NET OPERATING INCOME, N.O.I., an underwriter and you can determine value very accurately without referring to an appraisal.
Debt Service Coverage Ratio

In underwriting a business, or commercial property Cash flow analysis is referred to as the Debt Coverage Ratio and it means everything to an underwriter to determine value. For both owner occupied and investment properties, underwriters normally want to see ratio's above a ratio of a minimum of 1.20 to 1.

In other words, for every $1 of mortgage debt the property or business has to have $1.20 of net income to meet the mortgage payments. Obviously the greater the risk or shorter the seasoning or occupancy rate, or property types such as hotels or car washes will be required to have higher ration preferably a DSCR above 1.4.

As a quick method of qualifying a loan request, assume a Capitalization Rate, CAP RATE OF 10% and multiply the N.O.I. X 10 and you will have a general idea of the actual value. However, if you know the CAP RATE, for the area, is 7% you divide the N.O.I., by 0.07, and it will give you a very accurate idea of what the property will appraise for and whether the Loan To Value, LTV, requirements are within the guidelines to have a chance for approval.

A low DSCR, high vacancy rate, speculative transaction, poor credit history, poor business track record, lack of evidence to repay, high LTV, start-up business and so forth make your loan request “Less than Standard” and then MAY, if at all, only qualify for a Hard Money Loan, with much higher interest rates and points and substantially lower LTV.

commercial appraiser, commercial appraisal

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Part 1

Charles Pixley
Real Asset Management Associates
515 Madison Ave., 5W, New York, NY 10022
Skype: toanangel
585 217 2191

Volume 1 Issue 1


I am honored to be able to offer you this course which will be emailed to you over the next few weeks. Please feel free to ask questions, as I am sure if you are unclear others may have the same question and together we will have a better learning experience.

Will try to reduce the subject matter to the least amount possible and convey the greatest amount of understanding.

Ideally this information will help you garner a more well qualified base of clients as they learn of your professional ability and ultimately the most important point of all, achieve a win for your client and then a win for you when it the deal closes.

The basic definition of commercial lending is to provide finance to a business, or property, whose ultimate function is the creation of profit.

The purpose of this newsletter is to provide you with specialized information on underwriting commercial loans, which is hard to find and its various types, under the heading of capital finance, so you may address the specific needs of a targeted audience.

This is designed to guide you through the fundamentals of audience as concerns understanding COMMERCIAL LOANS & UNDERWRITING and how “INVESTORS,” a.k.a lenders evaluate scenarios and qualify the proposal and prospect for potential funding.


This business takes guts, drive and intense persistence, and the ability to survive financially, the period of time required to understand, build a book of business and know how to underwrite the various proposals and where to go to find the funds.

In our current market non-traditional sources of funds have become the go-to or lender of first choice, so the opportunity to review a myriad of deals is immense.

Some borrowers are highly sophisticated and know far more than the average loan officer, however, for the most part, simply don’t know what they are doing and don’t understand the process.

These days, almost all business borrowers have been, burned, turned out, or turned down, or simply they are ill qualified. Most unsophisticated clients embellish values, and don’t tell the whole truth and nothing but the truth, and that makes your job as an underwriter more of a Sherlock Holmes.

Many borrowers try to manipulate the money into what they think they want or should get, or they flat out are liars, or worse yet they are frauds. But, as you know money is like water, it seeks its own level and it KNOWS intrinsically what to do and what the rates are.

Unless you have the aforementioned I would not recommend entering this business, full time, at all. Although one never stops learning, nor finding new creative ways to structure deals

Realistically, the learning curve, if you were to do nothing but commercial loans, all day everyday at a modest rate of about 50 calls and interviews per day, can be about one year.

Once you have a working understanding, have been beaten up by borrowers and lenders there is a clarity focus that comes and all the pieces come together, THEN it becomes much easier.

Perhaps, the most important element of all is that, your clients can hear the experience level in your voice. Therefore, as you become more confident, you will inspire confidence in your clients and they will be more receptive to giving you their business.

In the next issue we will cover THREE IMPORTANT RATIOS and how these values are determined and the pitfalls from an commercial underwriters perspective.

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