“Be thankful we’re not getting all the government we’re paying for.” Will Rodgers

Just as we were concerned about proposed rent control issues, along comes ACA1, a measure which proposes to make raising taxes easier. This pertains to local bonds and special taxes. It is opposed by the Howard Jarvis Taxpayers Association.

WHAT WILL ACA1 DO? ACA1 Will lower, to 55%, the existing threshold of two thirds of the votes required for a local bond or special tax, if the money is to be used for “public infrastructure” or “affordable housing”. It will, essentially, make it easier for politicians to create additional fees.

The definitions are somewhat loose as to what is meant by “affordable housing” and Infrastructure. You can be sure that these definitions will be pushed to the limit to enact new “special taxes” and bonds.

DEFINITIONS. Affordable housing is something that is sorely needed in most all areas of California. How affordable is affordable housing? For the sake of this legislation, affordable housing tenants can be defined as making up to 150% of the current county median income. In my mind, we are in dire need of low income housing. Lack of low income housing has added to our homeless problem and needs to be addressed. Census information shows median LA County income as $77,546. 150% of that median income would be $116,319. Thus, any taxes or bonds would be passed on to proposed middle income rental properties, as well.

Infrastructure is another definition which can be relatively wide ranging. Including obvious items such as parks, and sewer repair, infrastructure can also include such things as broadband hookup and library facilities.

OTHER PLANS There are legislators looking into the fact we have our property assessment in California based on sale price. Other states reassess at will, which can be tricky if you own a large building and had not planned for a substantial property tax raise.I once owned a building in Nevada and these reassessments can be a surprise, When you look at a state like Texas which already has a very high property tax rate of 2.5% which I have heard they are thinking of 3.5 this is a very big deal. A tax raise like this could wipe out your cash flow, especially if you are a new owner.

BE VIGILANT Join your Apartment Owners Association, keep track of legislation that is coming so that you can support those that support you.

“The road to success runs uphill.” Willie Davis

What we at PRS PROPERTIES CAN DO. We try to keep pending legislation and proposed legislation in our newsletters and are always available to chat. We can supply you with rent and sale comparables in the area of your property. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities.We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.