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2. 2Q15 Market Update

3. Winter is Coming. Have A Plan!

4. Security Deposit Litigation

Monthly Circulation To More Than 10,000 Apartment Owners, Property Managers, On-Site & Maintenance Personnel

WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC

Rental Housing Journal Arizona October 2015 - Vol. 7 Issue 9

continued on page 6

5. Dear Maintenance Men

9. Amid Rapid Gentrifi cation, Inclusionary Housing Can Reduce Segregation

Advertise in Rental Housing Journal ArizonaCirculated to over 10,000 apartment owners, on-site and maintenance personnel monthly.

Call 503-221-1260 for more information

11.What To Do When You Need A Lawyer

Prepare Rental Properties For Th e Winter Season

5 Lessons For Winter Property Survival

By Scott Matthews, Director, Strategic Accounts, Th e Home Depot

Fall is a great time to prepare properties for the colder months ahead, which may help prevent or

off set costly repairs and high utility bills caused by harsh winter weather. Before winter hits, take steps to ensure that the property is ready for the elements with this must-have checklist.

1. Stock up. Property managers – espe-cially those handling procurement – should prepare for colder months by purchasing winter products, such as salt and ice melt, in bulk before the season changes. Buying in bulk not only saves time and money but also gives property managers peace of mind as they look ahead to potential extreme weather.

2. Seal gaps. Th oroughly examine roofs, siding, doors and window frames for damage and draft s. Repair damages immediately and seal around doors and windows with caulking, weath-er stripping, or a door sweep to help keep warm air in and cold air out. As a best practice, ensure exterior seals are strong where building ma-terials meet, like where siding stops and brick begins. Encourage tenants to notify of any draft s or noticeable gaps in their units to prevent soaring utility bills.

3. Protect pipes. Install heat cables and pipe insulation to prevent freezing pipes as temperatures drop – espe-cially for pipes exposed to outside air or on exterior walls. Remind tenants to let faucets drip overnight during extreme cold to keep pipes from bursting and causing water damage. Repairing burst pipes can cost more than $600 – depending on where the pipe is located and the extent of the damage, so take the necessary steps to avoid the additional out-of-pocket cost.

4. Check the water heater. Ensure units on the property are in good condition with thorough inspec-tions. Drain and fl ush the hot water heater to get rid of sediment build-

up. If it’s time for an upgrade, choose a model that’s compliant with the lat-est effi ciency requirements enacted in April of this year.

5. Install programmable thermostats. Wi-fi enabled thermostats off er cus-tomizable convenience by enabling users to control temperatures from their smart phone. Some models even sense when a unit is occupied, delivering comfortable temperatures when it is in use and saving energy and money when no one is home. Property managers can also program smart thermostats to send reminders for fi lter changes or extreme tem-perature alerts.

As Darwin concluded, “It’s the survival of the fi ttest.” If we hope to preserve our property over

the long term, there are simple truth’s we must accept and actions we must take in order to ensure the viability and value of the physical assets under our stewardship. Th e simple truth is that as soon as a property is built, it begins the process of dying. It’s a harsh truth, but we have all seen it. With that said, there are some properties that seem to escape the inevitability of decay, waste, and death. So, how do they do it? Are they

special in some way? What are those op-erators doing to extend the life of those properties, or, at least, lessen the eff ects of time in order to retain value? Th ese operators understand the following 5 lessons and keep them at the top of their preventative maintenance approach.

Lesson One: Gutters and drains are key.

When gutters, downspouts, and ground drains are neglected, they begin killing your buildings. Th ese compo-

contiued on page 2

contiued on page 3

Payroll Job SummaryTotal Payrolls 1,888.2mAnnual Change 49.7m (2.8%)2015 Forecast 51.7m (2.8%)2016 Forecast 51.3m (2.7%)2017 Forecast 51.5m (2.6%)2018 Forecast 47.9m (2.4%)Unemployment 5.7% (July)

Payroll Trends And Forecast

Th e year-on-year pace of payroll em-ployment growth decelerated, slowing from a 56,800-job, 3.1% rate in 1Q15 to 49,700 (2.7%) jobs in the second quar-ter. Likewise, seasonally-adjusted data indicate that net job creation during the period plunged from 9,100 jobs during the fi rst quarter to 300 in the second, the weakest gain since 3Q10. Slower expan-sion in regional services appear to be the cause as sequential quarter growth was weaker in retail trade and health care, leisure and personal services.

By contrast, the tempo of job creation appears to have gained speed during the summer. Year-on-year compari-sons in July showed a gain of 60,900 jobs over 2014, and payroll employment totals expressed on a seasonally adjust-ed basis advanced 10,900 jobs in July and August.

2Q15 Market Overview

Multifamily Housing Update

1503073_10wx75h_CMYK_MEEP_AZ_Rent_Hous_Journal_ad_r4_042015_outlined.indd 1 4/20/15 3:33 PM2

Rental Housing Journal Arizona

Rental Housing Journal Arizona · October 2015

2Q15 Market Overview ...continued from page 1

The Phoenix job market is among the more volatile in the country and is, therefore, a challenge to model. Red Research settled on a equation that em-ploys two lags of the dependent vari-able, U.S. GDP and payroll and metro income and home price growth as in-dependent variables; achieving a 97.2% adjusted-R2 (S.E.=0.5%). The model projects gradually moderating growth throughout the forecast, consistent with the national average. Annual job gains are likely to remain above 50,000 jobs through 2017, slowing to the mid-40,000 range in the out-years.

pancy of 94.6%, up 90 bps y-o-y. In this population, classes-B and—C notched the highest average occupancy, each on 94.8%. Class-A properties lagged at 93.6%, largely due to strong compe-tition from new properties coming on line. Indeed, this services identified 41 new or rehabbed assets still in lease-up during the second quarter. Absorption of new units appeared to slow to a crawl, sending rents lower after aggressive in-creases. RCR’s demand model employs payroll, GDP and supply growth and a lag of vacancy as independent variables to achieve a 94.8% ARS (S.E.=0.4%). The equation projects robust demand for more than 5,000 units in 2015 and 2016. But supply is likely to consistently over-balance demand, causing a –210 bps drop in occupancy by 2020.

petus came from the class-A segment, where asking rents surged 4.4% y-o-y while class-B&C gained just 2.1%.

Axiometrics surveys of 605 stabilized, same-store professionally- managed properties uncovered average y-o-y rent growth of 7.4%, representing the fifth consecutive quarter of 5% increases or faster. Growth was comparable across classes, each notching gains from 7.2% (class-B) to 7.8% (class-C). The fast-est growth was observed in Northeast Phoenix (9.9%) and South Mesa (9.7%), while South Scottsdale (2.6%) and Par-adise Valley (3.9%) trailed the pack.

The RCR rent model uses payroll, supply, income and home price growth as independent variables to achieve a 97.3% ARS (S.E.=0.5%), with payroll (+) and supply (-) having the greatest sig-nificance. This model yields a forecast of sluggish growth due to supply pres-sures in 2015-17, followed by faster ad-vances as the inventory wave subsides.

Trade & Return Summary$5mm+ / 80-unit+ Sales 30Approx. Proceeds $612.1mmAvg. Cap Rate (FNM) 5.0%Avg. Price/Unit $95, 328Expected Total Return 4.9%RED 46 ETR Rank 46tj

Risk-adjusted Index 4.41RED 46 RAI Rank 29th

Property Markets And Total Returns

Investors continued to accumulate Valley properties liberally as sales ve-locity of properties priced at $5 million

Occupancy Rate SummaryOccupancy Rate (Reis) 95.7%RED 50 Rank 28thAnnual Chg. (Reis) +0.6%RCR YE15 Forecast 94.9%RCR YE16 Forecast 94.4%RCR YE17 Forecast 94.4%RCR YE18 Forecast 93.9%

Absorption And Occupancy Rate Trends

Space absorption trends moderat-ed during the second quarter as a net of 1,212 tenants leased vacant units, according to Reis, down from 2,120 during the seasonallystronger first quarter but up from 902 in the compa-rable quarter of 2014. Supply remained subdued as developers delivered only 868 units, allowing occupancy to rise 20 basis points sequentially to 95.7%, a Reis series high mark.

Axiometrics surveys of 605 larger stabilized assets recorded market occu-

Effective Rent SummaryMean Rent (Reis) $781Annual Change 3.9%RED 50 Rent Change Rank 22nd

RCR YE15 Forecast 2.9%RCR YE16 Forecast 1.3%RCR YE17 Forecast 2.1%RCR YE18 Forecast 2.6%

Effective Rent TrendsReis surveys indicate that average

Phoenix effective rents increased $7 (0.9%) sequentially to $781 during 2Q15, marking the 10th consecutive quar-ter of 0.8% or faster sequential quarter growth. As a result, year-on-year rent growth held steady at 3.9%, nearly two times as fast as the sixteen-year quar-terly average (1.5%). Much of the im-

more accelerated to 30 trades from 28 and 27 in the last and penultimate quar-ters, respectively. Sales proceeds totaled $612.1mm, down moderately from $685mm and $630mm in the compa-rable quarters. The decline was attrib-utable to a decrease in traded units as the average property size declined from 279 in 4Q14 to 214, while the average price per unit increased from $91,031 to $95,3328. The average age of traded assets was 28 years, up from 24.

Regional owner/managers predom-inated among investors, accounting for about one-half of all trades. Other buyers included REITs, private equity firms and investment funds. Cap rates were mostly sub-6%. Class-A/B+ assets traded from the mid-4s to low-5s; class-B/B- from 5% to 6% and class-C in the 6.25%-6.5% range.

The prices of Phoenix properties were at odds with our downbeat rent forecast. Using a 5.5% assumed going-in yield, a 6.4% terminal cap rate and model de-rived occupancy and rent point esti-mates, the integrated model produces a 4.9% unlevered 5-year expected total return, last among the RED 46. Inves-tors appear to be betting that supply will not have the impact on rents antici-pated by the model. As for risk-adjusted returns, Phoenix ranks #29.

continued on page 7

By Daniel J HoganDirector of [email protected] Office1-800-837-5100 Toll Free

3



8. Defend against moisture. Keep out-door fabrics and surfaces safe from the winter elements with a moisture blocking spray or sealant. Use the product to protect walkways, wood and other outdoor surfaces before the harsh weather arrives.

9. Create a severe weather kit. Pre-pare for the worst by assembling a severe weather kit before the season hits, including generators, batteries, fl ashlights and a First Aid Kit. Also include snacks, water and other es-sential supplies.

10. Help residents prepare. Encourage tenants to report maintenance issues immediately and share tips to help them get ready for the winter season. Let them know that they play a huge role in keeping the unit intact during the colder months.

By Scott Matthews, Director, Strategic Accounts, Th e Home Depot

Scott is responsible for managing national accounts and e-commerce while overseeing

business-to-business relationships. During his 25 years at Th e Home Depot, he has served

in a variety of roles and capacities, including Regional Pro Sales Manager, District Manager

and Store Manager.

6. Clear gutters. Remove debris from gutters to ensure proper drainage around the property. Th e fall and spring seasons are the best times to clean gutters, and property manag-ers should take this one at least two times per year. Improper drainage can damage landscaping and the property’s foundation and cause snow and ice to build up in the win-ter months.

7. Protect the landscaping. Th e steps to winterize your landscape largely depend on your location. In milder climates, like the West Coast or Deep South, you can protect your outdoor plants by applying mulch or protec-tive fencing and verifying that the freeze sensor on the irrigation sys-tem is working properly. In colder climates, drain water from the irriga-tion system so pipes and sprinklers don’t burst underground. Th ere are three common techniques to win-terize irrigation systems – manual, automatic and compressed air blow-out methods – so property managers should review the options to deter-mine which can best protect their landscape.

Prepare Rental Properties ...continued from page 1 Winter is Coming

It’s budget season for property man-ager and everyone is scrambling to get them done accurately and on

time, while managing everything else that goes on daily on our properties. But, we can’t forget cold weather and freezing conditions are coming. Al-though, we have had a hot long summer into fall, we need to be prepared for cold weather. Prepare for the worst and hope for the best!

Here are some best practices for to help ease the process and headache.

Prepare the residents.• Staff should be prepared with all

emergency situations and how to navigate all emergencies. Winter can bring fi res, fl oods, freezing pipes, and freezing branches that can fall on buildings. All staff should know how to handle all of these situations. Be prepared with phone numbers for aft er hours emergencies for restoration com-panies, electricians, tree remov-al and landscaping companies, and help organizations like Th e Salvation Army. It’s also import-ant to make sure that your whole team has contact information for all team members, in case of emergency.

• Prepare staff and residents for emergencies. Make sure everyone knows what to do in case of emer-

Have a plan!gencies during business hours and aft er. Offi ce Hours and emergen-cy contact information, including emergency and utility informa-tion, should go out to all residents and posted on the offi ce door as well as voice mail.

• Publish and distribute an informa-tion booklet of emergency plans and reminders. For example: in the event of a power outage, re-mind resident not to use stoves or space heaters that do not automat-ically shut off if tipped over. Avoid candles and make certain that residents have working fl ashlights and batteries. Another important plan to include is fi re evacuation. Make certain to walk your proper-ty and note potential areas of con-cern – IE sidewalks, parking lots or stairway that might freeze over, etc. Include those in your plan.

Everyone hopes that none of these emergencies will occur, but they do happen. Th e best way to overcome, minimize damage and keep residents as happy as we can will come from BEING PREPARED!

By Dana BrownDana Brown has worked in all facets of the

property management and rental housing industry for over 30 years. She is a national speaker and trainer who consults with both

property management companies and industry service providers. You may reach Dana at:

[email protected]

Advertise in Rental Housing Journal ArizonaCirculated to over 10,000 apartment owners, on-site

and maintenance personnel monthly.


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Advertise in Rental Housing Journal ArizonaCirculated to over 10,000 apartment owners, on-site and

maintenance personnel monthly.


www.rentalhousingjournal.com

continued on page 10

Security Deposit LitigationNext to evictions, suits over se-

curity deposits are the highest volume of litigation between

landlords and tenants. Everyone in property management should be aware of the basic requirements concerning deposits.

The landlord can require a new tenant to pay a security deposit. These are subject to the following under A.R.S. § 33-1321:

• A) The deposit cannot exceed one and one-half month’s rent.

• B) All deposits are refundable un-less designated “non-refundable” in writing by the landlord.

The purpose of these must also be stated in writing by the landlord.

• C) There must be a walk-through form completed at the beginning and the end of the tenancy show-ing the unit’s condition. Normally the tenant has the right to be no-tified of the move-out inspection and to be there. This forms the basis for determining damage to the rental premises.

• D) Deposits do not accrue interest.

• E) The Deposit must be refund-ed at the end of the tenancy after netting out any rent and utility charges due, and the cost of re-pairing any tenant caused dam-age provided the landlord gives the tenant an itemized statement

within fourteen (14) working days after the lease is terminated, the tenant returns possession to the landlord, and the tenant makes a demand. A landlord failing to do so within fourteen days after the tenant vacates and makes written demand may become liable for three times the amount wrongful-ly withheld.

• F) The holder of the landlord’s interest in the premises at the time of the termination of the tenancy (the owner) is bound by this statute.

This section of the Act is probably the single most litigated area in landlord/tenant relations next to nonpayment of rent actions. It is also potentially the

most dangerous for the landlord. With the enactment of the Arizona Small Claims Court, more and more tenants are suing landlords for the return of part of their deposit.

Security deposits should be required from every tenant, but must not exceed an amount equal to one and one-half month’s rent. Security does not have to be money but could be anything of value acceptable to the landlord (i.e., a stereo, title to a vehicle, etc.). Keep in mind the definition of security under A.R.S. § 33-1310(14) which excludes cleaning or redecorating charges.

A landlord can never forfeit a refund-able deposit but must always itemize where the deposit was applied (rent, damages). Once the tenancy has ter-

minated, whether through expiration of the lease or the eviction process, a landlord needs to itemize how the se-curity deposit will be applied and the 14-day period does not begin to run until three conditions are met. Those three conditions are termination of the tenancy (the lease expires or the prem-ises are re-let), return of possession (the keys are turned in), and demand for the deposit is made. However some courts require the disposition within fourteen business days from getting possession back (regardless of the other two re-quirements being met).

It is unclear whether a tenant must make a demand in writing and either deliver it in person or send it by certified or registered mail as required by A.R.S. § 33-1313(B). However, some judges will take the position that a verbal re-quest is sufficient and tend to believe that, human being what it is, the tenant would have requested their security at move-out. This can create problems for the landlord as in the case where the tenants, upon moving, request their deposit from a manager who is shortly thereafter terminated or finds another job. As a safety precaution it is always advisable for the landlord to inspect the vacated premises as quickly as possible and send written itemization by regular first-class mail to the last known ad-dress of the tenant, within the 14-day time period, even if it is the address just

PublisherWill Johnson – [email protected]

Designer/EditorKristin Flores – [email protected]

Advertising SalesWill Johnson – [email protected]

Terry Hokenson – [email protected] Surratt – [email protected]

Rental Housing Journal Arizona is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in

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The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. To request a reprint or reprint rights contact Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007. (503) 221-1260 - (800) 398-6751 © 2015 All rights reserved.

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Dear Maintenance MenBy Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: Being part of the Baby Boom generation and staying active means I should know a bit more about “Aging in Place”. Can you explain this term and how it might aff ect my apartment community?

Bob & Joann Dear Bob and Joann:Baby Boomers are 25 percent of the population and the fi rst of the Boom-ers turned 65 in 2011 and the last will turn 65 in 2029. We heard on the radio the other day that 85 is now the new 75 and so on down the line. Th at is a large healthy aging group! Th ey are not going to go quietly into a nursing home which means as apartment owners & manag-ers; we need to prepare for this group. Aging in place means bigger showers with wider doors, taller toilets, grab bars and bath sinks that will accommo-date wheelchairs. Th is does not mean turning our units into institutions; there are many stylish accommoda-tions to fi t a number of needs. For ex-ample a grab bar capable of supporting 250 pounds does not need to look like it came out of a hospital. Grab bars come in a variety colors and designs. Many will double as towel bars and be virtu-ally invisible to their primary purpose unless needed. A larger shower stall also will look opulent and practical at the same time. Replace old two handle faucets in the kitchen and bathroom for

single handle or touch faucets. Consid-er installing anti-skid fl ooring in the bathroom and tub/shower area. A few other items might be contrasting color edging for the counter tops along with rounded edge and corners. Replace all door knobs with lever handles for ease of use. Th is is a small sample of the things you can do to stay competitive in a growing market while not mak-ing changes that younger generations would fi nd objectionable.

Dear Maintenance Men:I am starting my planning for a major kitchen cabinet remodeling project in my rental units. However, I am having a diffi cult time making material and de-sign decisions. What recommendations can you give?

Allen. Dear Allen,When doing a kitchen or bath mate-rial selection, cohesive and functional design is important. Kitchen and bath rehabs are some of the most expensive work you can do in an apartment unit and proper planning is a must. In order to appeal to a larger segment of the pop-ulation, try to keep the interior color scheme to neutral earth tones. Cabin-etry quality varies greatly. Don’t let the cabinet fronts fool you. Manufactures designed their cabinets to look good at fi rst glance. Keep in mind, being in a rental environment, the cabinets also need to hold up to abuse. Look at the actual construction of the cabinet box or frame. Th ere is no need to use cus-

tom cabinets to fi t your existing layout. Th e use of prefabricated modular cab-inetry can greatly reduce the time and cost to have a fi nished kitchen or bath-room. Using real wood cabinet fronts with 3/8” plywood sides is essential for durability. Th e drawer fronts and sides should be connected with a dovetail or other positive lock construction. Draw-ers that are held together by nails will not hold up to tenant abuse, nor will particle board constructed cabinets. On a side note; if you are gutting the kitchen or bathroom, use this time to relocate and add more electrical outlets and under cabinet lighting.

Dear Maintenance Men:I have a conundrum! My roof is in good shape, however I have a mystery leak or to be more precise I have a moving mys-tery leak. In other words, when it rains, the roof does not always leak in the same place. Th is is driving me crazy.

SamDear Sam:A good roofi ng troubleshooter is worth their weight in gold. Here at Dear Main-tenance Men, we love a good mystery! First things fi rst; have your building inspected by a reputable roofi ng com-pany or roofi ng inspector. Th e inspec-tion will eliminate non-issues and help point you in the right direction and may even solve the leak mystery. Th e amount and intensity of rain will contribute too many roof leak myster-ies. Oft en a light rain will cause a leak

in an area that would not leak in a heavy or prolonged rainstorm. Th e reason is material swell. A light rain is not “wet” enough to swell surrounding wood or roofi ng material and cut off the leak. Mind you, this is still a leak that needs fi xing. Th e deep penetration of water in a heavy or wind driven rainstorm will cause a leak by sheer volume that would not have leaked in a light rainstorm. Roof fl ashings are a common source of leaks that drip far from the source of the water intrusion. A roof fl ashing can be found were the roof material meets a transition area such as a chimney, a wall, a pipe or other structure. Shift -ed or lift ed composite shingles or roof tiles will cause water to come into con-tact with the felt paper under the roof-ing material and a break in the felt or roofi ng paper will cause a leak. Debris on the roof, valley, top caps, gutters etc can form water dams and cause leaks. Watch overhanging trees as well as they can damage the roof and cause leaks.

Bio:Please call: Buff alo Maintenance, Inc for main-tenance work or consultation. JLE Property Management, Inc for manage-ment service or consultationFrankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480 CA contractor lic: #797645, EPA Real Estate lic. #: 01460075Certifi ed Renovation Company Websites: www.Buff aloMaintenance.com & www.ContactJLE.comwww.Facebook.com/Buff aloMaintenance

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nents are at the top of the most wanted list when it comes to the destruction of your physical property. When they are clean and clear of debris, they will redi-rect and remove thousands of gallons of rainwater per year. To fi nd the estimat-ed amount of rainfall at your property use the following equation: (total sq’ of roof surface X 0.6 X annual rainfall).

Here is a common property exam-ple from one of the properties in my portfolio in Portland, OR. It’s a 100 unit property with 10 buildings. Each building has a roof surface of approx. 2000 sq’. Using the annual rainfall for Portland (37.2”/yr), we can estimate that over 446, 000 gallons of water per year is landing on nearly all surfaces of my property, but mostly on the roofi ng.

Without clean and functioning gut-ters, downspouts and ground drains all of that water is pouring into your building envelope somewhere. Wheth-er it’s damaging the roof sheeting, de-teriorating the fascia, pouring down the siding, splashing over the side and causing splash back on the underside of the siding, or simply creating stand-ing water throughout the property, it will cause you problems. Th e obvious solution is to give your rain drain sys-tem the attention it deserves. I recom-mend 3 cleaning and line jettings per year. Starting in March, I want to get all the residual debris out from the pre-vious winter. Th en in August/Septem-ber I want to get them all clear for the upcoming Fall and Winter leaf drop,

5 Winter Lessons ...continued from page 1

continued on page 10

then I will do one fi nal clean and jet in December/January to get rid of all the leaves and debris that was just dropped over the past 90 days.

Lesson Two: Sealant matters. Th e sealant (caulk) that is protect-

ing your windows and siding material joints is like the sentry guarding the castle gate. At fi rst he is strong, fl exi-ble, dependable, and nearly unbeatable. However, he gets weaker over time, and, depending on his location, is constantly under attack and beaten down. Even-tually, he fails and must be replaced. Th e truth of the matter is that even the best sealants on the market have a man-ufacturer’s recommended useful life of around 3-5 years. Th is means that if your property was built before 2013 and hasn’t had the sealant removed and replaced then your property is under siege, and there is nothing protecting the critical access points that could be-come an open gate for water, mold, dry rot, and building failure. Within the industry there is a push given the con-struction defect litigation environment that is prevalent to implement sealant replacement schedules every 4-5 years with a focus on the horizontal surfac-es, especially those that are not fl ashed with metal. Th is increased focus on the sealant will not only prolong the life of the material components, it will elim-inate interior envelope damages. Since all surfaces and potential points of in-trusion are being reinforced on a reg-ular basis, the life span of the envelope materials, and ultimately the value and future capital needs to retain the value

of the property is preserved.

Lesson Three: Irrigation is key to NOI.

We all know water is very expensive. What we sometimes forget is, one of the largest water drains on our sites are our irrigation systems. Th ese systems were designed, initially, to get things grow-ing fast at the time of development. Green grass, healthy trees, and bushes that can be trimmed and shaped make the property look good and help with the initial lease up and aggressive mar-keting that it takes to get the property performing well fi nancially. But, over time, grass takes root, trees and bushes become mature and native plants and trees stabilize, leaving much of our ir-rigation systems unnecessary. Take this opportunity to do an in depth irrigation audit and determine areas that no lon-ger need to be watered. Some areas may need diff erent approaches, such as drip systems rather than the more common sprinkler heads which use far more wa-ter. If possible, remove entire zones in areas that have little or no grass, heavi-ly shaded areas, or areas that appear to be heavily saturated. Taking advantage of these savings will not only save you money but eliminates the need for fu-ture maintenance and possible damage and repairs as well.

Lesson Four: Don’t forget about crawl spaces.

Although oft en forgotten, neglected crawl spaces can be can serious prob-

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The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell cur-rencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED Capital Group. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

continued on page 8


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www.rentalhousingjournal.com

Amid Rapid Gentrifi cation, Inclusionary Housing Can Reduce Segregation

Inclusionary housing, a policy by which developers provide for the construction of aff ordable housing,

can be used eff ectively to reduce eco-nomic segregation at a time of rapid gentrifi cation in neighborhoods across the United States, according to a report published today by the Lincoln Institute of Land Policy. And it can be deployed while avoiding the negative economic impacts and legal concerns oft en cited by critics, according to the report.

“In hot-market cities, skyrocketing housing prices push middle class and low income residents far away from well-paying jobs, reliable transporta-tion, good schools and safe neighbor-hoods,” said Lincoln Institute President George W. “Mac” McCarthy. “Inclu-sionary housing alone will not solve our housing crisis, but it is one of the few bulwarks we have against the ef-fects of gentrifi cation—and, only if we preserve the units that we work so hard to create.”

Th e report, Inclusionary Housing: Creating and Maintaining Equitable Communities, charts a path forward for local policymakers who are grap-pling with the eff ects of gentrifi cation, but who are wary of overburdening developers, impeding new housing construction, or inviting legal challeng-es. Th rough a review of literature and numerous case studies, author Rick Jacobus off ers solutions for overcoming the major political, technical, legal and practical barriers to the adoption of in-clusionary housing.

“More than 500 communities have used inclusionary housing policies to help maintain the vibrancy and diver-sity of neighborhoods in transition, and we’ve learned much along the way,” Jacobus said. “Research shows that if programs are thoughtfully de-signed and implemented, they can be a valuable tool at a time when aff ordable housing is desperately needed.”

Inclusionary housing is a strategy that taps economic gains from rising real estate values to create aff ordable housing. Many inclusionary policies re-quire a certain percentage of residential

units in new developments to be aff ord-able to lower-income residents, while others rely on developer fees, or provide for the construction of off -site aff ord-able housing.

Chief among the concerns citied by critics is the potential for inclusionary housing to impede new construction by making development less profi t-able. However, many cities have avoid-ed such impacts by allowing fl exibility in how developers comply and off er-ing incentives, such as the ability to build at greater densities, according to the report.

Some of the key fi ndings and recom-mendations in the report include:

• Contrary to popular perception, rapid construction of market rate housing actually fuels the need for more aff ordable housing by changing the character of neigh-borhoods.

• Th e most successful policymak-ers have built public support and worked closely with private devel-opers in the craft ing of inclusion-ary housing policies.

• Off ering fl exibility and incentives to developers can prevent negative

economic impacts, but these tools need to be used judiciously.

• Inclusionary housing has been challenged in court, but programs can be designed to minimize legal risks.

• Follow-up, in the form of enforce-ment and stewardship, is critical. Some communities have created thousands of aff ordable homes, only to see them disappear aft er subsequent sales.

About the AuthorRick Jacobus is the principal of Street Level Advisors (StreetLevelAdvisors.com) where his work focuses on craft ing strategies that ensure that everyone benefi ts from growth. He is the founder and currently serves as a consultant to Cornerstone Partnership (Aff ordableOwn-ership.org), a nonprofi t initiative that supports local inclusionary housing programs.

Th e Lincoln Institute of Land Policy is the leading resource for key issues concerning the use, regulation, and taxation of land. Providing high quality education and research, the Lin-coln Institute strives to improve public dialogue and decisions about land policy.

SOURCE Lincoln Institute of Land Policy

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Visit our website

w w w . r e n t a l h o u s i n g j o u r n a l . c o m

lems. They may be too cold and wet under the units, or too warm and wet above the units. Take the opportuni-ty to get a visual on these areas. Here is where to focus; lower crawlspaces should be clean and dry. Check the va-por barrier to be sure there are no tears in the barrier, no standing water or stains of previous water stains from the previous winter. Also, be sure to inspect all plumbing pipes that are within 5 feet of the outer foundation wall to be sure they are insulated.

As for the upper crawl space, take a few minutes in each building to look for potential problems that add to excessive moisture issues and ultimately mold. Check fan exhaust venting to be sure it is positively connected to the exteri-or of the building, be sure that intake baffling is in place (you should see some outside light coming in where the bird block and intake vents are located), so that clean air can come into the crawl space and help push the moist, stagnant air out the top of the system. Last, be sure insulation is in place all the way out to the edge of the roof. As long as the baffles are in place this will ensure proper insulation for the units below.

Lesson Five: Emergencies are go-ing to happen.

Be proactive by implementing and practicing emergency plans with your team. If there is an after-hours call, does every member of your team know what to do? Setting up emergency re-sponse protocols, such as pre-approved

vendors for restoration, plumbing, car-pet extraction, and leak locators to deal with the problems, and hotels restau-rants, or even the Red Cross to deal with the residents. Have a centralized location at the site that has a list of all these vendors, utility shut off locate maps, valve keys, fire panel directions, and emergency protocols for fire, flood, and blood, but also natural disasters, terrorist threats, gang violence, and even domestic violence. When emer-gencies occur everything is chaotic, be sure your responding site staff are trained, prepared, and are level headed so they can assume the leadership role your residents expect and deserve.

Zach Howell, CAMT, UPCS, LEED GA

Director, Apartment Maintenance Institute

Zach carries a Psychology degree from Oregon State University. He is a nationally Certified Apartment Maintenance Technician, LEED GA, and Certified UPCS inspector carrying

more than a decade of experience within the multifamily housing, development, and con-

struction industries. Zach is a valued advocate for the Apartment Maintenance trade, serving

as Subject Matter Expert for the National Apartment Association, Training Director for The Apartment Maintenance Institute, Com-

munity Education Faculty Member at Portland Community College, and 2014 Apartment

Community Excellence “Oregonian Civic Award” Recipient.

He can be contacted via email:[email protected]

5 Winter Lessons ...continued from page 6Security Deposit Litigation ...continued from page 4

vacated. Include receipts and mail an extra copy certified mail.

Procedurally, the landlord should always attempt a walk-through of the premises with the tenant so as to elim-inate or lessen the areas of dispute. It is advisable to take a witness along and photograph areas that exceed “normal wear and tear”. Next, the landlord should apply prepaid rent and any re-fundable security deposit to rent owned and damages. Also. If a landlord uses vendors to make repairs, they should, at the very least, give the landlord written estimates so that these may be includ-ed with the notice sent to the tenant. If money is due the tenant, it should be returned with the itemization, or if the money is due to the landlord then that should be demanded from the former tenant.

Failure to send the itemization with-in fourteen days after proper demand may make the landlord liable to the tenant in an amount equal to the por-tion of the deposit wrongfully retained plus twice that amount. The key words are “may” and wrongfully”. The Court has discretion to award the tenant triple damages under this section. The bur-den is on the tenant to prove the depos-it was wrongfully withheld. Remember that if the landlord retains $50.00 of a $300.00 deposit, the tenant can only sue for the $50.00 and double that amount or $150.00 total. HOWEVER, be aware that some court decisions have awarded tenants all their security deposit plus the double damages where the land-lord failed to account within the four-teen days even if part of the deposit was properly used.

If either landlord or tenant still has a claim for any other damages they may have suffered, they can be raised at the same time as a deposit claim is made. If the property has been sold since the time the tenant first began occupying the property, the new owner would be responsible to comply with the item-ization, even if the new landlord failed to have the tenant’s security deposits transferred as part of the sale.

Finally, if the suit is brought by a tenant to recover a security deposit, de-termine who the tenant has named as the defendant. The tenant can only sue the landlord and as was pointed out in A.R.S. § 33-1310(6) and (8), a manag-er or management company is not an owner/landlord unless there was a fail-ure to disclose the owner to the tenant. In other words, the tenant must sue the actual titled owner of the property, not the managing agent. Failure to do so should result in a dismissal by the trial court of the tenant’s claim.

Andrew M. Hull

Hull, Holliday & Holliday, PLCwww.doctorevictor.com602.230.0088

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11



These days, a sharp pain in the knee or a persistent cough sends many people not to the doctor’s

office, but to the Internet, looking for a potential diagnosis and cure.

Something similar happens with people in need of legal advice, says Jasen McDaniel, executive director of the Jeffers, Danielson, Sonn & Aylward law firm (www.jdsalaw.com), which has been in existence in Wenatchee, Wash., for nearly seven decades.

“It’s much easier to type in some search terms and hope you get some usable legal information, cheap or free, without having to visit an attorney,” McDaniel says.

But, just as with health issues, that’s not the wisest move, he says. Google is no replacement for a legal education and years of practical experience, and information via a website may “provide a false sense of security,” he says.

“There’s a reason it takes three years of post graduate law school and pass-ing the Bar exam to become a licensed attorney,” McDaniel says. “Even legal issues that seem simple on the surface can become much more complex as you delve into the details and the existing case law.

“Because of that, you want a custom-ized, rather than mass-produced, ap-proach.”

For example, Jeffers, Danielson, Sonn & Aylward employs about 20 attorneys

and is growing to an expected 27 by the end of 2017. JDSA Law is always on the lookout to recruit highly skilled appli-cants to join them. The firm’s attorneys focus on 18 areas of law, such as agri-culture, construction, employment and labor, estate planning, healthcare, real estate and tax law, McDaniel says.

“I think one of the most important factors when hiring an attorney is the relationship,” McDaniel says. “You defi-nitely don’t get that through virtual-le-gal advice, where you aren’t physically in the same place, and probably don’t get it at some law firms where the attor-neys are overloaded with clients.”

Those in need of legal assistance have a few options when they shop around for an attorney. Here are pros and cons of each:

• Solo practitioner. Most towns of any size have at least a few attor-neys who practice on their own.

They often generalize, offering legal advice in a number of areas, though in some cases they may focus on a particular area of law. “A solo practitioner can be a less costly option,” McDaniel says. “But you forgo the intellectual horsepower and collegial environ-ment you get at firms that have a team of associates who share knowledge and experience with each other, ultimately benefiting the clients.”

• Large firms and mega-firms. These firms can sometimes em-ploy 100 attorneys or more who focus on numerous areas of law, and usually can handle more so-phisticated legal issues than can the average solo practitioner. They may have offices in multiple cit-ies and even multiple states. A downside is their services tend to

be pricey, McDaniel says, in some cases costing $800 to $900 an hour, or more.

• Small and medium-size firms. These firms can provide some of that personalized attention that comes with a solo practitioner, combined with the sophistication of the much larger firms. The at-torneys often enjoy a collegiality that is sometimes lost at larger firms. And, generally, their hour-ly rates will be lower than those of the mega-firms. “One reason to go with a firm of 20 to 30 attorneys that has been around for decades is you get a high-quality attorney and support staff for an extraordi-nary value,” McDaniel says.

“Ultimately, it all comes down to finding the attorney that best suits your needs,”McDaniel says. “From that personal

relationship, to a focus on a particular area of law, to your budget, what’s im-portant is a fit that is right for you and your situation.”

About Jasen McDanielJasen McDaniel is executive director of the Jeffers, Danielson, Sonn & Aylward law firm in Wenatchee, Wash. (www.jdsalaw.com) The firm has been in existence since 1946 and focuses on a number of areas of law, including agriculture, construction, employment and labor, estate planning, healthcare, real estate and tax law, among several others.

What To Do When You Need A LawyerNavigating The Best Route To Legal Advice

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Rental Housing Journal Arizona October 2015

Documents

Transcript of Rental Housing Journal Arizona October 2015