AAOC Legislative Committee Vs. Bad Legislation

AAOC Legislative Committee Vs. Bad Legislation

A Recap of Our Recent Lobbying Trip to Sacramento

By: Nicholas A. Dunlap

As Californians, we are burdened with overregulation in contrast to neighboring States.  As an industry, apartment owners and operators in the Golden State face even greater regulation in addition to constant threats from Legislators.  It is important for us to interact with our lawmakers and remind them who we are, what we do and how these issues impact and affect our business.  On April 25^th, AAOC visited our State’s Capitol in conjunction with the National Apartment Association, San Diego County Apartment Association, Apartment Association California Southern Cities, Apartment Association Greater Los Angeles, Santa Barbara Apartment Association, East Bay Rental Owners Association and Northern California Rental Property Association to discuss and advise on four bills currently pending in the Senate & Assembly.  In total, we had over 100 representatives of the aforementioned associations present.  Needless to say, we had our hands full. 

Apartment owners are constantly under attack and we effectively utilized our strength in numbers to represent & defend the property rights of apartment owners of all sizes.  AAOC Legislative Committee members Alan Dauger, Nicholas Dunlap, Ray Maggi, Rick Roshan and John Tomlinson had a busy day meeting with more than 12 elected officials.  Please read on to see some of the bills we worked to prevent from becoming laws.     

Legislators Want Free Rent For Your Tenants

 

Two of the more disturbing bills that we opposed actually wanted to give your tenants free rent.  SB 1191 put forth by State Senator Joe Simitian would require a defaulting property owner to notify prospective tenants of the default prior to renting to them.  The penalties for failing to notify prospective tenants of the impending default are equal to two months of rent for every month not notified.  So, your prospect rents an apartment, moves in for two months and then decides that he or she wasn’t notified and BAM! That’s four months of free rent you would owe your tenant.  We see this bill as a landlord’s worst nightmare.  Imagine you buy a building that had been foreclosed on and all of a sudden, you become liable for the months of free rent owed to tenants who had not been notified of the previous foreclosure.  Even if the tenant had been notified, by the time you go through two owners (the bank and current owner which is a six month process), a tenant could possibly forget.  In this case again, the burden of proof is on the landlord.    

The required disclosure would affect the unit’s marketability, ultimately resulting in higher vacancy, decreased income and would effectively expedite the foreclosure process.  The other free rent bill, AB 1953 carried by State Assemblyman Tom Ammiano would require tenants to be notified of any change in ownership or management within 15 days of the change.  Now logically, the first thing that you would do as a new owner or manager would be to notify residents of who and where to send their rent to.  Here, landlords are again put on the defensive as this required notification would open up the door for tenants to say “I wasn’t notified.”  The penalty for failing to notify a tenant of where to send their rent? You guessed it: free rent! This would cover any changes in vesting (perhaps from an individual to an LLC) or management company.  If anything, this requirement does exactly the opposite of what it is supposed to do.  That is, it would open up the door to frivolous or fraudulent scam tactics to steal rent from hardworking tenants and innocent landlords. 

Proposed Pool & Smoke Detector Bills Would Require You to Be a “Jack of All Trades”

Not bad enough that you have to arrange maintenance, do a rent survey and market your vacant apartment home for rent, SB 1394 brought by Senator Alan Lowenthal would require you to consult local building code each and every time a tenant vacates so as to ensure you are in compliance with smoke detector requirements at that point in time.  If not in compliance, you would be forced to renovate.  We argued that this is overly burdensome on landlords who have never been forced to upgrade buildings at the time of rent.  Smoke detector technology has not changed in 20 years and yet we are being forced to hold a rentable unit off market until building code can be checked.  This would keep your incoming tenants out of their new home longer and would result in an additional loss of income to you as you sort through the voluminous building code books to ensure your compliance.  Wait, it gets better.  

If you’re like me, you train your resident manager to market and lease apartment homes, keep residents happy and identify maintenance issues before they become problems.  State Assemblyman Michael Allen pushed for AB1726.  This is a bill that would require your on-site manager, leasing agent, maintenance tech or other set of eyes and ears to attend 14 hours of schooling every 5 years to certify them in such tasks as: chemical management, calibration of pool controllers, operation of surface skimmers, etc.  Perhaps the best part about this ridiculous piece of legislation is that the City of Los Angeles previously thought up this concept and then dropped it because it was such a waste of time. 

Now, follow me through some simple math as we review the records of 65,000 pools over a 10 year time period in the proposed legislation.  Described by the legislation, there are 65,000 pools X 3,650 days (that’s 10 years X 365 days in a year) and we arrive at 237,250,000 total pool days.  In that time, there have been just 186 recorded chemical accidents.  That is, there is one accident for every 1,275,537 pool days.  That is just one incident every 3,392 years.  And the new law would require us to attend a class every 5 years? Few would argue we could improve on the current ratio of incidents to pool days.  I certainly would not.  Further proof that our lawmakers just don’t get it. 

We have it pretty good in Orange County but our neighbors in Southern and Northern California manage to keep us busy.  Three of the four Senate and Assembly Bills that we opposed were carried by Northern California Legislators, further pleading the case for a split State.  Joking aside, this is a battle that we will continue to fight and hope to win.

Fortunately for us, we have the power to support and elect the candidates who make intelligent decisions on our behalf.  And fortunately for us, we belong to an Apartment Association that believes in property rights for owners of all sizes and constantly monitors Statewide legislative activity, challenging nuisance legislation on our behalf.

Tales From a Part-time Politico

Tales From a Part-time Politico: 2012 Capitol Conference Recap

BY: Nicholas A. Dunlap, CPM

 *As published in the May 2012 Edition of Apartment News Magazine*

As you know, your AAOC membership provides you with a wealth of benefits and resources.  While some of these resources are more easily quantified & include the updated forms, credit checking, educational training & timely informational updates that you have access to, some of the most important work that is done to protect our industry is done behind the scenes and is accomplished through dedicated & effective legislative advocacy programs at the State & Federal levels. 

Through our partnership with the National Apartment Association, we recently participated in the joint efforts of the National Apartment Association (NAA) and the National Multi-housing Council (NMHC) at the 2012 Capitol Conference in Washington, D.C.  Visiting Washington, D.C. allowed us to meet with our elected officials and their staff to address some of the key issues that are facing apartment owners & operators at present.  On the agenda at Capitol Conference were items such as: tax reform, loosening of lending requirements with regard to FHA financing in the multifamily sector, continued dialogue with the EPA regarding storm water recapture, improving the Section 8 Voucher program, and yes, even the first ever "bed bug" bill. 

While it was beneficial to meet with and advise officials on how these issues will affect our industry, the true value of the visit is recognized through our ability to continually strengthen our relationships with these officials and provide them with the grass roots, hometown reference point into these issues at the national level.  With their busy schedules and multiple commitments, it can be easy for our elected officials to lose track of how key issues affect their constituents.  But through effective communication and dialogue, we carefully craft the portrait of our membership base and engage the support of our Senators & Congressmen in protecting our interests.   

Aside from our meetings with politicians, we attended upwards of 6 seminars & committee meetings per day, communicating with apartment owners & operators of all sizes & from all over the United States to share insight into our industry and to identify & be aware of the issues, rules and regulations that others are facing and could potentially come to California.  This being an election year, it is unlikely that these issues will become part of or be turned into bills that are voted on before November.  Look for many of the issues to surface in 2013.  At that time, please be sure to look out for our legislative updates and red alerts from AAOC.  You, too, play an integral part in the legislative process and help us provide the "feet on the street" that are necessary to defeat nuisance bills and legislation.  

So while our economic forecast has improved slightly, this could be the proverbial calm before the storm as far as legislative affairs is concerned.  Stay tuned for an update on our State specific Legislative affairs.

From Manager to Managing Partner

From Manager to Managing Partner

Click the link to see highlights from my recent keynote presentation at the IREM LLS Conference in Washington, DC.  The event was a quick, entertaining and enriching look at how professionals in the asset/property management industry can transition into earning equity interest in assets through leveraging their professional relationships and expertise.  

Ten Most Trusted Brands...Banks Nowhere to Be Found

Ten Most Trusted Brands...Banks Nowhere to Be Found

While reading the paper over the weekend, I noticed a top ten list published that highlighted the top ten most trusted brand names in America. The list included: Ford, Starbucks, Nordstrom, Nike, Apple, Amazon, Ford, Coca Cola, Southwest Airlines, Target & Fed Ex. For the most part, I can understand or agree with the list. That is, with the exception of Southwest Airlines. I have flown on Southwest Airlines 5 times in my life and the plane has been over an hour late twice, the flight has been cancelled once and the other time was a miserable flight home from Las Vegas with no air conditioning on the plane. Needless to say, I'll continue to avoid them regardless of their top ten placement.

But back to my point and that is: of the top ten businesses highlighted on the list we have a number of service, technology or retail businesses, travel, transportation and even the hospitality or food industry. There are businesses from all over the spectrum, except for the one area that makes it all possible and that is: the banking industry. We all put our money in, keep it there, invest it, rely on these institutions for their assistance and yet not one of the big four made the cut in spite of all of their technological advances. So why did they not make the grade? Well, that is the easy part. Essentially, there is a laundry list a block and a half long filled with complaints over dishonest, unethical and other greedy, unsavory business practices that find their way to light.

Not to sound like 99%'er, but really, the banking industry has gotten out of hand with their fees and their business practices. If Progressive Insurance is known for the "Discount Button", the banking industry is known for "pay up" button, wherein you ask for something and immediately get drilled with a charge. Almost like the old cartoon I mean just to refinance an apartment building requires paperwork after redundant, I've already told you this and signed a form and yet you ask me to do it two or three times over-paperwork. Enough is enough. I don't blame Wall Street or Financial Institutions for people trying to live above their means and suffering the consequences through foreclosure, but I blame Wall Street for ruining the reputation of the finance industry in America by simply ignoring and abandoning what it is to provide quality customer service and solutions to those who need it the most: their customers.

Let's hope that on the next top 10 list, a financial institution can make the grade.

Reality Strikes For Realtors

Reality Strikes For Realtors.

One of the newer trends in reality television is the showcasing of behind the scenes interactions between real estate agents and their clientele. Whether working with buyers or sellers, several shows on Bravo & HGTV highlight the glamorous side of marketing and selling (in some cases) high-end, luxury real estate. As someone working full-time in the real estate industry for as long as I can remember, I certainly know what it is like to be on both the principal side and the agent side, the buyer side and the seller side. I find it interesting to follow some of the stereotypes or stigmas that either are incorrect, inaccurate, or in some cases spot on about real estate professionals.

First off, there exists the idea that real estate agents who are paid on a commission based on the sales price of the house are overpaid. As seen in both shows, agents often tour dozens of houses, spend thousands of dollars on marketing a property and in the end do not make the sale and are thus not compensated for the time. Simply put, this comes with the territory in real estate. If anything, as one matures in their career they grow more astute at spotting potentially time wasting clients.

Some of the Realtors who are featured on these shows appear to be more beauty than brains and do not have much to offer in terms of strategy or expertise other than simply showing up and looking good. This too, has lead some to feel that the real estate profession is one centered around vanity and other shallow personality traits. Thus, some of the other stereotypes such as: unprofessional, dishonest, out for a buck and a cutthroat personality can be seen and experienced firsthand.

If anything, what these shows do illustrate is that as with any field or any profession, there are stereotypes that exist and quite possibly for a good reason. But just like in life, it is important to approach each situation with a clear and open mind, as opposed to judging someone by the actions of their colleagues.

Highlights From the Recent AAOC Rental Outlook

Highlights From the Recent AAOC Rental Outlook

Recently, I was on a panel at the Apartment Association of Orange County's trade show in which we discussed market activity, outlook and other things related to investing and operating income producing real estate. You can read the write up in the Orange County Register by clicking here.

Change the Record

Change the Record

By: Nicholas A. Dunlap, CPM

Each year, I get approached by hundreds if not thousands of vendors who over promise and under deliver. Often times, these vendors use the same regurgitated approach to sales as their competitors. That is, I get sold a solution to a problem that I often do not have. Perhaps the most tried and true example of this scenario is the solicitation that I get once per week where a vendor or service provider boldly promises me that..."this will improve occupancy", "this will lower your turnover expenses" or "this will improve resident retention". While I can appreciate their sentiments, often times they are unnecessary. These vague descriptions are generally useless and quite simply, a waste of time.

The first step to a successful sale is listening. As a salesperson, if you call me and immediately tell me what you have and what you can do for me, you have already lost the sale. Engage your prospective customer, ask them what they are looking for and how you can help them solve their problems. Then, provide them with your solution and support it with the facts. If you want to do business with apartment owners or operators, provide us with real numbers and statistics to help quantify what you can do for us. If you can help drive NOI by 1.5% and can show me how you have done it and who you have done it for, you are more effective by demonstrating that fact than simply telling me that you can help me.

So don't make the same mistakes your competitors are making. Provide solutions that are complete with quantifiable results. If you do this and you remember to approach your prospective customers as more of a counselor than a peddler, you will increase your sales by 300%. This, I know.