The difference between death and taxes is death doesn’t get worse every time Congress meets.” – Will Rogers
Well it looks like politics will remain noisy but won’t fundamentally contaminate the economy. The recent Fed actions to raise rates signals their confidence in the economy and their attempt to stave off future inflation. Rising interest rates, of course, cool investor activity and slow transaction activity. Also as interest rates rise so do CAP rates and subsequently, all the value built up over the last few years will slowly disappear. We will soon be facing the classic investor conundrum of wanting “the return of your money more than the return on your money.”
The good news is that steady hiring and low local unemployment levels are finally supporting higher wages and increased spending. This is all a positive for commercial property demand and owners. Unemployment and market prices are finally at pre-crisis (2007) levels. County unemployment is at 4.2%, down from January’s 4.55 and last February’s 4.8%. On properties under $2.5 million, sales volume rose 12.99% and pricing was up 5.5% from a year ago. Inventory shortage is the next step on the chart.
Credit is tricky. It seems to work against us more than it works in our favor, and in recent years, there’s been a push to improve the system. In this vein, the three major credit bureaus (Equifax, Experian, and TransUnion) recently decided to make a change that will help 12 million consumers in the U.S. According to the Consumer Data Industry Association, the three bureaus will change their standards for reporting tax lien and civil judgement data. If the data doesn’t include a complete list of the person’s name, address, social security number, or date of birth, it won’t be included, and, according to MarketWatch, most liens and judgements don’t include all of this info. The change will go into effect around July 1st. Paid tax liens stay on a person’s report for seven years.
Bankers argue this is a bad move because they’ll have a harder time gauging creditworthiness for loans. As a result of this change, 12 million U.S. consumers will probably see a boost in their score. How high? That depends on a lot of factors, including what their score looks like to begin with. Earlier this year, the Consumer Financial Protection Bureau (CFPB) put out a call for public feedback on credit reporting. They want to research the possibility of using other information, like rent and bill payments, to gauge credit. The idea is: if your credit sucks but you have a history of on-time rent payments, that history should be included in your report, too, as it may help boost your score.
Assembly Bill 1732 went into effect on March 1, 2017. It added language to the Health and Safety Code to require all single-user toilet facilities be identified as all-gender toilet facilities. That means most every restroom in a strip center or small office building needs to have a new sign on it. You can Google “all gender restroom sign CBC 11B-703.7.2.6.3” and find what you need to buy
While on the subject of compliance, AB2093 now requires further disclosure with Tenants and in leases with regards to ADA Compliance and CASp reports. If you are using the AIR lease forms, they have been updated, if not you should review your form with a real estate attorney immediately.
To comply with AB2093, commercial landlords generally must do the following:
- Disclose in every lease of commercial property whether the property being leased has been inspected by a CASp.
- If the property has been inspected, and there have been no alternations that would change the property’s compliance with accessibility standards, provide a copy of the CASp report at least 48 hours before the lease is signed. The report may be provided with an agreement that the report will remain confidential except as necessary to complete corrections the tenant agrees to make.
- If the property has been inspected and the CASp report indicates that the property complies with accessibility requirements, a landlord must provide a copy of the current disability access inspection certificate and the inspection report within seven days of the date of the execution of the lease.
- If the property has not been inspected or if an inspection certificate has not been issued indicating whether the property is in compliance, then a landlord must make the following additional disclosure in its lease: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”
Well as the noise and action of politics and bureaucracy crowd your life, just remember that complexity is a subsidy or in other words, one man’s rule is another man’s gain . Look at golf, a simple game (hit the ball into the hole in the fewest strokes) with only 34 rules (yet the rule book is 204 pages and ½ inch thick!). I guess if it were easy (life, real estate or golf) then everyone would be good at it. Hope you enjoy the story.
The Masters is one of the four major championships in professional golf. The Masters is scheduled for the first full week of April, and it is the first of the majors to be played each year. Unlike the other major championships, the Masters is held each year at the same location, Augusta National Golf Club, a private golf club in the city of Augusta, Georgia.
The tournament has several traditions. Since 1949, a green jacket has been awarded to the champion, who must return it to the clubhouse one year after his victory, although it remains his personal property it is stored with other champions’ jackets in a specially designated cloakroom. The Champions Dinner, inaugurated by Ben Hogan in 1952, is held on the Tuesday before each tournament, and is open only to past champions and certain board members of the Augusta National Golf Club and the previous Champion gets to pick the meal. Beginning in 1963, legendary golfers, usually past champions, have hit an honorary tee shot on the morning of the first round to commence play. This year we will all sorely miss Arnold Palmer.
The Masters is unlike any other golf tournament and despite the exclusivity and prestige of the event, food prices at the concession stands remain ridiculously cheap. Augusta National’s famous pimento sandwich is the star of the show and costs just $1.50. The most expensive food items on the menu are the grilled chicken wrap and the classic chicken sandwich at $3.00 each. A domestic beer will set you back $3.00. Someone could even order every single item on the Masters’ breakfast menu for a total of just $0.50 more than a water bottle at the Super Bowl.
Thousands of people are welcomed, guided, fed, assisted, and given a chance to buy a wide range of Masters memorabilia. It is all done by very kind people who demonstrate southern hospitality, enabling thousands of visitors to enjoy great golf in a beautiful setting.
Over the weekend, you may meet Lynn Swann, a former Pittsburgh Steeler (inducted into the Pro Football Hall of Fame) and a member at Augusta National or Condoleezza Rice, one of three women members at Augusta National.
Augusta National Golf Club was founded by Bobby Jones, one of the greatest golfers of all time, and Clifford Roberts in 1933. Bobby Jones wanted an elegant retreat for his friends where they could enjoy each other and golf. He and Roberts created a tone and atmosphere that remain to this day.
My favorite Augusta National story is about the Eisenhower tree. This was a huge loblolly pine that stood right in the middle of the 17th fairway. President Eisenhower, an ardent member of Augusta, visited 45 times (5 before he became president, 29 while he was president, and 11 times after he retired from the presidency). Eisenhower was an enthusiastic golfer and this tree was driving him crazy — because he kept hitting it. Finally, in 1956, Eisenhower went to the Board of Governors meeting as a member and made a motion to cut the tree down. Cliff Roberts, president of the club, ruled him out of order. Ike, of course, accepted the ruling as a mere member.
Imagine the moment.
Here was a retired five-star general, former commander of the Allied forces in Europe, who was at the time the extraordinarily popular president of the United States – and he was ruled out of order.
No one could dictate. Not even the President. Everyone has to abide by the rules. This is the spirit of Augusta National and the spirit of the great championship that occurs there every spring.
