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SG Real Estate Volunteers with Project Open Hand

 

As part of our effort to be further be a part of the communities in which we operate, SG Real Estate recently had a staff outing to volunteer for Project Open Hand in San Francisco. Founded in 1985, Project Open Hand is a non-profit organization that provides “meals with love” to critically ill neighbors and seniors. Each day, Project Open Hand provides 2,500 meals and 200 bags of healthy groceries to help individuals as they deal with illnesses, isolation, and the health challenges of aging.

 

 

On Friday, April 27th, we closed our office in Berkeley and went to San Francisco’s Tenderloin neighborhood to the offices and kitchens of Project Open Hand. After a brief tutorial, we got our aprons and hairnets and headed to the kitchen to start our work. By the end of the day, we cut 250 pounds of onions, 150 pounds of carrots, 6 cases of kale, and 1 case of celery for a total serving of 2,750.

 

This was a very humbling experience for our team and one we will happily do again in the near future.

 

FROM THE SOURCE

4 Questions & Answers with Erica Perez, co-owner of Oaktown Spice Shop.

 

 

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1. In order to open your first brick and mortar location, what does a small business owner need to consider in regard to real estate and the location?

There are many factors for business owners to consider: What’s your budget? Who are your ideal customers, and where can you find them? How are they going to get to your location? Is the location walkable for them? What is the area’s foot traffic like? Is there good visibility from the curb? Who are your neighboring businesses? What is the parking like for customers and employees? How accessible is the location? What does the storefront need in terms of a buildout?

2. How did the process of searching for a location differ from your first shop on Grand to your second shop on Solano?

We had a better understanding of our needs the second time around. We knew that we needed more space, and we had an idea of what the buildout would entail. We also knew a little more about how commercial leases work. While we knew we wanted to open our first shop in Oakland, we explored a few different neighborhoods in search of the right fit for our second location.

3. Now that you have two shops, what do you know now that you wish you knew back when you were in the early stages of the business?

Small business owners have to be their own advocates and research every decision carefully. There will be many opportunities to spend your money on services and products, and it’s important to choose wisely.

4. What advice do you have for other small business owners in regard to running a business and having a storefront (or multiple)?

Take the extra time to hire the right people. The more you can create systems for all the things your business does, the better. It makes it easier to train people, to manage expectations and to ensure that your stores maintain the same level of quality.

FROM THE SOURCE

Some of the housing bills Governor Jerry Brown signed in fall 2017 went into  effect on January 1st, 2018. Below is a summary of four of the laws as they pertain to funding, housing, and development.

 

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AB 1505: Inclusionary Housing Requirements Authorized in Rental Projects

AB 1505 supersedes a 2009 California Court of Appeal decision (Palmer/Sixth Street Properties LP v. City of Los Angeles), which held that the Costa-Hawkins Rental Housing Act precluded local agencies from imposing inclusionary housing requirements on rental projects that did not receive government assistance. In Palmer, the city of Los Angeles adopted a policy that required certain housing projects to include affordable housing units that would be subject to a 30-year rent restriction requirement (or pan an in-lieu fee). The Costa Hawkins law allows rental housing owners the right to set the initial rent level at the start of any tenancy.

 

Following approval of AB 1505, a city or county may now adopt an ordinance requiring that, as a condition of developing rental housing units, the housing project must contain a certain number of affordable rental units. Such inclusionary ordinances must include alternative means of compliance, including in-lieu fees, land dedication, the acquisition and rehabilitation of existing units and development of affordable units off site.

SB 2: New Funding Source for Housing

 

SB2, entitled the “Building Homes and Jobs Act”, provides a permanent source of funding for affordable housing by imposing a $75 fee on recorded documents. The fee-which is capped at $225 per transaction per parcel-will be levied on certain real estate transactions. Documents exempt from the fee include home sales and commercial real estate transactions.

 

 

 

AB 73: Housing Sustainability Districts

AB73 provides incentives to local agencies to create housing in Housing Sustainability Districts (HSD), with oversight from HCD, on infill sites with access to public transit. The law sets forth a procedure for a local agency to follow to establish an HSD (which includes a requirement that at least 20 percent of the housing units built within the HSD be affordable) after preparation of an Environmental Impact Report.

 

 

AB 1397: Residential Development Inventory

AB 1397 limits local governments from relying on housing inventory sites that do not have a realistic capacity for housing development. The new law changes the definition of land suitable for residential development in order to increase the number of multifamily sites. Identified sites must be “available” and “suitable” for residential development and have a “realistic and demonstrated potential” for redevelopment during the planning period. In addition, AB 1397 requires housing element inventory sites to have sufficient infrastructure, or to be included in a program to provide such infrastructure, to support and be accessible for housing development. The agency must specify the realistic unit count for each site and whether it can accommodate housing at various income levels.

 

 

Interview with Scott Weiner and Curbed on SB 827  

 

 

 

WELCOME TO ‘FROM THE SOURCE’!

 SG Real Estate is featuring interviews with other real estate experts and professionals in order to provide authentic information and advice from the individuals and companies shaping the real estate industry.

 

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FROM THE SOURCE: 

Q&A with Robert Selna of

Wendel, Rosen, Black, & Dean LLP and

Ari King of SG Real Estate

 

 

 

 What are the two most important factors to consider for someone looking to purchase a warehouse and/or land to legally operate within the California law pertaining to the cannabis industry?

 

The two most important factors are as follows:

A) Zoning:  In order to operate a cannabis business out of a warehouse, the warehouse must be located within zoning in a jurisdiction that permits the cannabis business the purchaser wishes to operate. Every local jurisdiction must comply with state law and operators must obtain both a local permit and a state license. Locals have great latitude to determine which cannabis operations they will permit and the areas in which they will permit them. Many cities have created “green zones,” which identify where cannabis operations are generally allowed. But a purchaser would be wise to look deeper than just a green zone map and also review the specific zoning of the property they are considering.

B) Suitability of the warehouse:  The suitability of the warehouse will hinge on the business the purchaser wants to operate. It is a particularly important consideration for cultivation operations because the state licensing framework places parameters on cultivation types and square footage. An example is as follows: Currently state medical cannabis laws do not allow a single cultivation operation larger than 22,000 square feet under one indoor cultivation license.

 

Are there specific geographic locations where property owners and developers are seeing prices increase significantly? What makes a desirable location for a legal cannabis operation?

A) Oakland: Oakland is a good example. Prices for warehouse space have increased 50%-100% during the past two years and Oakland’s industrial/warehouse vacancy rate is at 2% largely due to cannabis operations occupying all the available warehouse space.

B) Desirable:  Zoned appropriately; near transportation corridor; reasonably safe; distant from schools, youth centers, places of worship.

 

With the federal government causing uncertainty with states that have passed both medical and recreational cannabis, can a developer or property owner of a cannabis site be breaking federal law but not state law if/when their operation is underway?

The general answer is that a cannabis operator in will be violating federal law because cannabis is illegal under federal law. If the operator is located in a state that has legalized cannabis and created regulations for the industry — such as California, Colorado, Washington, Oregon and 20+ other states – and the operator is complying with the relevant state law, they will not be breaking state law.

The bottom line comes down to enforcement. The federal government has issued guidelines for states that have legalized marijuana and Congress has underscored  that the DOJ should not pursue enforcement measures in states with cannabis regulations that comply with federal guidelines. The guidelines include the following: Keep marijuana out of the hands of minors; don’t allow marijuana to cross state lines; don’t allow marijuana on federal property; etc.

 

Fast forward five years, what do you think the cannabis industry will look like from a real estate perspective? Similar to that of wine and/or the agriculture industry? In 2022, what will people be wishing they had done five years ago as it pertains to the industry?

In California, the cannabis industry in five years will continue to keep industrial and agricultural real estate prices higher than they have been in recent memory – in jurisdictions that permit cannabis operations. While the price of cannabis and related products is expected to decrease with legalization, the industry will continue to be very profitable and the need for real estate will not likely subside.

Price will dictate whether cannabis competes for agricultural space with wine or other agricultural products. Presumably there is only so much cannabis the market can absorb.

WELCOME TO ‘FROM THE SOURCE’!

 SG Real Estate is featuring interviews with other real estate experts and professionals in order to provide authentic information and advice from the individuals and companies shaping the real estate industry.

 

 

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FROM THE SOURCE: 

Q&A with Adrian Covert of Bay Area Council and Ari King of SG Real Estate

 

How does Measure AA protect communities along the coast from future potential flooding? Does the threat of coastal flooding mean more developers and city officials will seek to build apartments and housing in cities and create more high-density areas in cities due to California climate change?

 

Vast portions of the Bay Area are at, below, or barely above sea level, and are protected by antiquated levees built decades ago for salt production, or no levee at all. Measure AA will improve flood protection along the San Francisco Bay shoreline by building new levees and restoring wetlands. It’s unclear what the long term consequences of sea level rise will be on development in California. Today, California’s environmental policies are schizophrenic. One the one hand, California has set ambitious carbon reduction and clean energy goals. On the other hand, CEQA incentivizes suburban sprawl over infill development, making it far more difficult to bring down carbon emissions and water consumption than it otherwise could be. In addition, CEQA is making it impossible for the state to meet its housing demand, which drives up prices and drives middle class Californians to other states, such as Texas, where per capita emissions are much higher.

 

Measure AA is being funded by a $12 per year parcel tax. Does that tax apply to current owners and those looking to purchase property in the future in the Bay Area in the 20 year period that the measure is extended through? Who/what determines county/city priority if it is for all 9 Bay Area Counties?

 

Measure AA’s $12 parcel tax applies to every parcel in the Bay Area over the next 20 years, whether purchased now or later. Project proponents, whether cities, counties, NGOs, or private developers, will need to submit proposals to the San Francisco Bay Restoration Authority to be considered for funding.

 

As we all know, more and more people are moving to the Bay Area, how does common-sense regulations over San Francisco’s growing commuter shuttle system work for the average apartment renter or Bay Area renters living near public transportation/in a high density area? What common-sense regulations should apartment renters and developers/property owners know?

 

San Francisco’s commuter shuttles have brought huge traffic and pollution benefits to the Bay Area. According to SFMTA, the shuttle system eliminates 2 million single passenger car trips, and 2,000 metric tons of carbon every year. About 10,000 San Franciscans rely on shuttles to get to work or school, and they’re less likely to own cars than other San Franciscans. Residents should know the congestion and air quality benefits of shuttles, and that if they believe a shuttle is using curb space inappropriately, they can report the shuttle to SFMTA using the identification placard on the shuttle’s front and rear. For developers, it could be argued that proximity to a shuttle stop justifies reducing minimum mandatory parking spaces in new developments.

 

We are officially out of the drought but what should apartment renters in the Bay Area be aware of in regards to water conservation and consumption? Very easy for folks to turn on their faucet and flush their toilet without knowing where the water comes from, goes, and the importance of it. Especially in an apartment building for college graduates where things are out of sight, out of mind.

 

The winter rains have provided a temporary reprieve from a problem that remains unsolved, which is that California uses more water than is replenished by nature in all but the wettest years. The imbalance between water supply and demand is depleting California’s aquifers, sinking our farmland, and driving native fisheries into extinction. Apartments are the most water efficient types of housing, and cities and state law should encourage high density developments for that reason alone. For the apartment dwellers themselves, I recommend spending some time on your local water agency’s website, where you can learn ways to further reduce your water use, and learn about where your water comes from. As a bonus, you might even find some cool new outdoor activities, since protected watersheds often feature seldom used hiking trails.

 

Ari King
ari@sgrealestateco.com
510-704-1240 x 9
BRE Lic. 01988752

WELCOME TO ‘FROM THE SOURCE’!

 

 SG Real Estate is featuring interviews with other real estate experts and professionals in order to provide authentic information and advice from the individuals and companies shaping the real estate industry.

 

 

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FROM THE SOURCE: 

Q&A with Steven Morger of Wendel, Rosen, Black, & Dean LLP

and Ari King of SG Real Estate

 

Why should the average realtor, investor, or property developer watch The Big Short? What are some takeaways other than a great cast?

To me, the movie addresses a number of points that investors/borrowers should be cognizant about. These points include the inter-relationship between residential and investment capital markets; how we have evolved from a lend and hold environment to an originate and sell environment (the thrust being that lenders might not have enough skin in the game to compel them to fully underwrite loans); and how Wall Street doesn’t seem to learn from past mistakes.

 

What are some things that property developers can do in order to protect themselves for the next crisis?

The primary consequences of a downturn are, at least, twofold: decrease in property values and lack of liquidity in the capital markets. Historically markets have turned around and I don’t see that trend changing in future downturns.  Thus, the issue for property owners is making sure that loans don’t mature, or get called, in a downturn when refinancing is unavailable. One of the way to address this is to build enough time into any obligation so that it has the ability to be refinanced when the market is favorable. As such, I would periodically evaluate my portfolio to make sure that the loan can be refinanced before it matures. For instance (and assuming no prepayment penalty), it might be prudent to refinance before maturity to assure that maturity is out aways, rather than waiting for maturity to refinance.

 

The real estate industry has historically experienced cycle periods in which some years the market is great and some years it is bad. Considering this, and the fact that the last downturn was approximately 10 years ago, what are best options for sellers and buyers over the next 12 months in order to be in an optimal position once the next crisis is completed? (What’s the best way to position oneself so that you have ample financial opportunity once the economy recovers from the crisis. Some people positioned themselves quite well in 2007-2009 so once the economy turned around again, they were sitting pretty. What’s the best way to do that?)

Have access to capital. When the next downturn occurs, prices will drop (buying opportunity) and capital access will be strained (some won’t be able to get loans). Thus, those with funds readily available will be able to take advantage of buying opportunities.

 

What is the “one action rule” and how does it compare/correspond to California’s “security first rule”?

They are the same. Both are embodied in Code of Civil Procedure section 726. The Security First aspect means that a secured creditor must totally exhaust the collateral before looking to the unpledged assets of the borrower. The One Action aspect says that the only way to exhaust the collateral is by foreclosure so that other types of “actions” are not allowable. It also provides that a creditor only has “one” chance to sue the borrower for foreclosure. It cannot split the claims into multiple proceedings—one and done!

 

You have said: “Never sign as a guarantor. It’s not a question of ‘if’ you lose your money, but ‘when’.” Why is that?

A borrower has various protections (like the one action rule). These protections are non-waivable. Conversely, a guarantor has a number of statutory protections but these protections are all fully waivable (and every good guaranty includes full waivers). As such, with full waivers, a guarantor would effectively have limited defenses and could be sued without any requirement that the creditor exhaust its collateral first. Bad news.

 

 If a default is inevitable, how does one avoid deficiencies?

Hire me. This one is way too complicated for a short response. A deficiency can only be recovered after judicial foreclosure. Thus, the creditor must be convinced the potential deficiency is worth the cost and headache of a lawsuit.  So avoiding a deficiency is a function of borrower resources (why sue someone who is broke?); value of the collateral (no deficiency unless the value of the collateral is less than what is owed); nature of the loan (some are non-recourse); temperament of the lender (Wells Fargo used to be a bastard to deal with; other banks more reasonable); and similar issues.

 

Ari King
ari@sgrealestateco.com
510-704-1240 x 9
BRE Lic. 01988752

 

 

 

Bringing the best of off-campus student housing to UC Berkeley.

SG Real Estate is proud to be a part of the blue and gold community. We support the Bears in every stage of renting, offering a wide range of housing options from right across campus to luxury condos. We work with students, accepting co-signers, reviewing financial aid awards in way of income and never raising the rent per occupant because roommates are welcome. We strive to create a safe space for you to call home. If you missed us this week at the housing fair give us a call we are happy to help for the upcoming school year.

Tips and Tricks to avoid stress of Tax Season

As a property management firm, the seasonal trend of housing markets often dictate which times of the year get busy. However, one season works just like clockwork – year-end and tax preparation in the start of the new year. This period after the holidays requires thorough reconciliations and providing reliable and accurate financial statements. However, using some simple tips and tricks can make this stressful period much more simple and straight-forward.

Working with a tax professional or seasoned real estate CPA you trust is key to setting up the appropriate schedule to maintain tight deadlines and getting taxes filed in time. Start early and get the dialogue going between your clients, investors, and accounting teams. Being clear to understand all the documents and reports necessary will create the ideal checklist when preparing all the essentials to file taxes.

Maintaining strong monthly financials that are published monthly will also aid in alleviating the stress of creating annual financial packages for your stakeholders. Consistent reporting that focuses on transparency detailed with support documents for all entries and keeping all bank statements, mortgage statements, and property tax bills organized will ensure accurate recording keeping and bookkeeping. With Appfolio, the process of maintaining support is as simple as dragging and dropping in PDF formatted items to your accounting entries.

Also remember, annual reporting is not just as simple as making sure your bookkeeping is in good shape, but to go the next step and review all your long term liabilities. Double-checking that all loan balances match year-end statements and tying mortgage interest expense to 1098’s is crucial. Year-end is also the perfect time to review your record of security deposits. Match your security deposits reported on your balance sheet to your rent rolls to make sure all reports and activity match.

Maintaining these items and keeping communication open will not only help meet regulatory obligations but also provide a useful test of your accounting practices. Don’t let tax season be a burden, but rather an internal control to enhance partnerships between property owners and their property managers.

Standing Rock, ND Meets Berkeley, CA?

Fourth street in Berkeley has long been a place for casual shopping, great eating & drinking, and a popular destination for the residents of Berkeley.  The popularity of the area has blossomed in recent years and in addition to local stand bys such as Pete’s, Market Hall, and Bette’s, the street is also home to larger establishments such as Apple, CB2, and Crate & Barrel. As is the case with most streets and neighborhoods that receive a lot of traffic and customers, an idea to expand was floated some years ago. Now, there are plans for apartments, commercial real estate spaces, and a parking complex. As the expansion is imminent and on the brink of officially commencing, a fight over the land-and whether it is legal and ethical to disrupt it- is taking shape.

The East Bay Native Americans as well as area preservationist are opposing the mixed-use development which is slated for the Spenger’s parking lot because that land belongs to The Ohlone people. The Ohlone people are Natives to the Northern California coast and are the original inhabitants of many parts of the Bay Area and are opposing the project.

“At a Dec. 1, 2016 Landmarks Preservation Commission meeting reviewing the project draft environmental impact report, many among the packed audience called on Berkeley to honor City Council resolutions passed in January that recognize the Ohlone peoples as the original inhabitants of “the land now called Berkeley” and honor the shellmound as an indigenous sacred site.”

West Berkeley Investors is seeking to develop 155 apartments, approximately 30,000 square feet of commercial space, and a six-level parking garage. The space in question-1900 Fourth Street-was landmarked as a historical site in 2000 by the city of Berkeley. According to author and historian Richard Schwartz “This is the birthplace of Berkeley. It’s also the birthplace of  human settlement on the San Francisco Bay.”

This does, however, beg the question as to whether or not the already-in-place parking lot is going against the landmark status the site has. If the land is deemed ‘landmark’ but a parking lot is already in place, then a mixed-use property wouldn’t be the first disruption to the land. If the parking lot was already there, where was the opposition to Spenger’s? Are there protestors simply because it is a real estate project?

Given what has transpired in North Dakota with the pipeline that was planned to go through Native American land, it will be very interesting to see what occurs with the Fourth Street construction. However, it must be noted that the current parking lot is already in place.  Will there be protests? Will the construction proceed as planned? Will this deter new development in Berkeley? Will new Berkeley mayor Jesse Arreguin get involved?

For additional information and coverage, check out the East Bay Times

Holiday Greeting

To Our Wonderful Renters,

We would like to express our warmest greetings for the upcoming holiday seasons and best wishes for happiness in the New Year. SG Real Estate would like to ensure that your holiday season is both joyous and safe. Below are a few things to help make that happen.

The holidays tend to be a time when break-ins and burglaries spike, because of the increased number of apartments and households that are left unattended. If you are leaving town, please make sure that your windows and doors are all secured properly.

If you anticipate packages being delivered to your home, consider being available for the arrival date/time and request the sender require a signature. Please be certain to keep all doors and windows locked, including common access areas for residents.

If a large meal is what you have in mind please be mindful that not all food products are appropriate for the garbage disposal. Items like: Bones, Carrots, Coffee grounds, Cornhusk and Asparagus should be avoided. Use a compost container for these instead of a garbage disposal or the landfill garbage bins.

Are you decking the hall, or maybe your apartment? Please be sure to use surge protectors when hanging lights. Keep lit candles away from flammable items such as drapes and carpet. Never leave lit candles unattended.-

This time of year also brings additional cardboard boxes, recycling and Christmas trees. Please be sure to break down each item and place in the appropriate container. Your local garbage/recycling service may have a designated tree pickup day, but please don’t leave them in or near the building containers, they will not be picked up.

 

By taking the proper precautions both inside and outside of your home, you can prevent problems and focus on friends and family during the holidays!

Happy Holidays,

SG Real Estate

 

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