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Archive for August, 2011

New Law Against Rental Restrictions in HOA communities

If you live in a homeowner’s association you are probably familiar with rental restrictions, or at least the feeling that renters are a bad thing for neighborhoods.  For the last decade there has been an increase in amendments to the governing documents to include a restriction for renting the property.  Normally the restrictions prohibit an owner from renting the property for terms of less than thirty days.  The catalyst behind the rental restriction movement is rooted in the idea that owners take better care of the property.

Covenants, conditions and restrictions (CC&Rs) strive to reach a delicate balance between making homeowners maintain their property while at the same time allowing owners to retain some of their “frontier” land rights.  Due to the increased nature of rental restrictions and based on successful lobbying efforts, early this year Governor Brown signed SB 150 into law which prohibits a rental restriction provision in a homeowner’s association governing documents.  Effective January 1, 2012, Civil Code section 1360.2 will prohibit a rental restriction provision if the following conditions are met:

(1)   The provision must be located in a governing document or an amendment to a governing document;

(2)   The governing document or amendment must take effect on or after January 1, 2012; and

(3)   The owner of the property must have acquired title to the interest in the property before the governing document or amendment became effective.

This represents a substantial change to the Davis-Stirling Act, which is the section of the California Civil Code which governs most common interest developments, or as they are known, homeowner’s associations.  While this law represents a victory for landlords and tenants, it may have less impact than anticipated.  If an association properly records a rental restriction amendment prior to the effective date of January 1, 2012, the law will only protect future amendments and preserve any restrictions in place.  Naturally, if you live in an association who has wrestled with passing a rental restriction amendment, you can expect that there will be a rush to pass amendments before January 1, 2012.

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The Economic Toll On The Construction Industry

In an economic downturn, the construction industry is often hit harder and longer than other industries with decreases in demand, funding, and development. When relatively large portions of our population are facing issues like foreclosure and bankruptcy, it can be difficult for investors and builders to justify the construction of new homes or businesses. Even once other sectors of the economy begin to recover, the construction industry is often the last to improve as buyers and financers become more frugal and less willing to take a risk on an investment.

According to a report in the Sacramento Business Review, the US Census Bureau reported that the vacancy rate of buildings in the Sacramento area reached 7.4% in 2009, and has likely risen even higher since then. Additionally, Sacramento was listed in the top 10 cities for foreclosures at the end of last year. Given the excess supply of empty buildings in our city, it is not surprising that construction virtually ceased altogether when the recession hit. Unemployment in the construction industry has hovered at a national average around 20%, compared to about 9% nation-wide across all industries. In 2005, construction jobs comprised 8.6% of Sacramento’s payrolls; today that figure has fallen to only 4.3%. In fact, Forbes Magazine ranked Sacramento as the fifth worst city for unemployment in the country, a negative designation it attributes to the slow recovery of the construction industry here.

In light of these statistics, one might look around the city of Sacramento and expect to see hundreds of forlorn-looking abandoned buildings, not the giant construction tower cranes which have obscured the skyline in many parts of the city in the past year. Until recently, these cranes provided a beacon of hope that, despite the extended hiatus from most building projects, Sacramento’s construction industry was slowly beginning to turn around as a product of federal and state funding into New-Deal-esque public works programs.

So far, these public works projects have infused the local economy with more than $4 billion in development, mostly centered on four areas: the rail yard and Township 9 in downtown Sacramento, the Bridge District in West Sacramento, and the Curtis Park Village in the neighborhood of Curtis Park. According to the Sacramento Business Journal, the four projects were primarily funded through infrastructure bond programs administered by the Department of Housing and Community Development and additional public subsidies. The projects created thousands of construction jobs in our community using public funding. In turn, the development and construction in these four areas was intended to spur demand for other private construction around the newly revitalized parts of the city.

 

As a product of some tacked-on additions to the state budget passed at the end of June, however, the construction on these areas of our city has screeched to a halt. The new state budget laws effectively dissolve four hundred redevelopment agencies in the state, including those responsible for the public works projects here in Sacramento. Under the law, these agencies can only remain in existence if they agree to pay a portion of their financial resources, a yearly total of about 1.7 billion dollars statewide, toward schools and other public programs. In the current economic climate in which these revitalization projects have been struggling to succeed, this additional taxation could be an insurmountable challenge to the revival of the construction industry in Sacramento.

John Shirey, executive director of The California Redevelopment Association, stated an intention to sue to maintain funding for redevelopment projects and to block implementation of the new budget laws before they take effect on October 1 (see the Sacramento Bee article linked below). State legislators, in contrast, maintain that the state budget deficit does not leave room to fund redevelopment construction projects at this time. It remains to be seen which side of this debate will come out on top. Those tower cranes, once emblematic of hope and revitalization in our community, may now stand unused until the state budget becomes better balanced or until Shirey and others can convince the California Supreme Court of the importance of their projects.

To see the Sacramento Business Review report, go here.

View the Sacramento Bee article on the budget laws here.

For the Forbes Magazine ranked list of cities with the worst job markets, go here.

And to see the Sacramento Business Journal’s report on the public works programs, go here.

Categories: Uncategorized

The Ground Pot is Dispensed From is as Important as the Ground Pot is Grown On

When most people think of the legalities of Medicinal Marijuana Dispensaries, they think of the conflicts between state and federal law, the legality of “prescriptions” held by the “patients,” or the profits being realized by these “not for profit” companies.  However, the threshold issue to owning and operating a pot dispensary is actually a question of land use.

As the legality of medicinal marijuana is a local issue, so are the zoning ordinances.  Currently, Sacramento County residents must travel to neighboring Yolo or Sutter County to seek “legal” store fronts. (Sutter County is actually hosting a 3 day event to educate, and potentially celebrate, dispensaries, for more information click here).  Despite the county wide bans in both Sacramento and Placer Counties, the greater Sacramento area has still seen its fair share of clinics that appear to be legal but in fact are not.  Such facilities are typically operating without a license as well.  But given state budget cutbacks and overworked police departments, many are allowed to operate anyway.

Recently however, the Sacramento County Board of Supervisors decided to address this issue.  In a nutshell, they agreed to agree to future zoning ordinances that will in fact allow pot to be dispensed in Sacramento County if the premises are zoned for it.  (See this article).  Said ordinances are intended to limit both the location and the number of dispensaries allowed in the county.  At this point, more questions seem to be created than answers.  How will such zoning affect neighboring property?  Are there neighborhoods that would generally accept this business? What are the correlations between dispensaries and area crime?  This last question has provided many statistical assertions, all probably as “credible” and “unbiased” as the last.  Whatever the case, the politicians and the vast majority of their constituency have made up their minds in regards to whether or not dispensaries are good for the county.  It is widely accepted that the intent of these ordinances is to attack the recent surge in new dispensaries in the greater Sacramento area.

But one must question why Sacramento County is spending precious resources addressing this issue now in the wake of the recent Department of Justice memo seeking to enforce anti-marijuana laws in legal medicinal marijuana jurisdictions.  (See the SacBee article here).  The reason is, again, the “legality” of pot is first a land use issue.  Here, politicians have an opportunity to “fight” the war on drugs.  The supervisors intend to beef up regulations against those trying to operate within at least the four corners of the law if not the spirit of the law.  But is this going to help the greater issue – the illegal use of marijuana?  I would think not as the vast majority of pot used is sold on the proverbial street.  It seems law makers are attacking dispensaries mostly because they are visible and because they can.

I overheard a person calling marijuana the second gold rush…the green rush.  I’m not sure I agree, but one distinct similarity is certain: it’s all about the land where you stake your claim.

Categories: Uncategorized