LGR REPORT
June 2007
THOUGHT FOR THE MONTH:
It is knowledge that influences and equalizes the social condition of man; that gives to all, however different their political position, passions which are in common, and enjoyments which are universal.
Benjamin Disraeli
British politician (1804 - 1881)
FEDERAL:
House Committee Passes FHA Reform Bill
The House Financial Services Committee passed H.R. 1852, a bill to reform the FHA mortgage insurance program. The bill increases the FHA loan limits nationwide, eliminates the 3% downpayment requirement for first time homebuyers, streamlines FHA purchases of condominiums, allows FHA to risk-based price loans, eliminates the cap on the number of reverse mortgages FHA can insure, and increases the loan limits for multifamily properties in high cost areas. The bill also includes a provision that would take excess revenues created by these changes and puts them into housing counseling, technology improvements for FHA, and an affordable housing fund. The majority of those who objected to the bill opposed the fund. The bill passed the Committee 45-19 and is expected on the House Floor in early June.
House Financial Services Committee Votes to Keep Banking and Commerce Separate: Passes Bill to Close the ILC Loophole
On May 2, 2007, the House Financial Services Committee overwhelmingly passed H.R. 698, the “Industrial Bank Holding Company Act of 2007,” which strengthens our national policy against mixing banking and commerce by closing a loophole that allows commercial companies, such as Home Depot, to own certain state-chartered, federally regulated banks H.R. 698, introduced by Representative Paul Gillmor (R-OH), the Ranking Member of the Financial Institutions Subcommittee, and Chairman Barney Frank (D-MA), currently has strong bipartisan support with 139 cosponsors.
The Committee’s consideration of H.R. 698 was one week after NAR Immediate Past President Tom Stevens testified in support of the bill and explained, “banks should be in the business of banking not selling cars, home improvement supplies or real estate brokerage. When banking activities and commercial activities mix, it can be a recipe for disaster – bad for the economy, bad for businesses and bad for consumers.”
H.R. 698, the “Industrial Bank Holding Company Act of 2007,” is expected to be considered by the full House in May.
STATE:
SB 670 – Correa - Private Transfer Taxes. C.A.R. Legislation Would Place Responsible Limits on "Private" Transfer Taxes
C.A.R. is sponsoring SB 670 to eliminate private transfer taxes. While the legislators on the Senate Transportation and Housing committee agreed that the current law is inadequate, they are also sensitive to concerns raised by environmental and affordable housing advocates. Therefore, they were reluctant to "throw the baby out with the bathwater," and prohibit all such fees. To address these concerns, C.A.R. has amended the bill to severely restrict the use of these fees and outlaw them entirely when proceeds are used for personal gain or when the fee is not physically or geographically related to the development. Despite these very reasonable amendments, SB 670 remains controversial and C.A.R. is asking all REALTORS(r) in this area to contact their Senator to ask for a "Yes" vote on the amended bill. This bill is scheduled for votes in the Senate Transportation and Housing committee and in the Judiciary committee. Amendments to SB 670 are: * Require that the transfer fee beneficiary annually file an audited financial statement which also includes a report on the progress that has been made with regard to providing the public benefit. This requirementwill provide accountability and needed oversight of the recipients of the transfer fee funds. * Require transfer fee payment obligations be imposed for a particular number of years (but in no case longer than 30 years) or until a particular dollar amount has been raised, whichever comes first. C.A.R. has identified a number of instances in which the transfer fee payment obligation has been imposed in perpetuity (forever). * Limit transfer fees to 1.0% of the home sale price. There are currently no limits on such fees and C.A.R. found an instance in which the fees total 1.75% of the home sale price - that's over $10,000 on a median priced home! * Provide disclosure of the existence of a transfer fee payment obligation via a separately recorded document. The transfer fee payment obligation is often buried in the deed to the home - requiring recordationof a separate document will insure that prospective homebuyers are aware of the obligation. * Limit the use of transfer fee funds to facilities or services that provide a "public benefit" in the same county as, or within 25 miles of, the development. This limit will prevent the transfer fee funds from being used for causes that bear no relation whatsoever to the development.
SB 670 is one of C.A.R’s top priorities this year. We urge all REALTORS® to contact their State Assemblymember and State Senator and ask for their support.
SB 464 (Kuehl) Ellis Act C.A.R. is OPPOSING SB 464 will force landlords (even for single-family homes) to stay in business for at least 5 YEARS and requires that landlords give ALL tenants a ONE YEAR notice of termination of tenancy, should ANY tenant be a senior (62 years of age or older) or disabled. C.A.R. opposes SB 464 because it is an outrageous attack on private property rights and because it will cause fewer rental units to be available to families who need them. In 1985, C.A.R. successfully sponsored the "Ellis Act," which prevented local governments from passing laws that restricted the ability of landlords of residential property to go out business. Since then, several attempts have been made to severely weaken the Ellis Act. SB 464 is one of the most radical attempts yet to control private property and those who own it. SB 464 will make possible for local governments to restrict the ability of landlords to go out of business unless they have owned the property for five years. This effectivelyforces a landlord to remain in business that long and makes residential rental property a less attractive investment. Additionally, SB 464 will require, in rent control jurisdictions, that all tenants in a property be given a ONE YEAR notice of termination of tenancy if EVEN ONE unit is occupied by a senior (62 years old or older) or someone who is disabled. This bill, if passed, will only apply to properties purchased on orafter March 27, 2007.
C.A.R. supports AB 1309 (C. Calderon) Mobile home Rent Control, which was scheduled to be heard by the Assembly Housing and Community Development Committee on April 25, but was removed from the committee calendar prior to its scheduled hearing. California has had vacancy decontrol for apartments since 1995 through the Costa-Hawkins Rental Housing Act, which C.A.R. successfully co-sponsored. AB 1309 will insert vacancy decontrol provisions into local mobile home rent control ordinances. As with apartment vacancy decontrol, this bill does not prohibit rent control nor does it raise rents for existing tenants beyond that permitted by local ordinance. In fact, vacancy decontrol only permits an owner of a mobile home park to raise space rent to market price for a new resident when the space or mobile home unit is voluntarily vacated, which usually happens when the unit is sold. C.A.R. supports AB 1309 because vacancy decontrol removes some of the negative impacts caused by rent control, which include discouraging investment and construction of new mobile home parks.
C.A.R. opposes SB 127 (Kuehl) Property Transfer Disclosures, which passed the Senate Judiciary Committee on April 24. As introduced, this bill would have required all transactional disclosure documents to be delivered within three days of the “execution” of an offer to purchase. The bill was amended two weeks ago to require all transactional disclosure documents to be delivered within three days of the “acceptance” of an offer to purchase. As recently amended last week, this measure would require all transactional disclosure documents to be delivered within ten days of the “execution” of an offer to purchase. C.A.R. continues to oppose SB 127 because it imposes a “one size fits all” time frame which will make compliance difficult for many transactions.
LOCAL
BALDWIN PARK:
The city is continuing a plan to curtail public solicitation by day workers. The City Council voted 3-2 to introduce a revised version of a no-soliciting ordinance, which if approved, would ban commercial solicitation in areas intended for vehicles, landscaped parkways and areas intended for pedestrian travel. The ordinance now seeks to prohibit all commercial solicitors, though property owners will be allowed to use their parking areas for commercial solicitation and garage sales. It also states that pedestrians and persons on wheelchairs must have three feet available to access walkways
DIAMOND BAR:
The Council has held off approving more than $450,000 for an environmental study to turn the Diamond Bar Golf Course into a commercial center. Since the early 1990’s the Los Angeles County owned golf course has been viewed for its potential as a retail center and city park. The location along the 57 and 60 freeways makes the site attractive to development. City officials are seeking input from the public. The 6,801 yard par 72 course, which attracts golfers from around Southern California has been open since 1964 and includes a large banquet facility. If a project for the site were to reach fruition a golf course could still be located in the city with potential locations being the site of the current Aera Energy Project or in an undeveloped area between the City and Chino Hills.
EL MONTE:
The City has introduced an ordinance which prohibits people from possessing or consuming open alcoholic beverages on public property and in public places. A violation would be a misdemeanor. Officials assert that the ordinance is needed as the city regularly receives complaints about transients drinking in public parks, flood-control channels and around businesses.
INDUSTRY:
Local officials broke ground on a $125 million car-pool project on the Pomona (60) Freeway, part of a broader effort to relieve congestion on the San Gabriel Valley's major east-west arteries. The project, which will add a car-pool lane in each direction of the 60 between the San Gabriel River (605) and Orange (57) freeways, is expected to be completed by 2010 and will save car-poolers time on their commutes. The Metropolitan Transportation Authority is contributing the bulk of the project's costs - about $76 million. The federal government is pitching in another $19 million, while the L.A. County Sanitation Districts is contributing about $250,000 for landscaping improvements. Sound walls will also be constructed along major portions of the project's 11.5 mile length. About 211,000 commuters use the stretch of the 60 between the 605 and 57 every day, according to Caltrans estimates. The first phase of the project is expected to begin May 21, as workers lay concrete barriers along the outside shoulder of the freeway on the first phase between Azusa Avenue and Crossroads Parkway. Local businesses have donated their changeable message signs along the freeway to provide construction updates to motorists.
LA PUENTE:
Attorneys for the city filed paperwork Monday with Los Angeles Superior Court to acquire the 2.7-acre parcel at 1313-1335 N. Hacienda Blvd. The filing marks the first time in La Puente's 50-year history the city has attempted to take land through these means. The property, includes a strip mall where AnthonyLi's Hobby shop and nearly a dozen other small businesses front the main thoroughfare. Behind the retailers, a patch of open land - making up about two-thirds of the entire property - has been vacant for more than 40 years. Since September, city officials have been trying to buy the land from Victor Gudzunas. The city originally offered $3.5 million. She said the land is now appraised at $3.8 million. Li and other business owners are concerned about the ability to continue their business and make a living. Li said he will have to find another location for his shop, but a move will probably amount to a substantial financial loss. The City states the property's seizure is necessary in order to eliminate blight - namely the undeveloped patch of land behind the strip mall - and to complete an 11.5-acre commercial center with retail shops and mezzanine parking along Hacienda Boulevard at Fairgrove Avenue.
POMONA:
The site of a former Xerox Corp. plant that once was a source of contamination that area residents charged with polluting groundwater is now clean enough for development, according to Xerox and city officials. More than 1,000 area residents filed a class-action lawsuit in the late 1990s against Xerox and two local water providers for allegedly polluting the groundwater, causing cancer, skin rashes and a host of other physical ills. Xerox settled the suit in 2004. The terms of the settlement remain confidential. The suits against the two water providers - the city of Pomona, and Southern California Water Co. (now Golden State Water Co.) - were thrown out in 2004 by a Los Angeles County Superior Court judge. The plaintiffs have appealed the dismissal. Since the early 1980s, when leaked contaminants were initially discovered on the Xerox site, the company has conducted ongoing efforts to clean the area of toxins. The long process is now nearly complete, Xerox and Pomona officials said. A so-called "no further action" letter from the Los Angeles Regional Water Quality Control Board, the regulatory body responsible for overseeing the cleanup, is expected to arrive "within weeks, or within days," said Raymond Fong, deputy executive director of the city's Redevelopment Agency.
ROSEMEAD:
For the first time in the city's history, staff heads and elected officials have developed a list of priorities for the next three years. Economic development, improved communication and enhanced public safety are among the city's top concerns. Staff and council members said Rosemead is lacking in several areas, including its antiquated management system, poor internal communication and division among staff members and elected officials. They identified several external factors that they think will impact them in the next three years, including health care, litigation, natural disasters and a negative perception of Rosemead. Goals identified for the next three years are to improve economic development, organization effectiveness and public safety, and to enhance internal and external communication. Another first on was that the city developed a mission statement: "The City of Rosemead is dedicated to providing exemplary public services for our community."
In other action the City approved $600,000 for a remodel of the Council Chambers. The dais and lighting system will be replaced, the sound system upgraded and the chambers will get new carpeting, paint and wallpaper. Pasadena-based Onyx Architects will assist in the design of the project. Onyx was selected last year to design the expansion of Pasadena's conference center. Built in the 1950s, the council chambers has seen virtually no upgrades except for a ventilation system, and the dais is not handicapped accessible. Once the project is designed, the city will accept bids for construction. The remodel is expected to be completed within a year. The project is being paid for out of the city's capital improvement program.
The city is also looking for ways to cut employee benefits because of a drain on the budget. City officials have been meeting with employees and informing them of possible changes to their benefits and retirement packages, although nothing has been finalized or proposed to the City Council. Estimates show that the city will have to pay up to $12 million out of its coffers for the employee packages and retirement plans.. Costly retirement packages and lifelong health care coverage that currently doesn't cost employees anything will bleed the city's budget if a change is not made, officials said. The city is proposing a "cafeteria plan," which gives $1,200 monthly to each full-time employee. This money could be used to purchase health, dental and vision insurance, or can be taken as cash or deferred compensation. The health package now covers the full cost of any health care plan of the employees choice. Other changes include adding 10 more holiday hours, an increase of vacation days from eight to 10, floating holidays will go from 10 to 20 hours, the introduction of paternity leave and tuition reimbursement. Among the biggest changes will be that retirement health will be eliminated.