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June 2020 Commercial Newsletter

Download Complete Newsletter | Volume 8, Issue 6

Will Good Investment Opportunities Be Coming Our Way?

While we’re right in the middle of dealing with everything that’s going on right now, and people are
trying to get their bearings on what now to expect, the question arises around whether or not we’ll see good real estate investment opportunities coming our way.  Well the answer is, “Yes, we will see good investment opportunities”, but both the type of the opportunities and the magnitude of them will still depend on how everything will continue evolving within the coming months.

There will be some property owners who, when looking ahead, will believe that now is the time to sell, because they’re concerned about what still may be coming our way. For these people, their motivation will be to minimize their risk, and take what they can for their property right now. Because let’s face it, we’ve never seen an economic downturn begin like this one, and we can’t predict with certainty what the economy will really be like in six months, in one year, or even in two years down the road.

 In addition, there’s something else on the horizon right now that could dramatically impact the availability of good investment opportunities. In California, for example, the legislature is now discussing passing SB 939, which will allow tenants of commercial properties to not pay any rent through December of 2021, and landlords would be forbidden from evicting any commercial tenants during this time. So one could imagine what this would then do in terms of putting a freeze on building activity, where many buildings and units could not be leased or sold during this time, and many investors would probably be very concerned about buying buildings that are subject to this kind of moratorium, too.

But while this law would apply specifically within California, we have to believe that other states will consider enacting similar legislation also. Then at the same time, for buildings where the tenant or tenants seem to be doing pretty good financially, and they’re still making their monthly rent payments…buildings like these could then be sold to investors, and you might just see some owners deciding that now is the time to sell these buildings, too. In addition, during The Great Recession we learned a term called “extend and pretend”, where lenders, instead of foreclosing on delinquent property owners, worked to then revise the payments on these loans, which greatly reduced the number of foreclosures that we saw, too.

So, in putting all of this together, yes, we will see good investment opportunities coming our way, but we’ll really need to see how this situation plays out over the coming months, to determine both the number, and the exact type of good investment opportunities that will be coming our way.

California ‘Split-Roll’ Measure That Could Raise Commercial Property Taxes Qualifies for November Ballot

By Randyl Drummer – CoStar News May 29, 2020

California election officials said a ballot measure aimed at reforming the state’s landmark Proposition 13 tax law to allow for higher property taxes on commercial properties has officially qualified for the Nov. 3 statewide ballot.

The measure, which is expected to raise $12 billion a year for schools and local governments, is officially known as the California Schools and Local Communities Funding Act of 2020 and better known as the split-roll tax initiative. It received more than 1.17 million valid petition signatures, well surpassing the 997,139 signatures necessary to get the measure into the hands of the voters, according to the California Secretary of State’s Office, which administrators state elections and political campaigning.

The proposed split-roll tax initiative, so named because it would create a split property tax roll between residential and commercial properties, is the second measure to qualify for the November ballot aimed at reforming Proposition 13, one of the California’s most contentious pieces of legislation that has resisted numerous repeal efforts over the past four decades.

The initiative’s sponsor, a coalition of education, labor and community groups called Schools & Communities First, submitted petitions with more than 1.7 million signatures in April. Group spokesman Alex Stack said that may be the largest number of signatures collected for a California ballot initiative on record. The Secretary of State’s Office estimated that three-quarters of those signatures were provided by registered California voters.

Petitions received almost 390,000 signatures in Los Angeles, the nation’s most populous county, with almost 217,500 signatures collected in the six-county San Francisco Bay Area, according to data from the California Secretary of State’s Office, which administrators the state’s elections and regulates political campaigning. Urban areas such as San Diego, Orange and Sacramento counties also generated a large percentage of the valid signatures.

The proposed measure would allow the state to reassess commercial and industrial properties and land valued at more than $3 million at market rate, in what is a major revision of California’s Proposition 13, the 1978 initiative that allows residential and commercial properties to be reassessed only when they are sold or change hands.

“This historic effort to generate $12 billion every year for critical local services, essential workers, and schools by closing corporate tax loopholes comes at a time of unprecedented hardship throughout California,” Schools & Communities First said in a statement today. “Simply put, we can’t afford corporate tax loopholes at the expense of these essential services and workers.”

The original split-roll measure qualified for the Nov. 3 ballot in October 2018. However, the Schools and Communities First campaign scrapped the measure and refiled a similar proposal last summer that proponents say provides more tax relief and other protections for small businesses and agriculture in an attempt to gain wider public support.

Stack told CoStar News that the group would withdraw the original measure that qualified for the ballot if the California Schools and Local Communities Funding Act of 2020 qualified to go before the voters.

Remote Learning Tips

Remote learning has been on the rise for some time now and has only escalated in 2020 due to recent worldwide events. However, students who prefer face-to- face learning can sometimes find remote learning difficult, but there are some tips that can make the process easier.

One thing that remote learning students need to keep in mind is that large blocks
of time are not necessary to achieve good productivity

The important thing is to focus attention in shorter amounts of time within periods where work can be carried out without interruption.

Remote learning students should also determine how much work is actually required in order to divide bigger projects up into smaller ones.

This is a big help for learning, as there is only so much information that can be simultaneously recalled and then processed.

One of the best tips that remote learners should follow is to stick to routines. Sticking to the same routine for remote learning as for face-to-face learning will make the transition easier to adjust to, and ensure that all of the necessary work will be done.

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