"All money nowadays seems to be produced with a natural homing instinct for the Treasury." - Prince Philip – Duke of Edinburgh
With local jurisdictions placing Community Facilities Districts, Assessment Districts, Bond Issues and other taxing measures on ballots REALTORS® should be ever mindful of the total tax burden on a property. As local jurisdictions look for new ways to increase revenues, private property will continued to be viewed as a funding source. Those involved with organized Real Estate will need to continually monitor the situation on behalf of the REALTOR® community.
FEDERAL:
NAR: Moratorium By FDIC Temporarily Helps Protect The Safety And, Soundness of Banking System
In late July the Federal Deposit Insurance Corp. (FDIC) of a six-month moratorium on Industrial Loan Company (ILC) applications marks a positive turn of events in the campaign to protect the separation of banking and commerce.
Recent ILC applications by Wal-Mart and Home Depot highlight serious concerns about the dangers of mixing banking and commerce. NAR has repeatedly spoken out at both congressional and FDIC hearings and in letters to key federal officials on the importance of keeping banking and commerce separate. NAR has stressed the risks to the financial system that would come with a bank owned by a commercial firm that may not have the ability to exercise independent credit judgments.
The moratorium provides that the FDIC will not make any final decisions or accept any future applications for deposit insurance or notices of change in control for ILCs during this six-month period expiring on January 31, 2007. The action also provides the FDIC with a suitable time-frame to evaluate the need for clear-cut statutory, regulatory, or policy changes. NAR urges the FDIC to narrow the loophole that allows retail and commercial firms to own ILCs. In addition, NAR supports swift congressional action on the protection of the separation of banking and commerce by passing bipartisan legislation – The Industrial Bank Holding Company Act of 2006 (H.R. 5746) – before the current legislative session ends in the fall.
FTC Increases Fees for Do Not Call Registry Access
FTC has gone forward with its plan to increase fees for access to the Do Not Call Registry. For individual area codes in excess of the five free codes, the fee will jump from $56 to $62. For access to the entire registry, the fee will increase from $15,400 to $17,050. The new fee schedule takes affect September 1, 2006.
NAR voiced its opposition to the fee increase in its May 2006 comment letter. FTC quoted heavily from the NAR letter in its rule-making. Nevertheless, the Commission chose to retain the five free area code model because it is less costly to administer than a system that accounts for the size of a business in determining eligibility for free or reduced cost access to the registry. The FTC will once again review its policy next year.
STATE:
SB 521 – TRANSFER TAX - (Torlakson) OPPOSE - would authorize the Contra Costa Board of Supervisors to impose a document recording fee to generate funds for affordable housing. C.A.R. is opposing SB 521 because it will add to the cost of owning a home and may start a tidal wave of counties hoping to look to real estate to fund any number of other programs. While C.A.R. continues to be a leader in the fight for housing creation, the association believes it sets a bad precedent to fund affordable housing by making housing less affordable.
In general law cities, the total amount of the county and city documentary transfer taxes is limited to $1.10 per thousand dollars of the purchase price. Charter cities, however, can levy taxes without state authorizing legislation like Richmond in Contra Costa County which has a transfer tax of $7.00 per thousand dollars of the purchase price. Therefore, in the city of Richmond, the total transfer tax is $1.10 plus $7.00 or $8.10 per thousand dollars of the purchase price. As a result, a home buyer purchasing a $500,000 home in the city of Richmond already has to pay a documentary transfer tax of $4,050. SB 521 will add to the already substantial fees and taxes already paid by homebuyers.
California Budget Update
On the evening of June 27th, the California State Legislature approved a balanced budget that funds state services and pays down debt.
There are no general tax increases in this budget and it does not raise fees in our state universities and colleges, while lowering fees at community colleges. Additional state funds were included for the state’s emergency trauma care centers as well.
Here are some key points:
K-12 Education
- Full funding for K-12 education under Proposition 98, including special funding for music, art and physical education programs.
- Spending on kindergarten through high school will soar 10%, increasing from $44.6 billion this year to $49.1 billion in the new fiscal year. Proposition 98 funding provided by the state general fund and local property taxes will increase spending from $7,402 per pupil in the current year to $8,291 next year, an increase of $889 per pupil. That takes us from 43rd in the nation to a level much closer to the national average.
- The budget also provides $50 million to expand preschool programs in our highest priority schools.
- The budget also includes over $500 million in one-time discretionary funds, 75% of which will go directly to schools for their priorities.
Higher Education
- The cost per course unit will go down by $6 at community colleges, from $26 to $20 per unit.
- UC and CSU fees were maintained at their current levels.
Human Services
- An increase in funding for the Needy Families Program, which helps those in need get back to work and off assistance.
- Foster care and child welfare programs receive a boost of $25 million above the $50 million the Governor asked for.
Health
- An additional $10 million in funding for our state’s trauma centers.
- There are no reductions in health programs.
- Additional funds for work support programs for persons with developmental disabilities.
Transportation
- Proposition 42 is fully funded and another previously borrowed $1.4 billion is returned to cities and counties and state highway projects. As a result, more funds will be available to improve local streets and roads.
The final proposal provides for a balanced budget as mandated by the State Constitution. In total, it is based on $103.4 billion in available General Fund resources, including a reserve of $2 billion.
MLS ballot initiative fizzles.
A ballot initiative spearheaded by attorney David Barry failed to gather even a modicum of support in its efforts to qualify for the November ballot, according to information provided by the California secretary of state’s office today. Barry reportedly was unable to secure a single supportive reported signature for the “Open MLS” initiative during his statewide collection efforts over the past several months.
For more than two decades, Barry has brought over a dozen legal actions against C.A.R. and organized real estate, yet his clients have never obtained a judgment against associations of REALTORS®, except in one case on a narrow legal issue pursuant to a settlement to avoid the costs of trial.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently announced it received a favorable ruling from the San Diego Superior Court in its ongoing malicious prosecution complaint against Barry and plaintiff Arleen Freeman. In 1997, Freeman sued C.A.R. in federal court, lost on summary judgment, and a U.S. Court of Appeals upheld C.A.R.’s dismissal. Despite these clear rulings, Freeman re-filed against C.A.R. in the same federal court and also sued the attorneys in the case. The U.S. Ninth Circuit Court of Appeal upheld all of the district court’s dismissals in C.A.R.'s favor for the second time.
The Superior Court agreed with C.A.R.’s position that no reasonable attorney would think there could be another lawsuit on the same matter that had already been dismissed by the federal district court and the federal court of appeals. The Court found C.A.R. demonstrated sufficient evidence of malice to go forward with the case against Barry.
REGIONAL
Los Angeles County
Semi-trailer trucks will be prohibited from parking on certain streets in unincorporated areas of the County. The Board of Supervisors approved a resolution which would prohibit the parking of commercial vehicles in the unincorporated areas of South Whittier, Rowland Heights and Altadena. In Rowland Heights commercial vehicles weighing more than 10,000 pounds will be prohibited from parking on the west side of Nogales Street between 407 feet south of Colima and Pathfinder Roads, and on the east side of Nogales Street, between 291 feet south of Colima and Pathfinder Roads.
San Bernardino County
The Board of Supervisors has placed an amendment on the November ballot which would increase the salary for the Board of Supervisors from $99,088 plus benefits to $128,091 plus benefits, while limiting the terms of Supervisors to not more than three terms (12 years). If approved by voters the amendment would take effect beginning with the 2007 term of office.
LOCAL
AZUSA:
Robert Garcia has been appointed as Police Chief. Garcia is a 24 year veteran of the Azusa Police Department and is the first Latino Police Chief in Azusa’s 93 year history. Garcia will be paid $148,000 a year heading up a department of 61 sworn officers. Garcia plans to add eight more officers over the next decade. The City has recommended that the developer of 520 acres below the forest be allowed to regrade home sites to avoid trucking tons of dirt through city streets. Officials from the 1,250 Rosedale housing development discovered a miscalculation in the original grading plan that underestimated the amount of excess dirt.
CHINO:
Future homeowners in the proposed College Park Development may be required to pay $30 million in future taxes to help pay for future schools based on the square footage of their property. The proposed 470 acre development borders Euclid and Eucalyptus Avenues is slated for up to 2,200 homes. The special tax known as a Community Facilities District (CFD) or Mello-Roos district is a way to raise money for schools and other public projects. Bonds provide the money for the projects in the area, while the future homeowners pay for those projects through taxes over a specific period of time. As property owners the developers will decide, by a two-thirds vote, whether to create a special tax district at College Park. Although ballots were counted, CVAR was unable to get an answer on the outcome from the Chino Unified School District. CVAR was told that the district was in the process of “agenda building” and would not be able to answer the question. For a definitive answer call the Chino Unified School District at (909) 620-1201.
The City of Chino has authorized the sale of $47 million in RDA bonds to pay for several city projects including building more ballfields and a stadium at Ayala Park while expanding it by another 65 acres. The bonds will be paid back by property tax revenue generated from properties within the city’s RDA areas. The Council also approved the purchase of property on Schaefer Avenue near Central Avenue for a 65,000 square foot police station to be built within 3 years. The 3.67 acre site will be purchased for $1.9 million from Martin and Leona Chihigoyenetche.
CLAREMONT:
The City Council unanimously agreed to place on the November 7th election ballot a bond for the purchase of Johnson’s Pasture. The decision came after voters rejected the creation of a Parks Enhancement Assessment District to fund the acquisition of Johnson’s Pasture. The measure lost by a 56% to 44% margin. If the November bond measure should pass by a two thirds vote, homeowners would be assessed approximately $24.73 per year per $100,000 of assessed valuation. A home with an assessed value of $500,000 would be charged approximately $123.65. The Council also passed a new housing law impacting new residential development. Under the new ordinance, builders of five units or more must sell at least 15% of their units to those with moderate incomes or 10% to low-income buyers. A provision requires that a percentage of rental units be made available for low and very-low income residents. Under the new ordinance units provided must be affordable for 45 years and rental units for 55 years. Additionally the City approved an affordable housing development for Baseline and Towne Avenues. Council directed that the project be rental for 15 years, then revert to ownership.
DIAMOND BAR:
A ballot measure for a new library has qualified for the November ballot. Citizens for a New Diamond Bar Library qualified the measure which would proceed with construction of a new $13 million library. If approved in November, single-family homeowners will pay $89 per unit, multi-family residents will per $64.80 per unit, commercial properties will pay $80.50 and industrial properties $60.00 per parcel per year. The measure will need two-thirds voter approval to go into effect.
EL MONTE:
The City Council and city staff are discussing how to address El Monte’s $6.1 million budget deficit. Among proposals are to cut some crossing guard positions, eliminate the Young Americans Drill Team, request officers involved with the TORCH program – a program designed to help reform at risk youths to volunteer their time and to close one of the city’s fire stations. Officials said that the preliminary general fund budget for 2006-200- includes an estimated revenue of $55.2 million and an expenditure budget of $61.3 million, or a budget deficit of $6.1 million.
GLENDORA:
The developer in a land swap initiative has outspent its opponent by a 9-1 margin. Texas based NJD Ltd., owner of land in the hills on the northeast edge of Glendora, listed expenditures and contributions of $293,711 for a period between Jan 1 and June 30th for its Glendora Hillside Protection Committee. The opposing group, Citizens Committee to Project Glendora No on Measure A, listed $31,930 in contributions through June 30th. NJD wants to exchange land with the 107-acre Glendora Country Club and build 338 homes on the property. The land swap would also bring a new Country Club to Glendora.
10 acres of city owned land in the South Hills Wilderness Area, has been granted a five-year lease to a wholesale nursery. Azusa based Colorama Wholesale Nursery will use the site for growing annuals and perennials in 1 and 2 gallon containers. Retail sales will not be permitted in the South Hills Wilderness Area which is north of the Foothill Freeway between Glendora and Sunflower Avenues.
IRWINDALE:
Tim Simpson, an Irwindale resident, has filed claim for damages citing the city’s failure to comply with state and federal laws when he was forced to relocate for Irwindale’s low-income housing project. City officials took the property located at 848 Meridian Street by eminent domain to build a 29-unit, low-income housing project, resulting in Simpson losing his on-site mobile home. Simpson claims that Irwindale violated health and safety codes as well as his due process, forcing his family to be without a safe and decent place to live. Irwindale attorney Fred Galante said that the City settled with Simpson for $10,000 in relocation costs. Irwindale residents will receive priority in the new development and assert that Simpson did not complete the necessary paperwork to qualify for one of the units.
LA PUENTE:
Officials are seeking the public’s input on a 57 acre site known as the “duck farm”. The 57 acre parcel straddling the 605 freeway south of Valley Blvd once owned by Woodland Farms is now in the hand of the Watershed Conservation Authority and will be used as open space. Residents are being asked to review three plans drafted after the Authority’s first meetings in April.
POMONA:
The long vacant Mayfair Hotel building will be renovated into a mixed use project with condominiums and businesses. The property located at the northeast corner of Garey Avenue and Third Street may include 20 live-work lofts and condominiums on the upper floors and businesses on the lower floors.
RANCHO CUCAMONGA
LINC Housing a non-profit affordable housing corporation is converting the former Pepperwood Apartments into low-income housing units. The 230 units at 9055 Foothill Blvd will be available to families earning no more than $34,500 per year. Although 45% of the current Pepperwood residents will be re-located, those earning 60% or less of San Bernardino county’s median income will not be displaced. LINC has said that they are focusing on families with entry-level jobs or who are living on fixed incomes. Those being re-located will be provided moving costs and rental assistance with every attempt to keep them within the City of Rancho Cucamonga.
The Etiwanda School District has approved a resolution to create a Community Facilities District (CFD) that would collect up to $50 million in taxes for construction of new schools and funding additions to existing schools. In lieu of paying school fees, land owners can set up a district that would collect taxes from future homebuyers. The CFD would encompass six developments in Rancho Cucamonga and Fontana. Homeowners in the Etiwanda School District would pay an estimated $675 to $1,800 per year for 30 to 35 years.
ROSEMEAD
The new Rosemead Public Safety Center has officially opened. The 3,000 square foot facility at 3018 Charlotte Avenue features a multi-purpose room, computers and desk space for deputies and a full-service counter staffed by law enforcement technicians.
The City Council has approved the expansion of the city’s mortgage assistance program, which provides loans to prospective homebuyers making less than 80% of the median household income. The Council’s action increases the amount of money available through the program from $40,000 to $75,000 per qualifying household. Under the new guidelines a family of four could make no more than $55,450 per year. The median price of home in Rosemead in August was $465,500
SOUTH EL MONTE
The Council has appointed Anthony Ybarra as City Manager and Ernie Hernandez as Assistant City Manager. Ybarra who served as Assistant City Manager from 2003-2005, and was appointed Interim City Manager in 2005, will receive a three year contract with an annual salary of $120,000. Hernandez who served as South El Monte’s risk manager received a two-year contract and an annual salary of $95,000.
UPLAND:
Upland Crossing, a 355 unit development of single-family and town homes received a 5-0 approval by the Planning Commission. The project will be located on a 30-acre property on the southeast corner of Foothill Blvd and Monte Vista Avenue. Dewey Way and 11th Street are its eastern boundaries. The developer – Lewis Operating Corp will be responsible for extending Dewey Way south from Foothill to 11th St. The project’s proximity to Cable Airport requires two airport land-use commissioners to review the plans. The airport land-use commission is made up of the Planning Commission and two other individuals with airport use experience. The units will range in size from 1,100 square feet to 1,700 square feet, with sales beginning as early as mid-2007.
San Bernardino County Superior Court Judge Christopher J. Warner ruled for the Colonies Project in citing that San Bernardino County and not the developer is responsible for flood-control facilities at the Upland site. Colonies Partners LP successfully argued that the County not only unjustly took the developers’ land for flood-control purposes, but also should be responsible for building and maintaining flood-control facilities on the land in perpetuity.
WEST COVINA:
West Covina is being considered as one of 15 possible stops between West Los Angeles and Ontario on the first leg of an estimated $7 billion Magnetic Levitation Elevated Train (MagLev) project being eyed by the Southern California Association of Governments. West Covina Mayor Steve Herfert was one of 20 members of a delegation which traveled to Shanghai China to see a similar train in operation. If completed the West Covina stop would be in the proximity of the Westfield Shoppingtown.
The City Council voted 302 to sell development pads to the Charles Co for $1.1 million. The developer known for creating shopping centers purchased nearly 4 acres of non-graded land at the former BKK landfill. Although the developer did not present any plans for the site, the Council approved the sale without plans because the developer was in need of meeting a 60-day deadline for a 1031 tax deferred exchange.
WALNUT
Rough grading has continued on the $100 million Walnut Hills project, which will bring 268 single-family detached homes to 551 acres on Amar Road between Creekside and Countryside Roads. City officials along with the developer Standard Pacific Inc of Irvine, believe the entire project will be completed by 2010. The low density development will devote almost 400 acres to open space.