Local Government Report
LGR April 2008


Mortgage Debt Cancellation Relief - H.R. 3648 - Public Law 110-142 General Information and Provisions

Individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.

Thought for the Month:

“Somehow I can't believe there are any heights that can't be scaled by a man who knows the secret of making dreams come true. This special secret, it seems to me, can be summarized in four C's. They are Curiosity, Confidence, Courage, and Constancy and the greatest of these is Confidence. When you believe a thing, believe it all the way, implicitly and unquestionably."

Walt Disney - December 5, 1901 – December 15, 1966

 

FEDERAL:

 

Fannie Mae and Freddie Mac Negotiating Deal on Appraisals

 

Fannie Mae and Freddie Mac have been negotiating with New York State Attorney General Andrew M. Cuomo that will help eliminate conflicts of interest on mortgage appraisals. If the agreement is reached, Fannie and Freddie will no longer purchase mortgages from lenders that utilize internal appraisers. A home valuation protection code would be developed to set standards on compensation and appraiser independence. A clearinghouse of appraiser information will be created, with a separate board of directors, to monitor complaints from appraisers and consumers. All lenders will be required to provide post-purchase copies of appraisal documents to the clearinghouse. The Office of Federal Housing Enterprise Oversight and the Office of the Comptroller of the Currency have also been involved in the negotiations. NAR will continue to monitor the negotiations and provide updates as the information becomes available.

 

Mortgage Debt Cancellation Relief - H.R. 3648 - Public Law 110-142 General Information and Provisions

Individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.

General Provisions of Public Law 110-142:

  • No income limitation: All borrowers receive the relief, no matter what their income.
  • Dollar limitation: No more than $2 million of mortgage debt is eligible for the exclusion ($1 million of debt for a married filing separately return).
  • Relief applies only to an individual's principal residence.
  • The forgiven mortgage debt must have been secured by that residence.
  • No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement.
  • Eligible debt is what is called "acquisition indebtedness." This is debt used to acquire, construct or rehabilitate a residence.
    • Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt. (Same rule as Mortgage Interest Deduction)
    • Home equity debt (or second mortgages) qualifies if the funds were used to improve the home. (Borrower must have adequate records, as under current law.)
    • See cash-outs, above. No amount of a cash out may be treated as acquisition debt.

 

STATE:

 

C.A.R. SPONSORED LEGISLATION – 2008

 

AB 2363 (Ma) Megan’s Law - “Just Cause Evictions” under Megan’s Law - Municipalities with eviction controls only permit landlords to evict tenants for a “just cause”. Under these ordinances, the landlord must state, and prove in court, a valid reason for terminating a tenancy which generally includes: non-payment of rent, illegal activity or holdovers, property damage, owner move-in, or the removal of units from the rental market. C.A.R. is sponsoring legislation to require local jurisdictions with a “just cause eviction” ordinance to permit landlords to evict a registered sex offender in order to protect a person at risk, as is permitted in existing law.

 

Status: Pending Introduction

 

 

AB 2259 (Mullin) Ownership Rights in a Common Interest Development (CID) - There is a growing trend among homeowner associations to adopt restrictions that limit the number of dwellings that can be rented by unit owners, whether by raw numbers or percentages of owner occupied vs. renter occupied. The imposition of rental restriction diminishes the owner’s property rights, and C.A.R. argues that property owner’s should enjoy the same rights and privileges that existed at the time the CID unit was purchased. C.A.R. is sponsoring AB 2259 to protect property ownership rights in a CID by preserving an owner’s right to lease or rent their unit if such a right existed at the time they purchased the unit.

 

Status: Pending Committee Assignment

 

SB 1053 (Machado) Mortgage Loan Broker Disclosures- As the lending function has become increasingly complicated, and increasingly the subject of disputes, calls for more supervision or separation of the lending function from the rest of the real estate license have increased. Legislative pressure for reform continues to increase, aggravated by fears of increased defaults among non-traditional mortgages. In response to these concerns, C.A.R. sponsored legislation will require a prominent disclosure to all parties whenever a broker, business entity or licensee represents a buyer and originates a loan in a “1-4” transaction. This legislation will help to alleviate the perceived conflict created by the loan originator’s obligation to ensure that the loan application is accurate and adequately underwritten.

 

Status: Senate Business, Professions and Economic Development Committee

REGION:

AIR QUALITY MANAGEMENT DISTRICT

The South Coast Air Quality Management District Governing Board will consider adoption of Proposed Rule 445, Wood Burning Devices.  The REALTORS® Committee on Air Quality(RCAQ) achieved its objective: NO POINT OF SALE ENFORCEMENT BY REALTORS IS INCLUDED IN THE RULE.  Further, the AQMD has accepted the RCAQ recommendation that the rule be supplemented with an incentive program funded by the District to encourage homeowners to install cleaner gas log sets if they choose.  A $1.5 million incentive program is proposed, with  $.5 million to be distributed in Fall 2008/Winter 2009.

Only one final change was proposed by the Building Industry Association and Hearth, Patio and Barbeque Association:  implementation of the requirement that all new construction below 3,000 feet include only dedicated gas-fueled fireplace devices will begin one year after the date of adoption.  Previously, implementation was proposed to begin six months after adoption.  The Board Committee overseeing development of the fireplace rule indicated its agreement with the implementation date change, and the proposed amendment to the rule language will be presented to the Board for their final consideration. 

The final proposed  Fireplace/Wood Rule Stove sets the following requirements:

* Only USEPA-certified wood-burning fireplace units and woodstoves can be sold in the Basin.

* Only seasoned firewood (less than 20% moisture) can be sold in the Basin, July to February.

* Rule “shall not apply to an indoor or outdoor wood burning device that is permanently     installed and included in the sale or transfer of any existing development.”

*Remodels allowed to install EPA certified wood burning device or permanent gas-fueled fireplace.  No traditional open masonry wood-burning fireplaces allowed.

*Exempt:  Low income households where wood burning device is sole source of heat and properties above 3,000 feet, or no gas infrastructure within 150 feet.

*New construction is allowed to install only dedicated, permanent gas-fueled log sets or fireplace inserts.  No wood burning devices of any kind.

*Mandatory No-Burn Day Program After 2013, if needed.

The rule includes proposed ban on indoor and outdoor wood burning on high particle pollution days after 2013, if future particulate levels  warrant. Program would be activated by subregion. At present, Rubidoux, Azusa, Downtown LA, Burbank and Fontana have the highest winter PM 2.5 levels.

Rule would take effect six months after adoption (September 2008).  Board will consider BIA proposal to extend new construction requirements to March 2009.

LOCAL

BALDWIN PARK

City officials expect to have $2 million in reserve money by June.  But they say more is needed to lead the city through a slowing economy, a housing slump and the trickle effect of estimated budget cuts at the state level. In a midyear budget review last week, city officials saw generally favorable estimations through June 30, the end of the fiscal year.  Baldwin Park operates on a $49 million budget and expects about $47 million in expenditures for 2007-08.  About $600,000 of the $2 million difference will go into the city's reserve fund, which already has $1.4 million. The rest of the money is restricted to specific funds.  Officials say that throughout the year, department heads have not asked for additional money from the City Council when funds were needed. Instead, the city has absorbed costs other ways - like keeping vacant positions open. Baldwin Park currently rakes in about 60 percent of what other agencies receive in sales tax revenue. Officials say development in the city could change that.

COVINA

A year to the month after voters rejected a ballot measure extending the city's utility user's tax, the City Council declared a fiscal emergency and voted for another election on the issue. If county officials agree, the measure will appear on the June 3 ballot. If not, a special election will be held, which would cost the city an estimated $66,000.

The Council meeting was packed with supporters of the tax, with almost 20 speakers urging the council to set an election date. Proponents gathered 1,237 validated signatures from registered voters in the city. The rejected March 2007 resolution allowed the city to expand the tax to other "telecommunications services" besides the telephone bill, opening up the possibility that some Internet services could be taxed.

The tax is set to expire in March 2009, but in anticipation of losing the tax income, the city passed a two-year budget last summer with millions of dollars in cuts, some scheduled for the 2007-08 fiscal year. The original budget cut crossing-guard service, a city graffiti cleanup contract and summer recreation programs, and would have closed the city library. The City Council later reversed its stance on these cuts, though, and renewed the crossing guard and graffiti plans in July. By November the council agreed to fund recreation programs and the library through next September. The city has said that if the utility tax is renewed, widespread budget cuts this year and in 2009 will be unnecessary.

To schedule the election, the city declared a fiscal emergency, which allowed it to put the measure on the ballot with the signatures of just 5 percent of Covina voters who voted in the last gubernatorial election. Non-emergency ballot measures require 10 to 15 percent of registered city voters to sign a petition, but the tax measure did not have enough signatures to qualify. All the City Council members have previously lobbied for a renewal of the tax, so there was no debate over whether to pass the measure.

GLENDORA

BUSINESS LICENSE TAX

The City which began enforcing a 3 decade old regulation requiring people transacting business in Glendora to have a business license rejected a list of concerns from REALTORS®.  REALTORS® citing California Business and Professions Code sections 10131-10132 which states that a real estate salesperson is an “employee”, not an “independent contractor”, have asserted that as such they are not required to have a separate business license.  Glendora officials assert that as real estate sales people receive a 1099, they are required to have a business license.  Glendora officials admit that their own Municipal Code fails to differentiate between a 1099 or a W-2 and therefore they defer to the California Business and Professions Code, although in the case of  real estate salespersons; officials cite the code is “open to interpretation”.  CVAR REALTOR® members are organized and prepared to continue to fight the matter.

OTHER ISSUES

The Council approved the development of a 125-bed senior assisted-living center, ending a dispute between the developer and a neighborhood that has lasted several years. The 4-1 vote to approve the development was made by the Council after hearing heated comments in opposition to the project from residents near the Bonnie Cove and Gladstone intersection, where the development is located. Opponents argued the new, 97,000 square-foot facility would be too dense, too tall and would cause too much traffic for the surrounding residential neighborhood. City staff reiterated at the meeting that the site is zoned for medical services.  The city attorney had advised the council that since the project did meet all zoning requirements, the developer would have grounds for a lawsuit against the city if it rejected it. A plan for developing the site, which currently hosts a live-in senior rehabilitation center, was originally approved by the council in 2004.Several citizens asked for an appeal of the project on the grounds that the traffic survey used in the case was outdated, so the council delayed action to do a new traffic survey. City staff said the new survey showed that the senior center would not add significant traffic to the neighborhood. To mitigate the costs of the survey and other city costs, the city charged the neighborhood group for $2,000, one of several factors that made the meeting a contentious one.

In other matters, the city received official paperwork last week from a citizen's group notifying officials of its intent to gather signatures to get a measure on a city ballot which would split Glendora into election districts.  The measure would divide the city into five separate districts, each of which would elect its own council member. Currently four of the five current Councilmembers live in one proposed district. If proponents of the measure were to be successful, three of those Councilmembers would be forced to leave the Council. The paperwork on the ballot measure was submitted to the city by Mark Smith, a critic of the Bonnie Cove and Gladstone project, and Randy Ray.  A political action committee, called Glendorans for Equal Representation, was formed by Smith, and is awaiting state approval. Smith said he had personally researched and written the measure, which he said was about fair representation.  Proponents cite that residents like the idea that they are represented by a specific person who lives in their neighborhood.  Opponents assert that the measure is not a good idea as it will force Councilmembers to take a more narrow focus rather than a city-wide focus.

LA PUENTE

The city might set loose guidelines for City Council members seeking information from city contractors. Officials said they want individual council members to notify the city manager whenever they request information from a contractor. They also want contractors to give any responses to the city manager, who will then send it to the rest of the council. The proposed guideline was prompted by a committee already reviewing service contracts in the city, according to a staff report. Council members say they have not had problems in the past, but want to make sure there continues to be a level playing field.

If approved, Mayor Louie Lujan said he wants the guidelines to be "memorialized," or adopted in the City Council's policy and procedures manual. Council members are not mandated to follow the manual's policies. Lujan said he did not want to adopt an official resolution because it would be more difficult for future councils to undue. Officials say the guidelines would be an advantage for the council and staff members. La Puente has no policies outlining procedures for council members individually contacting a city consultant. The guidelines would apply to city-contracted consultants, such as the city attorney or the city engineer. Councilwoman Lola Storing - who opposes the guidelines - said she would rather see a policy that would prohibit council members altogether from meeting with contractors individually about city issues.

LA VERNE

A proposed Sprint/Nextel cell tower in the north part of town was denied by the Planning Commission. The unanimous decision came after more than a dozen nearby residents complained about the location of the tower, which would have been about 40 feet from Oak Mesa Preschool. Residents complained that radio frequency emissions from the tower may pose health risks to students at the school. They also questioned the appropriateness of the design. The design called for the cell tower to be shrouded from view atop a newly constructed 58-foot flagpole. Community Development Director Hal Fredericksen said Sprint/Nextel could appeal the Planning Commission's decision or submit a new application for a tower at a different location or with a different design. Cell service in north La Verne is spotty because the only tower north of Base Line Road in the vicinity is on county land near Leroy Boys Home, Fredericksen said.

POMONA

Interim City Manager Linda Lowry was appointed the city's top administrator at the Council meeting held on March 3rd 2008.  City Attorney Arnold Alvarez-Glasman made the announcement immediately after council members emerged from closed session.

Lowry, who joined the city in July 2006 as assistant city manger, is the first woman to be city manager, said City Clerk Marie Macias.  Lowry became interim city manager in October after the retirement of Doug Dunlap, who left after seven years with the city.  Lowry was among a group of applicants seeking the post, but she withdrew her application after she was appointed to be the interim. Council members had three finalists in November for the job but the top choice, Brian Williams, turned down the city's offer after taking a position with the Southern California Association of Governments. At the time, council members said they would resume the search in January.  Instead, city leaders opted to hire Lowry citing her knowledge of the city, department directors and personnel.

RANCHO CUCAMONGA

Two months after the City Council approved an affordable housing complex opposed by nearby residents, the Planning Commission gave the initial approval for a similar project on Foothill Boulevard. Commissioners voted 4-0  with Chairwoman Pam Stewart absent. The project now awaits final approval by council members.  The proposed 166-unit apartment complex is on nearly 11 acres on the north side of Foothill Boulevard, west of Center Avenue. Final approval would require a city General Plan amendment to change the land-use designation from commercial to mixed use. Commissioner Lou Munoz reminded residents against the project that the city supports fulfilling a state mandate to provide affordable housing to the community. The project consists of one- and two-bedroom apartments in one-, two- and three-story buildings. Of the 166 units, 33 would be at market rate. Several nearby residents protested the project Wednesday, citing fears of crime and traffic increases.

In other matters the City Council, vexed by the proliferation of political signs during the 2006 election, moved a step closer toward passing an ordinance that would limit the posts. A year after the current City Council expressed dismay that the city was blanketed with neon-colored election signs - and less than nine months away from another City Council election - the Planning Commission drafted an ordinance that would prohibit all signs in the public right of way and limit two signs per candidate or event for each parcel of private property. The ordinance would apply to all signs in the city, including real estate signs, even though it was the onslaught of political signs that council members were most annoyed with. The City Attorney said that  the city can't place greater restrictions on political signs than other signs.

Some council members thought a portion of the ordinance was too limiting and other sections weren't restrictive enough. On Wednesday, the City Council decided to send the ordinance back to a subcommittee consisting of council members Sam Spagnolo and Rex Gutierrez for revisions.

A revised ordinance will likely allow for just one sign per candidate or event for each parcel of private property and allow the free-standing real estate signs used for open houses in the public right-of-way. This represents a provision ironed out at meetings between City officials and representatives of the Citrus Valley Association of REALTORS® and the Inland Valley Association of REALTORS®

SAN DIMAS

The city enacted its first-ever rental assistance program to assist seniors living at a city-owned mobile home park. Rents at the Charter Oaks Mobile Home Estates - where officials estimate more than half of the resident are low income - are due to increase by up to $25 per month April 1, San Dimas officials said. In response, the City Council voted unanimously Tuesday to offer five options, including the rental assistance program, to park residents to help them deal with the increase. Residents of Charter Oaks have been notified of the options. The vote signifies the city's "first concerted effort to put together a meaningful rent assistance program," City Manager Blaine Michaelis said. The program will be administered along similar guidelines as Section 8 assistance. Qualified residents will receive between $25 and $50 credit toward their rent per month, depending on their level of need. They will also be required to apply for Section 8. The money to pay for the credits will come from funds set aside to manage the park. A rental-assistance program has never been attempted before in San Dimas, officials said, and is somewhat experimental. Officials aren't sure how many residents will choose to participate in the program. If the plan proves successful the city might look into implementing it at the other privately-owned mobile home parks in the city. Another option being offered is a city-run shared housing program. Through this option, the city will help to match seniors together as roommates so they can split the cost of rent.

The city is also reminding residents of three existing options available through the management company that administers the mobile home park for the city. Those existing options include using a reverse mortgage to defer the cost of rent and a temporary rent waiver available on a case-by-case basis to residents with short-term financial issues, officials said. A final option is if residents plan to move out of the park within a year, the rent increase will not apply to them.

 
Date Posted: 3/31/2008
Number of Views: 474

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