Gene Wunderlich - Realtor®, Government Affairs Director

Irony abounds. On the same day Los Angeles appointed a blue ribbon panel to study ways to reduce taxes and encourage business, the Canyon Lake City Council decided it was time to raise taxes, errr, FEES and singled out 'Professional Employees and Professional Licensees' for an additional tax, errr, FEE. (They went to great pains to point out in their ordinance that this is a FEE and shall not  be construed as a TAX.) Whatever - the net result is if you're a professional licensee it'll now cost you more for the privilege of doing business in Canyon Lake.

Exactly why they singled out 'Professional Licensees' to hit up for more taxes, sorry - FEES, is anybodies guess. Maybe the city leaders just figured that's where the money's at since it apparently isn't in the city coffers and they need more. So they determined that in addition to the customary 'Business License Tax' that owners of every business pay every year, they were going to break that down even further to "protect the public health, safety and welfare as well as provide for efficient administration of the program". That's clever - invent an unnecessary program and then tax people to run it. These people may have bright futures in state politics.

Ryan Smith, IVAR GAD, board Counsel John Giardinelli and I have been working with the City to address the madness of this ordinance since July. We have held numerous meetings with city staff and counsel and, as of a month ago, had actually reached what we felt was an equitable compromise. Unfortunately the CL Mayor visited her hairdresser a few days before the most recent council meeting and the current Ordinance 121 revision was the result of that high level conference. (No, I am not lying).

From here on out, any 'Professional Associate or licensee' including, but not limited to, realtors, attorneys,beauticians, barbers, manicurists, dentists, dental hygienists, veterinarians, doctors, podiatrists and chiropractors get to pay extra to operate in Canyon Lake. It applies to 'businesses which have a fixed location within the city as well as those which do not'. 

So if you're a Broker, attorney, doctor, etc. with an office in Canyon Lake, you will owe this extra fee for every licensee under you. If you are a Realtor from elsewhere and you list a property in Canyon Lake, they will send you a bill. They are unclear on whether they can bill your Broker for every agent in your office whether or not they do business in Canyon Lake but for sure you'll get a bill because of your sign. If you represent a buyer on a property in CL, they have no way of figuring that out so you can either just pony up the tax, errrr FEE because you are a fool, or you get a free pass. 

I'm sure all the agents from San Diego and Los Angeles (& Murrieta and Riverside) listing bank-owned homes in Canyon Lake will just be falling over themselves to send in that extra payment.Their code enforcement person is going to have a full time job tracking down these signs, sending bills, stopping by offices to count noses and ensure compliance etc. 

What? You say they don't have and can't afford to devote a full time code enforcement officer to this effort? Jeez, maybe it's gonna be a challenge collecting those payments from Ventura and the OC then. If they're lucky a few businesses in Canyon Lake might comply - everybody else will just give this program the respect it so richly deserves - doo-dah. 

The City claims this is necessary for 'disaster preparedness and in the event of an emergency'. So by their logic, if your building is on fire, instead of calling the owner of record they could just call some random Realtor or hairdresser. If your business is being burgled, don't call the manager, just call somebody that does nails in the back stall or a random podiatrist. Yeah, that makes sense. 

In summary, under Ordinance 121, the City of Canyon Lake has singled out 'licensed professionals' working in or thinking about working in the City for an additional tax, errr, FEE. They claim they need to do this for 'disaster preparedness and emergency contact', and they're counting, in large degree, on voluntary compliance because they don't have the manpower necessary to enforce it. They have invented an unnecessary program and want to charge you an additional fee to implement it. 

At this point you may be wondering what the additional tax, errrr FEE is? $20. That's right, $20. One lonely Andrew Jackson. As a representative from their Chamber asked, why is the City willing to piss off some 300+ business' still hanging on in Canyon Lake over $20? If they're lucky, they might generate a few grand. Probably not. He told them straight out "You aren't listening!". He was right. 

If there's any good news to be gleaned from this ludicrosity, they started out demanding $90 a head, they ended up at $20. Of course since the amount of annual increase is unspecified, they could decide to jack it to $90 next year now that it's in place. 

Anyway, if you're thinking about dong business in Canyon Lake, you might want to check out the City's record on business friendly ordinances before you jump. Menifee, Lake Elsinore & Wildomar are right next door and they would love to have your business. And it won't cost you an extra $20 a head to do it. 

You can read the full text of this ordinance if they every figure out how to post it to their website. 

County Assessor/Clerk/Recorder Larry Ward has just released his 2009-2010 Annual Report and it's chock full of all kinds of exciting stuff - and some not so exciting.

I'll just tease you with a few details but for the full scoop you've got to follow the link at the bottom to find the details.

For example, did you know that:

• The Riverside County tax roll value (before exemptions) dropped 10.51% last year - from $242.98 Billion to $217.44?

• There are 500,292 single family residences in the County worth $120,318,983,044. They represent 57.54% of the tax base with an average value of $240,498?

• 253,364 of those received a reduction in assessed value last year averaging $144,432 and a total of $36,593,784,694 was lopped off the tax rolls as a result? That's 15.44% of the total.

• Indian Wells has 4 of the 5 largest homes in the county at 22,597; 20,499,; 19,188; and 18,404 SqFt. Palm Desert snuck in #2 at 20,667?

• The Palm Desert place is assessed at $26,619,674 while the Indian Wells places are $16,611,951; 12,180,881; 11,935,337 and $11,736,743? (He doesn't say if they applied for a reduction in value last year).

• There were 36,191 appeals last year, up from 12,330 in 2008 and 2,909 in 2007. Remember those days?

• In Murrieta there were 19,113 homes re-assessed under Prop 8. Gross Value Assessment rolls dropped 14.92% from $11,885,525,613 to $10,112,353,803?

• In Temecula there were 16,110 homes re-assessed. GVA dropped 11.33% from 13,537,557,997 to $12,003,546,129?

• The top business in the County based on Business Personal Property was Abbott Vascular. International Rectifier came in at #14?

In a nod to bi-partisanship, Gov. Schwarzenegger has sent a clear message to one his Democratic legislators. Gov. Arnie always includes a note attached to a bill that he signs or doesn't signs letting the bills author know why he is taking the action he did. It's usually a boilerplate note either congratulating them on proposing a bill that serves the people, or telling them to try harder next time.

In addition to his boilerplate note, he attached the following missive to a bill he didn't sign authored by San Francisco Assemblymember Tom Ammiano. It should be noted that Ammiano was a prominent heckler of the Gov when he attended the State Democrats Convention last month at the request of former Speaker Willie Brown. Among other taunts, Ammiano is reported to have called the Gov a 'liar' and shouted that he could 'kiss my Gay ass' as he walked out of the event. So here's the Gov's message:

Now that in itself is hardly newsworthy - except that some sharpie noticed another message embedded in the text. And it's not that hard to find - just one of those simple 'Read Down the Left Margin' kind of things. If you're having trouble seeing it, the message begins with 'F' and the second word is YOU.

When asked about the note, the Gov's office replied:

"My goodness. What a coincidence," said Schwarzenegger spokesman Aaron McLear. "I suppose when you do so many vetoes, something like this is bound to happen."

Silly stuff - and if you want to read what the San Francisco Guardian had to say about the matter (as if you can't imagine what the liberal blogs are saying) just click here: Arnold to SF - FU

When you start your day attending two meetings where the speakers apologize for being depressing, the rest of your day can only improve. That was my day today.

I started with an early morning meeting of the Southwest California Economic Development Corporation where we were treated to remarks by John Rossi, General Manager of Western Municipal Water District. Apologizing for depressing us, John presented a factual summary of where our state is waterwise and how the water districts are dealing with our current situation. Having toured the Northern end of our state water supply system last year from Oroville Dam to LA, and having written about the issue on numerous occasions, I believe that rather than being depressed we should see this as a call to action. As Rossi did when he encouraged us not only to use our resources wisely but to engage our legislators in recognizing the complexity of the issue and dealing with it comprehensively.

With over 70% of SoCal water deriving from the north, another 25% from the Colorado River and about 5% from ground water & desalinization, it's clear where the answer lies. Prayer. But in addition to prayer, the water department is also working legislatively through the current 'special session' to address both conservation and infrastructure issues. Until and if those solutions ever bear fruit, they will also continue to squeeze their customers. Oh, by the way, if those solutions do bear fruit, they will still continue to squeeze their customers. Why? Because they can. And any fix - even the inadequate Democrat proposals, will come with a big price tag that somebody has to pay for.

Here's a fun factoid. During the past year our primary wholesale supplier of water, Metropolitan Water District, has instituted rate increases of nearly 40%. These increases were designed to encourage conservation - a very admirable goal and one that will certainly help us deal with the problem. There's another 20% increase due in a month or two. Why? Because our conservation efforts have been so successful at reducing water consumption that Metropolitan has less revenue coming in to service their bond debt and fixed expenses. So they need to raise rates again because the first rate increases were so successful at changing our consumption habits. Damned if you do, damned if you don't. Is there a win-win in here anywhere?

Think our bills will go down anytime soon? The you should have been to the EWDC luncheon featuring Senator John Benoit and Assemblymembers Brian Nestande and Kevin Jeffries. The operative words here were also 'depressing' and/or 'frustrating' by turns, for the state's economic outlook, any chance for real reform and for the water picture.

Assemblymember Jeffries, who was appointed to the state special commission on water, remains hopeful that some compromise solution will be reached soon, possibly as early as this coming week. He bemoaned the fact that water has become so politicized that true progress remains elusive. While the party in power in Sacramento thinks the problem can be solved by merely conserving more and restoring the Delta, the minority view prefers conservation coupled with additional infrastructure to provide long-term solutions. Capturing and storing rainfall and snowpack for future use, channeling current water resources without adversely impacting the Delta Estuary, new dams, an alternative conveyance AND continued conservation are all part of a comprehensive solution.

Our current drought is caused in equal parts by nature and regulation. Our dams truly are down by 1/2 to 2/3rds as a result of rainfall & snowpack the past few years. It is regulatory by virtue of the fact that judicial decree has determined the rights of the Delta Smelt take precedence over 18 million water users, farmers and food producers throughout the central and southern parts of the state. There are also complex water rights issues with people at the watershed source and with environmental groups concerned about preservation of the Delta. It wouldn't be an easy fix even on a level playing field - given the way our legislature operates it's a wonder anything happens at all.

All panelists agreed that jobs are the answer for our state. "Not bigger government, not more taxes, more jobs", according to Senator Benoit. "Taxes up, jobs down, legislature ineffective", according to Jeffries. '450,000 jobs lost this year at an average $68,000 per, 150,000 jobs created at an average of $52,000 per - not good' according to Nestande.

Jeffries also pointed out that the party in power, regardless of which party, has shown they will do darn near anything to perpetuate that power. There was some disagreement as to whether term limits have been effective at making our state more governable but all agreed that term limits have resulted in shifting power from the people who should be accountable, (our legislators), to people who are not accountable, (staff and lobbyists). The people who make the decisions aren't around long enough to have to deal with the consequences of their actions so what's their motivation to work for the long-term good? (Please keep in mind that all legislators are not altruistic by nature. Some just love the power, some just love the perks, and some just want to have a lobbyist mistress who wears a thong).

Agreeing that reform must occur if California is to turn itself around in any meaningful and sustainable way, they admit that if the legislature is not prepared to reform itself then the public will have to do it for them. When asked about the prospect of that occurring through Constitutional Convention, Jeffries voiced some concern about what could result from opening that can of worms while Nestande opined that any result probably couldn't be much worse than the status quo.

Depressed yet? You shouldn't be. This is California politics at its best. The more you know, the better prepared you are to deal with it. If you're not at the table, you'll surely be on the menu. Sometimes you might be anyway. Of course that's just my opinion, I could be wrong.

In addition to the Action Items summarized in the previous article, CAR Legislative Agenda Shapes Up, there was another Action Item that came before the 526th Board of Directors session on October 10, that being a motion from the Real Estate Finance Committee. 

By way of background, here's a brief primer on how things happen at our state association level. Any member can bring forward an issue through their local association representatives for consideration at the state level. The matter is brought into the committee structure so that a decision can be made on whether the matter is appropriate, whether the impact is significant and what action should be taken. I mean, face it - Just because you've got a beef about a local lockbox issue or had a problem with some lenders short sale negotiator may not qualify the issue for consideration by a state committee. 

If the committee determines the issue is of sufficient import to tackle it, it will be placed on the agenda for discussion along with supporting documentation. The committee will then determine what, if any, action should be taken.

Should they decide to recommend some form of action they will determine whether they will go forward with a request to SPONSOR a bill, SUPPORT a bill that's already in process or just ask CAR to devote some staff time to further research the most appropriate course of action. That recommendation, in the form of a motion or report, will then proceed from the originating committee to a policy committee, generally the Legislative Committee. That committee can decide to approve the committees motion, oppose the motion, or draft an amended version. One or both motions will then proceed to the Executive Committee where they will look at it, approve it for the general session agenda, draft an amended or competing version or, in rare instances, oppose the motion.

One such motion came before the session on Saturday having to do with the current FHA 90 day anti-flipping rule. Originally drafted in 2001, the FHA rule was intended as a consumer protection back in a day when FHA loans, especially in California, were the exception rather than the rule. Due to the FHA's unwillingness to keep pace with escalating prices, again especially in areas like California, the use of FHA mortgages fell to single digits by 2005 contributing to the widespread reliance on sub-prime and other more exotic financing methods. 

Today FHA loans are becoming more the standard again with increased loan limits in our area. This is especially true for first time and other low-to-moderate range buyers, currently estimated to account for as much as 40% of todays loans statewide. The anti-flipping rule, originally intended to prohibit investors/intermediaries from acquiring cheap homes and simply 'flipping' them with no value added thereby driving prices up, doesn't really apply in this market. In fact the argument was made that investors play a very significant role in todays market buying abandoned and stripped foreclosures that would not qualify for an FHA loan to begin with. They rehab the home, often within 30 days, and then put a move-in-ready home on the market (at market price, not inflated). But 40% of buyers who might otherwise qualify for that home with an FHA loan cannot because of the anti-flipping rule.

As you might imagine there was substantial debate at every level of advancement for this motion. But when it came to the floor on Saturday it carried an almost unheard of prohibition - a recommendation from the Executive Committee that the motion be defeated. Why? Their stated reason had little to do with the particulars of the rule or the motion but a general caution that in todays political climate of increasing regulation, they simply didn't think this was a winnable fight.  HONEST.

After about 45 minutes of spirited back-and-forth on the motion before the general assembly, members delivered a stinging rebuke to Exec. Not only was it determined that C.A.R. in conjunction with NAR 'SUPPORT' the elimination of the anti-flipping rule, an amendment was inserted telling CAR we want them to write a letter to the FHA Commissioner and others appropriate parties advising them of our opposition to the rule. NOW. 

It's kind of fun to see the members get riled up sometimes. In an environment that at times resembles a convention of rubber stamp politics as usual, passion can carry the day. Enough of our member/Directors realize the impact this is having on you and your Buyers and decided political correctness and/or lack of balls be damned. This was the right thing to do and we're by God gonna do it. 

Will it result in an immediate change? Not likely. But the message is being delivered. As we continue to define what is the new 'normal market', your Association of Realtors will be at the table assisting in that process. It was a proud moment to stand up and be counted.