.
November 2019
A monthly newsletter published by the Rental Housing Alliance Oregon
rha est. 1927
www.rhaoregon.org
In this issue:
RHA Calender of Events.......................................page 2 President’s Message..... page 3 Deferring Taxes................page 4 Dear Maintenance Men..........................................page 5 Oregon Legislative Changes...............................page 6 Holiday Party ....................page 9 Toy Drive...............................page 11
RHA Oregon Dinner Meeting
•Where: The Monarch Hotel-Clackamas •When: Wednesday November 20, 2019 •Location: 12566 SE 93rd Ave Clackamas, OR 97015 •Time: 6:00 pm •Price: $32.00 if registered before end of business Friday November 15th $42.00 if registered after end of business Friday November 15th Menu
Voting will take place November 20, 2019 (at Dinner Meeting) Installation of Officers & Directors will take place December 18, 2019 (at the Holiday Party) OfficersKen Schriver, President John Sage, President Elect Phil Owen, Vice President Sandra Landis, Treasurer Lynne Whitney, Secretary Ron Garcia, Past President
Plated Meal- Your choice of:
Grilled salmon finished with lemon butter. Served with rice pilaf and seasonal vegetables. OR
London broil with Demi-Glace served with roasted garlic mashed potatoes and seasonal vegetable. All selections include fresh salad, rolls with butter, chef ’s choice dessert & coffee service.
Nominations for Directors ~ Two Year Term Tamara Collins Charles Kovas Melinda McClelland Diana Lindemann Directors Continuing to Serve~ One Year Term Remaining
Hear from a panel of three RHA Affiliate Members who provide Jerad Goughnour different types of screening services to Landlords. Panelists Jim Herman include Marcia Gohman (National Tenant Network), Tiffany Katie O’Neal Deere (Complete Screening Agency), and Rob Collier (LandlordAlan Carpenter Reference.com). Each will present an overview of the services Doug Moe they provide, followed by Q&A. This is a great opportunity Jake Ramirez to evaluate how you will screen your applicants in the future, Violet Anderson especially once the new Portland Screening and Security Deposit ordinance is implemented next March. Registration/Cancellation Policy: To qualify for the early bird registration rate you must have your registration into the RHA office no later than 4:59pm on the listed early registration date in the advertising for the event. Deadline for refund/credit or cancellation of registration is up until 48 hours prior to the date and time of the class/seminar, up until 48 hours prior you will be refunded 100% of the cost to attend. If a registered guest/member does not cancel and/or does not 17registrations to the class/seminar will be seated first. Walk-ins will only be accommodated once the class has started and only if space is available. Registered attendees who arrive 15 minutes after the start of the class/ seminar be aware that your chair may be filled. Our venues do have a limited capacity therefore at times registration to an event may close prior to the event.
To register or for more information visit https://rhaoregon.org/event/october-2019-dinner/
DATE
EVENT
LOCATION
TIME
INFORMATION
11/9
Board Retreat
RHA Conference Annex
9:00am
11/16
Mentor Roundtable
RHA Conference Annex
11:00am
11/20
Dinner Meeting
The Monarch Hotel
6:00pm
See above for more info.
11/28
Thanksgiving
RHA Office
Clsoed
In Observance of Thanksgiving
11/29
Black Friday
RHA Office
Closed
In Observance of Black Friday
12/11
Board Meeting
RHA Conference Annex
4:00pm
12/18
RHA Holiday Party
Eastmoreland Gold Course
6:00pm
See Holiday Flyer on page 9
12/25
Christmas Day
RHA Office
Closed
In Observance of Christmas
DATE
CLASSES
LOCATION
TIME
INSTRUCTORS
11/5
Screening Class
RHA Conference Annex
11:00am
Marcia Gohman w/National Tenant Network
11/7
Landlording 102
RHA Conference Annex
6:30pm
Jeffrey Bennett w/ Warren Allen LLP
11/8
Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
11/14
Property Tax Appeals
RHA Conference Annex
11:30am
Steve Anderson w/First Class Properties
11/19
Screening Class
WebEx
7:00pm
Marcia Gohman w/National Tenant Network
11/22
Screening Class
WebEx
7:00pm
Marcia Gohman w/ National Tenant Network
12/6
Screening Class
WebEx
11:00am
Marcia Gohman w/ National Tenant Network
12/20
Screening Class
WebEx
7:00pm
Marcia Gohman w/ National Tenant Network
For additional class/event information visit: https://rhaoregon.org/education 2
RENTAL ALLIANCE UPDATE November 2019
www.rhaoregon.org
President’s Message Ken Schriver, RHA Oregon President
Last month I used this column to raise my voice a bit more than usual with respect to the regulatory environment in which we, as landlords, find ourselves. There are few places in the country where it is more challenging to comply with the myriad regulations of developing and managing rental properties than Portland, Oregon. I ended my comments with the prediction that if this continues, housing costs will increase, and neighborhood diversity will decrease. I also promised to share some ideas that may help to reverse, or at least slow, this trend. First, educate yourself! I have written on this theme enough times since I became RHA Oregon president that I shouldn’t need to repeat myself here. But I can’t help myself. Learn about what resources are available to help you comply with state and local regulations; this month’s RHA dinner meeting is a great place to start with a panel of three of our vendor affiliates who specialize in different aspects of tenant screening. Watch your e-mail and the online RHA calendar for additional relevant classes. Second, educate your tenants! I budget a 90-minute meeting with new tenants when I meet them to sign the rental agreement and hand over the keys. I review the most important clauses in the rental agreement and each of the addenda. I provide concrete examples of what constitutes a violation of a clause in the agreement. When I raise rents, I explain how much of
www.rhaoregon.org
the increase is from passing through expenses, such as the $5/month registration fee imposed by the City of Portland, the $10/month tax increase associated with the Metro Bond for affordable housing, or the $10/ month increase in insurance premiums (your numbers may differ). Third, educate your civic leaders and state legislators! Most state legislators hold monthly coffees” or other casual gatherings with constituents. These are good opportunities to share your concerns and the impact of regulation on your business. I have found that although I may not always agree with my political leaders, they are usually open to listen to my argument; I like to think they will at least consider my position when evaluating proposed regulations. I try to avoid lecturing, but I also try to explain the real consequences of these regulations on our industry; see examples above. Finally, become politically involved! In addition to the various public offices at the city, county, metro, and state levels, there are many other commissions and advisory committees at each of these levels. The small-landlord-business community serves hundreds of thousands of Oregonians; we will need to continue to increase our involvement with these entities if we are to have any impact on future regulation. Even if you cannot personally participate, you can support candidates that support landlords. One way of doing this is to contribute to a PAC such as the Good Landlord PAC. Remember that in Oregon you may take a $50 tax credit against such contributions ($100 for couples). Talk to your accountant for specifics. Each November brings two important annual events: voting day and Thanksgiving. Of course, I urge you to vote. I also hope that you can use the holiday to take a break from your property management tasks and spend time with family and friends. Happy Thanksgiving! RENTAL ALLIANCE UPDATE November 2019
3
Extracting Liquidity from Relinquished Property While Deferring Taxes
by Austin Bowlin, CPA -Partner at Real Estate Transition Solutions
Often owners of investment real estate find themselves in situations in which they are “property rich and cash poor.” Thus, when contemplating a sale and taxdeferred 1031 exchange, owners frequently ask about ways to access the equity in their property to receive cash from the sales proceeds while still deferring tax. Interest in this topic is entirely understandable. Unfortunately, the IRS is rather explicit in the treatment of cash proceeds, also known as “boot”, received by a seller while performing a 1031 exchange. In fact, not only is all “boot” taxable, it is “taxed first,” meaning any proceeds withheld from an exchange are subject to the highest applicable Federal tax rate first. This means that the taxes are applied in the following order, at the following rates for Oregon State residents: 1. Depreciation Recapture: 25% 2. Long-Term Federal Capital Gains: 15% to 20% + Possible Net Investment Income Tax: 3.8% + Oregon State Income Tax: 9% to 9.9% Once all taxable proceeds have been used up, the seller of the investment property then receives credit for the remaining tax basis in the property, which is the portion of the sale that is non-taxable. Needless to say, the penalty on “boot” is severe. Ensuring all exchanged equity and debt qualifies for tax-deferment is of the utmost importance. Many investors are under the impression that in order to avoid taxable “boot”, qualified replacement property(s) must have equal or greater debt and equal or greater equity than the relinquished property (i.e. the property sold). While adhering to this guideline would satisfy the exchange criteria, it is an oversimplification. Instead, investors must ensure that the “Net Equity” from the relinquished property is equal or greater in the replacement property and that the replacement property value is greater than the relinquished property value. The property value associated with the debt that must be matched or exceeded does not need to be matched by traditional debt, instead it can be offset by outside cash contributed or matched by nontraditional debt such as seller-financing, an outside loan or a combination of. Essentially, you cannot have a reduction in overall value (Net Equity + Value of Debt) when moving from relinquished to replacement property without creating “boot,”. Understanding how to avoid “boot” is key to ensuring an investor’s exchange is entirely tax-deferred. Tax-deferred liquidity is not possible at the time of an exchange; however, it is possible either before or after an exchange – depending 4
RENTAL ALLIANCE UPDATE November 2019
on the relinquished and replacement property profiles. Owners looking for liquidity have several available options. Owners can refinance their property in advance of the sale to extract equity from the property. While a reduction in equity and a corresponding increase in the property’s loan-to-value (LTV) may change the replacement property options available, it does not eliminate either the fee-simple or Delaware Statutory Trusts (DSTs) as viable replacement property(s) as both can be purchased with moderate to high LTVs. Furthermore, high LTV Delaware Statutory Trusts can be used to account for the replacement debt, leaving residual equity to be exchanged into more conventional ~50% LTV fee-simple or DST properties. For example, if a property is owned outright with no debt, the property could be refinanced to access 50% of the equity in cash refinance proceeds, without paying tax. Then the property could be sold and exchanged, with the new debt moving with the remaining equity in the exchange for complete tax deferral. It should be noted that properties that are refinanced in advance of a pending sale and subsequent exchange should be refinanced with sufficient time before the sale so that the IRS is not led to believe that the refinancing was done solely with the intent of extracting capital from the property. What constitutes adequate time is a conversation to be had with your tax advisor, however many professionals suggest the refinance and sale occur either in separate tax years or a calendar year fall between the two. The other option for extracting capital is to refinance the replacement property following the exchange. Traditionally, the IRS has not contested refinancing following an exchange, thus this approach can occur any time after the replacement property is closed on. However, financing should not occur simultaneous to closing on the replacement property or be arranged during the acquisition process. There are many ways to address the “property rich and cash poor” scenario that is common among investment property owners. The optimal strategy will depend on an owner’s individual situation and objectives. Our firm, Real Estate Transition Solutions, works diligently to understand investment property owners’ goals and objectives, educate owners on various solutions that best position them to realize their objectives, and assist in the implementation of the plan developed with the owner. If you would like to have a conversation about your objectives and the properties owned, do not hesitate to reach out to us to schedule a complimentary consultation. Call 206-686-2211 or email info@re-transition.com. We also invite you to attend our FREE Fall 2019 Investment (continued on page 8)
www.rhaoregon.org
Dear Maintenance Men by Jerry L’Ecuyer & Frank Alvarez
Dear Maintenance Men: What is an economical method of cleaning concrete driveways and sidewalks? The concrete has oil stains, chewing gum and organic matter stains. John Dear John: There are a few things you can do to help clean up the concrete. Oil stains can be spot treated with cat or absorbent litter. Spread the cat litter over the oil stains and grind the litter into the stains with your shoes. Leave it for 24 hours and sweep up after. Chewing gum can be removed by chilling the gum with ice or CO2 spray and using a putting knife to lift and scrape the gum off of the concrete. Use detergent and a stiff brush to remove the gum stain. Organic matter stains can be removed with power washer spray. If you have a large area of concrete to clean, use a power washer. Set the power washer to 3000 PSI and use the wide spray head. Be careful not to gouge the concrete with the spray; keep the hand wand moving. Softer material like brick will need less PSI or more distance between the spray head and the bricks. Dear Maintenance Men: During the recent rains, my building started leaking. I was surprised, as I have just installed a new roof. The odd thing about the leak is that it is only affecting the downstairs units. What is going on and how do I solve this? Michael Dear Michael: Water is a funny thing and tracking down leaks sometimes takes a bit of detective work. The first thing we would check is the roof. As www.rhaoregon.org
you stated, the roof is new, but sometimes the odd flashing does not get caulked and the water finds its way down the side of a pipe, valley or junction area. Have your roofer, double check all the flashings. Another issue to look at, is water pooling around the foundation. If you have cracks in the foundation, water will find its way in. Be sure to clear any debris, dirt and leaves from around your building or anything that will cause a water dam effect. Overgrown or old landscaping can contribute to leaks by trapping water or redirecting water to the building instead of away from it. Inspect the building’s stucco for cracks. We have seen small cracks in the stucco suck in large amounts of water. Pay close attention to the stucco between floors or on the edge of balconies. Balconies shed a lot of water which may cascade over the edge and flow back into the stucco where a hidden crack will allow the water to enter. If you have aluminum windows, check the weep holes that allow water to drain out of the window tracks. Dear Maintenance Men: I own a building that consists of all two bedroom one and three quarter baths. The three quarter bathrooms have a sink, toilet and bathtub, but no shower. I would like to convert them to a full bath by adding a shower. How do I do it? Bill Dear Bill: This is a great upgrade to any unit. There are a number of ways to go depending on your budget and do-ityourself skills. The most economical and simple solution to adding a shower to a bathtub is to install a diverter spout that includes a 1 halfinch hand shower fitting. The hand
shower can be sold separately or as a kit with the spout. Connect the hand shower hose to the spout and hang the showerhead on the wall. Other than installing waterproof shower walls, you are ready to go. The second option is a bit more involved, but a much better solution. Because most tub only bathroom situations usually have no wall tile or “shower wall” material; gaining access to your existing valve & plumbing system should be easy. Let’s begin with the items you will need to start your project. (If you have an existing two-valve system, now is the time to go to a modern single valve set-up.) The easiest apartment application valve to buy is a shower/tub valve kit. There are many other brands to buy depending on your budget. The kit will come with a valve, spout, shower arm and head. You will still need to purchase a 1 half inch copper pipe at least 56 to 59 inches long, a 90 degree brass elbow, slip to thread with ears to attach it to the wall stud at the shower head. Be sure you have a full propane torch with solder and a fire extinguisher before starting the job. Now you are ready to install. Don’t forget to turn off the water. Since you will be installing new shower walls, don’t worry about damaging drywall. Cut a hole in the drywall stud to stud, 12 inches high at the existing valve level. Then cut a 4 inch wide strip of drywall 59 inches up from the location of the existing valves. Now that everything is exposed, remove the old valves, by cutting or use the propane torch to melt the solder joints. Install the new valve in place, cut a 1 half inch copper riser between 56 and 59 inches and solder to the valve. Solder the brass 90- degree elbow to the pipe
(continued on page 8)
RENTAL ALLIANCE UPDATE November 2019
5
Oregon Legislative Changes
by Cliff Hockley with Bluestone & Hockley Property Mgmt.
Summary of the Oregon Legislative changes made in 2019.
for occupancy within a reasonable time; and
In this newsletter, I will be detailing legislative bills that were passed in the last (2019) session. This summary would not have been possible without the assistance of Cindy Robert, the lobbyist for the Rental Housing Alliance (RHA) and Nellie DeVries, the lobbyist for the Oregon Building Owners and Managers Association (BOMA), who were kind enough to share their session summaries with me.
occupy the premises as a primary residence for self or immediate family.
This overview will not be addressing all the changes to the City of Portland’s ordinances regarding security deposits and tenant screening. The ordinances have been passed, but the implementation procedures have not been fully finalized by the Portland Housing Bureau.
Impact: This bill allows for more dense housing in cities around the state.
Democrats in charge How does one describe this very robust Oregon legislative session? Republican senators walked out of the Senate, which triggered a quorum call, and for lack of a quorum, the Cap and Trade bill faltered. Not to say anything of the senators hiding out of state, so they could not be apprehended by Oregon state troopers. Clearly, with a Democratic House, Senate, and Governor, bills were passed that would not have passed with a more balanced legislative group. It all started with rent control. Oregon was the first state in the nation to pass a rent control bill, SB 608. Rent Control – SB 608 Early in the session, Oregon became the first state in the nation with rent control. SB 608, caps rent increases at 7% per year + consumer price index (published annually by the Oregon Department of Administrative Services on September 30th; currently 2.9%); restricts no-cause terminations to the first year of the tenant’s occupancy; and establishes a relocation fee equal to one month’s rent for tenants being displaced. Note: Under the law, one may levy a 9.9% base rent increase and a separate increase for utilities. (Not so in the City of Portland, where the total of all increases, rent and utilities, may not exceed 10% without triggering Portland relocation assistance.) SB 608 does provide landlords with some ‘relief ’ by: Keeping the state’s preemption over local rent control regulations; creating a new ‘tool’ to terminate leases after three violations in a year; and defining landlord-based exemptions to terminate a tenancy (with the payment of a relocation fee equal to one month’s rent*) to: demolish or repurpose a dwelling within a reasonable time; renovate or repair premises that are or will be unsafe or unfit 6
RENTAL ALLIANCE UPDATE November 2019
* Owner-occupied units, owner-occupied duplexes and landlords with four or fewer rentals are exempt from paying relocation fees. HB 2001 – Missing Middle Housing
Oregon is growing[1] and the legislature is listening. Under the leadership of House Speaker Tina Kotek, and in response to the housing crisis, HB 2001 was passed. In an innovative move, the State of Oregon paved the way for duplexes, triplexes, four-plexes, townhouses and cottage clusters (defined as middle housing) to be built in areas formerly reserved for single-family homes. The bill was passed with a Senate vote of 17-9, 43-16 in the House, signed into law by the Governor and using an emergency clause, became effective immediately. It legalizes the development of duplexes on single-family lots, in cities of 10,000 – 25,000 inhabitants. In cities that are larger than 25,000 inhabitants, it permits the building of duplexes, triplexes, four-plexes, townhouses and cottage clusters. This law provides for the phased implementation of rules in June 2021 and 2022 to allow synchronization with the state’s landuse regulations. HB 2003 – Regional Housing Inventory Impact: Requires localities to study housing needs and develop strategies to increase housing supply. Effective January 1, 2020, in addition to appropriating funds to the Housing & Community Services Department, HB 2003 requires: the Housing and Community Services Department to develop a methodology to conduct a regional housing needs analysis; the City of Portland to estimate their housing stock every six years and cities outside Portland, with populations greater than 10,000 inhabitants, to estimate their housing need and capacity every eight years; local governments to: adopt a housing production strategy within one year; allow accessory dwelling units; allows affordable housing on land zoned for places of worship; and the Land Conservation and Development Commission (LCDC) to: seek an enforcement order against cities not implementing a housing production strategy; and develop or rezoning of public property for affordable housing. (continued on page 7) www.rhaoregon.org
HB – 2005 Paid Family & Medical Leave Impact: This bill increases employee benefits which will increase costs for businesses and customers. Oregon currently requires family medical leave for employers with 25 or more employees. Leave can be taken for a serious illness, care for a family member who is ill, or bonding with a new child. More than half of Oregon workers are eligible for unpaid family and medical leave benefits under the federal Family and Medical Leave Act of 1993 (FMLA) and the Oregon Family Leave Act (OFLA). Under HB 2005, an insurance program is created to provide employees with a portion of their wages while on family and medical leave or military family leave. Beginning January 1, 2022, benefit premiums begin to be collected and employees can begin to access paid leave January 1, 2023 Program details: Premium responsibility split 40 employer / 60 employees. Employers with 25 or more employees pay (40% of 1% of payroll) and employees pay (60% of 1% of payroll). Employers with less than 25 employees don’t pay the “employer premium.” Caps weekly benefit amount at 120% of the state’s average weekly wage. It also establishes a minimum weekly benefit amount of five percent of the state’s average weekly wage (approximately $50). Allows the employee to use accrued paid leave (i.e., vacation leave, sick time) in addition to receiving paid family and medical leave insurance benefits to replace wages up to 100 percent. Employers with fewer than 25 employees may assign a returning employee to a different position with similar job duties, but with the same pay and benefits. Prohibits reassignment/termination claims by other employee claims while an employer is accommodating a returning employee. If you are trying to figure out how this affects you, just consider that all property management companies with more than 25 employees will have to comply with this law effective January 1, 2022. They will be passing this cost through their clients. HB 2006 – Housing & Community Services Department Grants Impact: Corrects SB 608 and funds housing-related support services to low-income Oregonians. The bill appropriates $3 million from the General Fund to the Housing and Community Services Department to support programs that help people to obtain and retain housing. Examples include tenant education programs, technology solutions that help low-income people find available housing, fair housing training for tenants and landlords, and assists victims of domestic violence and sexual assault with housing needs.
This bill also clarified that units owned by a landlord, but not used as a rental (i.e. private residence, vacation home, etc.) do not count toward the 4-unit threshold for exemption from the relocation assistance requirement. HB 2056 – Housing Development & Guarantee Account Impact: House Bill 2056 updates and expands current loan guarantee programs for affordable housing. Loan guarantee programs, administered by Oregon Housing and Community Services (OHCS), currently help finance up to 25 percent of a loan for low-income housing. This expansion allows eligible organizations to participate in this program to purchase land for affordable housing development. HB 2206 – Building Safety After Emergency Inspections Impact: Creates certified building evaluators to help decide if buildings can be occupied after a natural disaster. This bill directs the state fire marshal to develop and administer a program to evaluate the condition of buildings after a natural disaster and create a registry of certified building evaluators and approved trainers. If there is a major flood or earthquake, a building may not be occupied until it has been inspected by a certified evaluator. This seems to apply to all buildings without exception. It will behoove building owners to sign contracts with these evaluators, in advance, to ensure prompt inspections after a natural disaster. HB 2285 – Receiverships Impact: HB 2285 provides a new process for a locality to request a general judgment in lieu of receivership. Upon request, the bill directs the court to enter a general judgment for the estimated cost of abatement in lieu of appointing a receiver. Such judgment is given the priority position of a lien. Additionally, HB 2285 allows a lien against the property, for outstanding amounts owed to a receiver. These liens have priority over all other liens, mortgages, and encumbrances. HB 2530 – Military Veteran Services Notification Impact: Requires residential landlords to notify veterans of special services available to them upon eviction or foreclosure. Disclosures shall include contact information for county veterans’ service officer, community action agency or 2-1-1 referral service. HB 3427 – Corporate Tax Increase Impact: Increases taxes for companies with gross income over $1,000,000. CPA review is advised. The Student Success Act includes a corporate tax increase of 0.57% for all income, generated in Oregon, above $1 million. (Some exemptions and reductions may apply.) The bill also reduces personal income tax rates for the lowest three tax brackets by 0.25 percent (certainly helpful if the bill ends up being referred to voters). With an upgraded revenue forecast, the bill is estimated to raise $1.3 billion per year for schools. (continued on page 10)
www.rhaoregon.org
RENTAL ALLIANCE UPDATE November 2019
7
Defering Taxes Cont. CONTINUED FROM PAGE 4
Property Owner Education Lunch: 1031 Exchange Basics in Portland. This complimentary, informative education lunch will provide you with an overview of 1031 Exchanges, why they are used and how they work, the benefits vs. risks, and what property types qualify. If you are interested in attending and would like for more information, please email Nancy Duckett at nduckett@retransition.com. Austin Bowlin, CPA is a Partner at Real Estate Transition Solutions and provides exit strategy analysis, execution, income and equity replacement options for investment property owners. If you have questions relating to your investment property ownership, please email him at: aabowlin@re-transition.com or call (206) 686-2211.
IMMEDIATE
RESPONSE Sean & Shelby Goforth 503-517-9027
junkawayhauling@gmail.com Your items picked up are recycled and/or donated Shelby Cell: 971.998.4654 Sean Cell: 971.808.6387 PORTLAND
VANCOUVER
FIND EVICTIONS STRESSFUL?
503-‐242-‐2312
Full FED Service First Appearances evict@landlord-‐solutions.com Small Claims
Maintenance Men Cont. CONTINUED FROM PAGE 5
and screw the elbow to a cross stud. If you could not find an elbow with ears, use plumbers tape or a pipe hanger to secure the elbow in place. Test your plumbing installation for leaks. Install new drywall to cover your plumbing work and the tub is now ready for the installation of the shower wall material of your choice. We recommend a one-piece wrap around shower wall system available at your local home center. WE NEED Maintenance Questions!!! If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: DearMaintenanceMen@gmail.com Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Frank Alvarez is licensed contractor and the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor and Co-Chair of the Education Committee of the Apartment Association of Orange County as well as being Chairman of the Product Service Counsel. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com Jerry L'Ecuyer is a real estate broker. He is currently a Director Emeritus and Past President of the Apartment Association of Orange County .and past Chairman of the association’s Education Committee. Jerry has been involved with apartments as a professional since 1988. 8
RENTAL ALLIANCE UPDATE November 2019
www.rhaoregon.org
Wednesday December 18th 6-9pm at
Eastmoreland Golf Club
RHA Oregon’s 2019 Holiday Dinner Party
Dinner Menu Main Course Accompaniments
Dinner Price
Dessert Beverages
Gift Exchange Please bring a nice gift for the gift exchange -One per personAnd a toy for the Toy Drive
www.rhaoregon.org
To register go to: www.rhaoregon.org Email us at: info@rhaoregon.org Or call us at: 503-254-4723
RENTAL ALLIANCE UPDATE November 2019
9
There are about 40,000 businesses that qualify to pay the new tax, according to information from the legislative revenue office. The Tax Foundation of Oregon has developed a calculator to help businesses with revenue over $1 million to determine the impact: https://files. taxfoundation.org/20190501152303/How-to-CalculateOregons-ProposedCorporate-Activity-Tax-Under-HB-3427Flowchart1.pdf Senate Bills that became Law: SB 262 – Property Tax Exemption for Multi-Unit Housing Impact: Benefits low-income housing providers and developers. SB 262 extends the date localities may grant a property tax exemption to affordable multi-unit rental housing (excluding land) from 2022 to 2032. After the exemption expires, qualified properties go back to being taxed at the assessed value. SB 278 – Rent Guarantee Program Impact: Extends eligibility of program that helps low-income tenants qualify for rental housing. Rent Well is a tenant education course that helps low-income individuals who have poor credit, past evictions, or criminal history and who are at risk of homelessness or currently homeless. Graduates receive a certificate giving their landlords access to the Rent Well Landlord Guarantee Fund, which may cover damages, unpaid rent or eviction costs. SB 278 extends eligibility for the Rent Guarantee Program to individuals between 16 and 27 years of age who were wards of the juvenile court within the past ten years. SB 484 – Applicant Screening Charges Impact: Restricts a landlord’s ability to charge multiple screening fees. It is common practice for applicants to pay a screening fee. These costs can add up quickly when applying for multiple apartments. This law limits a landlord to charging a single screening fee in a 60-day period for units owned or managed by the same landlord. Additionally, the law provides that an applicant may not recover a screening charge if the applicant refuses an offer from the landlord to rent the dwelling unit. SB 586 – Manufactured and Marina Community Updates Impact: Significant clarifications and changes to laws that affect manufactured dwelling parks and marinas. The law provides marina owners and occupants with some protections similar to those enjoyed by manufactured home parks including notification of a marina’s sale, provide financial due diligence information and a short tenant rightof-refusal period to purchase. It also increases the park registration fees; establishes the Dispute Resolution Advisory Committee; requires mediation for certain landlord-tenant and tenant-tenant disputes; institutes a 10-month cure period home floatation issues; 10
RENTAL ALLIANCE UPDATE November 2019
mandates reasonable notice before inspecting a hazardous tree; provides for a longer period before a landlord sells or disposes of floating home; modifies the process for tenants to cure separate and distinct lease violations; requires landlord to provide at least one method by which a tenant may cure a violation; and; amends the process for landlord to convert to a different utility billing method. SB 970 – Marijuana Screening Criteria SB 970, is primarily related to manufactured dwelling park statutes and ‘facility landlords’ and prohibits all residential landlords from considering minor marijuana convictions, possession of a medical marijuana card, or status as a medical marijuana patient when evaluating rental applications. SB 420 – Marijuana Conviction Set-Aside SB 420 allows a person to petition a court to set aside most convictions for possession, delivery, and manufacture of marijuana if such conduct, upon which conviction was based, is no longer crime. The process exempts applicants from filing fees, providing fingerprints and undergoing a background check, but the prosecuting attorney has the opportunity to contest. Approved petitions result in the court sealing records of set aside convictions to include the Department of Corrections and other relevant agencies. SB 369 – Substantial Completion Statute of Limitations Impact: Clarifies the definition of ‘date of acceptance’ from a contractor to a property owner. SB 369 modifies the statute of limitations for action against an architect, landscape architect or engineer arising out of construction, alteration or repair of improvement to real property. In order to do so, the bill modifies definition of “substantial completion” to the earliest of: (A) the date when the customer accepts, in writing, the project as having reached that state of completion when it may be used or occupied for its intended purpose or, if there is no such written acceptance, the date of acceptance of the completed construction, alteration or repair of such improvement by the customer; (B) the date when a public body issues a certificate of occupancy for the improvement; or (C) the date when the owner uses or occupies the improvement for its intended purpose. Summary As you can see, there were a lot of legislative changes. On the other hand, there were many bills that did not pass. My goal with this article was to give visibility to the massive amount of change owners of real estate faced in this last legislative session. The biggest challenge for all of us will be to review these bills and change our policies to meet the new regulation. Our company has been working on implementing these laws since the session ended and will continue to stay abreast of the changing legislative environment. Unfortunately, many of these changes will significantly increase the cost of owning and operating real estate. [1] The three-county region expects to add 56%-74% more households by 2035. The City of Portland projects a household increase of 44%-57%. https://www.portlandonline.com/ portlandplan/index.cfm?a=288097&c=52256 The three counties surrounding Portland are forecasted to experience the greatest growth over the next 10 years. https:// www.oregon.gov/das/OEA/Documents/appendixc.pdf www.rhaoregon.org
RHA Oregon’s Annual Drive Toys will be given To families of Those who are homeless wiTh children Through
snowcap
help brighTen The life of a child, bring an unwrapped gifT or gifT card.
Please bring new unwrapped toys to the RHAOregon at: 10520 NE Weidler Portland, OR 97220 OR To RHA’S Holiday Dinner Party GIFTS FOR CHILDREN AGES 9 & UP ARE ESPECIALLY NEEDED
www.rhaoregon.org
RENTAL ALLIANCE UPDATE November 2019
11
Considering Selling Your Investment Property? Considering a
1031 Exchange? ASK US ABOUT:
1031 Exchange Solutions Real Estate Investing Seminars and Workshops Passive Investment Opportunities – No More Tenants Toilets and Trash! Delaware Statutory Trust (DST) Properties Triple Net Leased (NNN) Properties 721 Exchange UPREIT Properties – How to 1031 Exchange into a Real Estate Investment Trust (REIT) Opportunity Zones Preferred Return Investment Opportunities
Learn More at www.kpi1031.com or call 1.855.466.5927
CALL TODAY
FOR A FREE BOOK ON 1031 EXCHANGES YOU WILL ALSO GET FREE 1031 EXCHANGE LISTINGS! 1.855.466.5927 or visit www.kpi1031.com
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax and legal professional for details regarding your situation. This material is not intended as tax or legal advice. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through WealthForge Securities, LLC. Member FINRA/SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities. Preferred return is not guaranteed, and subject to available cash flow.