The now-famous Democratic donkey was first associated with Democrat Andrew Jackson’s 1828 presidential campaign. His opponents called him a jackass (donkey), and Jackson decided to use the image of the strong-willed animal on his campaign posters. Later, cartoonist Thomas Nast used the Democratic donkey in newspaper cartoons and made the symbol famous.
Nast invented another famous symbol – the Republican elephant. In a cartoon that appeared in Harper’s Weekly in 1874, Nast drew a donkey clothed in lion’s skin, scaring away all the animals at the zoo. One of those animals, the elephant, was labeled, “The Republican Vote.” That’s all it took for the elephant to become associated with the Republican Party.
Not all of Nast’s work was about politics, though; he is also credited with creating the modern-day image of Santa Claus (which I suppose is what both Democratic & Republican politicians of today are more synonymous with!).
On August 19, 2024, the Democratic National Committee released its 2024 Platform. It calls for the full repeal of 1031 Exchanges incorrectly referring to them as a tax loophole for the rich.
Targeting 1031 Exchanges for repeal has been a bipartisan strategy over the years. We need to consistently educate both parties. Help educate Congress by clicking this link . It’s a quick process – 30 seconds to send a letter to your Representative and Senators.
1031 Exchanges allow a seller to defer paying capital gains taxes by reinvesting in new properties of equal or greater value.
20% – 40% of all commercial sales and numerous residential transactions involve a 1031 Exchange, particularly for residential rentals, multifamily, and agricultural land sales.
Repeal of Section 1031 would affect all of our business. Real estate sales would come to a standstill, devastating the U.S. economy and reduction of transaction volume.
Speaking of loopholes and such, you should do some looking at recently signed SB-1211. It significantly expands ADU opportunities effective January 1, 2025. This from the folks at Allen Matkins;
Key takeaways:
- For existing multifamily projects, you can now by right build eight detached multifamily ADUs per parcel (previously only 2) which comply with the limited standards in Government Code § 66323(a)(4) (18’ height and 4’ rear/side yard setbacks). This allows better scale and drives down per-unit costs.
- At eight per parcel, if you have a multifamily project with multiple legal parcels, you can build several clusters of eight throughout the project.
- If you convert or replace a garage, carport, covered parking structure, or uncovered parking space with an ADU, you do not need to replace the lost parking.
- If the project is within a half-mile of public transit (e.g., a bus stop or train station), the municipality also cannot require any parking for the ADU.
- “Livable Space” is now expressly defined as follows: “a space in a dwelling intended for human habitation, including living, sleeping, eating, cooking, or sanitation.” This is helpful because several municipalities have resisted the interior conversion of non-livable space under Government Code § 66323(a)(3), such as ground floor retail, which is now clearly outside the definition of livable space.
So, if you have underutilized parking or retail space maybe we should be talking.
I know I have talked about this before, but don’t be stubborn like a mule about having an estate plan. Unless you want to punish your heirs, please get with an attorney and get an estate plan put together. We are entering an era of the greatest wealth transfer in history – estimated at $84 trillion. Wills and trust and health care directives are critical. But equally important are beneficiary designations and powers of attorneys. Who’s running the show, both before and after you go? I can’t tell you the number of clients we deal with that died without a will or trust and the years and cost the heirs have gone through. And on the easier side, how many heirs knew nothing of where to look for keys, leases, account access and key contacts (lawyer, accountant, property manager). Lastly, please talk to your advisors about Prop 19 which we are finding to cause heirs to be forced to sell their properties (commercial, houses and vacation homes) because the new market property tax re-assessment upon death.
Nick’s Numbers
This month I am sharing a chart that shows CRE loans maturing by property type and by lender type. The unanswered question at this time, is of all of the 2024 maturities, how many successfully refinanced and how many are in distress (default) or pre-distress (short term extension of the loan)? Of the successful refinances, what has happened to the cash flow (or lack thereof) of its owners/investors? This “extend and pretend” approach is creating a wave of debt all counting on rates to go down.
If you would like an analysis of your properties’ value or discuss what you should be doing concerning interest rates or inflation and their impacts on your business, tenants, or property, I’d be happy to talk. (Nick Zech, 858-232-2100, nzech@cdccommerical.com).
So, as we enter our quadrennial exercise of democracy at the beginning of this month, I wish for you and your families a thankful and joyous Thanksgiving holiday at the end of it. I am sure we will all be happy by the end of next week to no longer be getting political emails and text messages! However, with half the country sure to be disappointed, I hope that all can appreciate this month’s story.
The Man, His Son and Their Donkey
A man and his son were once going with their donkey to market. As they were walking along by its side a countryman passed them and said, “You fools, what is a donkey for but to ride upon?”
So, the man put the boy on the donkey and they went on their way. But soon they passed a group of men, one of whom said, “See that lazy youngster, he lets his father walk while he rides.”
So, the man ordered his boy to get off, and got on himself. But they hadn’t gone far when they passed two women, one of whom said to the other, “Shame on that lazy lout to let his poor little son trudge along.”
Well, the man didn’t know what to do, but at last he took his boy up before him on the donkey. By this time, they had come to the town, and the passersby began to jeer and point at them. The man stopped and asked what they were scoffing at. The men said, “Aren’t you ashamed of yourself for overloading that poor donkey of yours and your hulking son?”
The man and boy got off and tried to think what to do. They thought and they thought, till at last they cut down a pole, tied the donkey’s feet to it, and raised the pole and the donkey to their shoulders. They went along amid the laughter of all who met them till they came to Market Bridge, when the donkey, getting one of his feet loose, kicked out and caused the boy to drop his end of the pole. In the struggle the donkey fell over the bridge, and because his feet were tied together, he drowned.
“That will teach you,” said an old man who had followed them. “By trying to please everybody, he had pleased nobody, and lost his ass. Moral: If you try to please all, you please none.
