The Bay Institute Aquarium Foundation

Aquarium of the Bay

A commercial enterprise that never made money is about to become a non profit. The deal has been consummated and now fully owned by The Bay Institute Aquarium Foundation.

The $9.5 million deal means the 65,000-square-foot aquarium at Pier 39 will become a non profit center for education and research of the San Francisco Bay ecosystem. Impressive that a deal made in tough economic times, took a tourist trap and turned it into a community asset.

Its now a nature center dedicated to the conservation of the San Francisco Bay. The defunct commercial enterprise still attracts 600,000 visitors a year and now this population will support sustainable research to keep the bay a flourishing and healthy living resource for all of us.

The Aquarium is a huge endeavor, it is 50,000 square feet of exhibition space, including 300 feet of acrylic tunnels holding more than 700,000 gallons of filtered bay water. 20,000 marine life including sharks, bat rays and eels. You can take walking tour through the acrylic tunnels and see marine life all around you. Quite cool.

Partnering up with Monterrey Bay Aquarium, UC Davis and the California Department of Fish and Game, the aquarium will work on fish breeding and aging studies. New programs including a lecture series, marine workshops, tagging and tracking programs, exhibits, classes on pollution, freshwater diversions, fish contamination and species sustainability. This was supported by private loans, donations and municipal bond money......Thank you San Francisco.

Howard Bell

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MORTGAGE RATES RISE ON POSITIVE ECONOMIC NEWS

NEWS REPORTED DURING THE WEEK

30-year fixed-rate mortgage: Averaged 4.84 percent with an average 0.7 point for the week ending May 7, 2009, up from last week when it averaged 4.78 percent. Last year at this time, the 30-year FRM averaged 6.05 percent.

The 15-year fixed-rate mortgage: Averaged 4.51 percent with an average 0.7 point, up from last week when it averaged 4.48 percent. A year ago at this time, the 15-year FRM averaged 5.60 percent.
Five-year Treasury-indexed hybrid ARMs: Averaged 4.90 percent this week, with an average 0.6 point, up from last week when it averaged 4.80 percent. A year ago, the 5-year ARM averaged 5.67 percent.

One-year Treasury-indexed ARMs: Averaged 4.78 percent this week with an average 0.6 point, up from last week when it averaged 4.77 percent. At this time last year, the 1-year ARM averaged 5.29 percent.

Freddie Says

Mortgage rates rose slightly this week amid positive economic news that the economy may be approaching the bottom of the recession, said Frank Nothaft, Freddie Mac vice president and chief economist. In terms of the household sector, the final April estimate of consumer sentiment, as measured by the University of Michigan, was revised above the market consensus. On the business side, the ISM Manufacturing Index for April also exceeded market expectations.

In addition, the positive news was corroborated by Fed Chairman Bernanke when he stated that he expects economic activity to bottom out, then to turn up later this year. He also noted that the housing market is beginning to stabilize. For instance, pending existing home sales rose for the second consecutive time in March and represented the first back-to-back monthly increase since March 2008. Furthermore, in its April 2009 Senior Loan Officer Opinion Survey, the Federal Reserve found the demand for prime mortgages rose for the first time since April 2007 when it first began collecting such detailed mortgage data.

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Howard Bell
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A web site of over 450 articles related to real estate focused primarily on property management.

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San Francisco Remembers 1906

This is the Anniversary of the 06 Earthquake

The Exploratorium will display a large-scale Jell-O model of San Francisco for just one day, Jell-O doesn't last long.

Firefighters will host a costume ball where the best bustled skirts, top hats and other turn-of-the-century clothes win prizes.

1906 Great Earthquake and Fire Exposition at Pier 48 is sponsored by the San Francisco Fire Department Historical Society

1906 Earthquake and Fire Parade. April 18, 10 a.m. The parade begins at City Hall and proceeds down Market Street

And, of course....Lottas Fountain

Every April 18, 4:30-5:30 a.m. Market Street, at Kearny, Third and Geary streets a meeting in remembrance of those lost and found at Lottas fountain is replicated. Its the centerpiece of the city's events and a true memorial to those who came before us.

After the earthquake in 1906, the fountain, one of the few structures still standing on Market Street, became a central meeting place for San Franciscans. People gathered round Lottas fountain to meet and find friends and family. Notes and messages were left in the hopes of rejoining loved ones.

In celebration of San Francisco's 1906 earthquake, a few survivors, the mayor and San Franciscans in period costumes will sing, from the heart, a not so perfect rendition of the song "San Francisco"....

Howard Bell

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Green is the New Black

EPAa and California Energy Commission fund an innovative pilot project to turn waste-only brown grease into bio fuel. The program is an extension of the SFGreasecycle program that since 2007 has been collecting used cooking oil and recycling it into bio diesel for its own fleet.

FOG

In addition to providing a renewable fuel source, the diversion of Fats, Oils, and Grease (FOG) helps save money by reducing grease blockages in San Francisco sewers. Half of of all sewer emergencies are grease related costs the City $3.5 million a year.

Brown grease is the mix of used oils and food scrapings that flow from our homes and restaurants and is not being recycled. The city has a free collection program for restaurants that will provide the basis of new fuel.

The new bio diesel plant will be constructed at the Oceanside Treatment Plant next near the zoo. It's the first of its kind to combine sewage treatment and generate alternative energy sources:

1. High-grade, road-worthy certified bio diesel for vehicles
2. Lower grade boiler fuel for running sewage treatment plant equipment.
3. Converted methane to run the treatment plant

If we can provide fuel for city fleets and run sewerage plants with recaptured brown grease, experts think we could save 3% three percent of the nation’s electrical consumption. Treatments plants run 24 x 7. Each plant upgrade is expected to cost about a million, making this truly cost effective. What is really cool is that San Francisco has been chosen to build the template for the country. A tool box of recycling methodology that could be copied by other cities.

San Francisco has been relatively sheltered from the economic downturn compared to the rest of the state. We have been blessed to near Berkeley and Stanford and Silicon Valley and those Google buses that allow Silicon Valley workers to work there and live here. As Lenard Cohen writes: we got the machinery and the verse.
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Howard Bell

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Rent Control, Managing Rentals and the GRM

In fact when a building with long standing tenants comes up for sale it’s a great selling point. It’s not hard to see future value when you are looking at a few units renting for $350 that would easily rent in today’s market for $1,500.

Not Everything Is Rent Controlled

In San Francisco, limits to rent increases are mandated and administered by the Rent Board with some exceptions:
1. New Construction: Mandated by state law, all building constructed after June of 1979 are exempted
2. Subsidized Housing: such as HUD housing projects.
3. Dorms, monastery’s and nunnery’s
4. Residential Hotels: If you have less than 28 days of continuous tenancy.

How it Works

Base Rent: A landlord can increase the tenant’s base rent by an annual allowable increase. This year its 2.2%. So, if a tenants rent was $1000, the most you can increase in 2009 is $22. Next year the rent board will declare the maximum allowable increase for 2010. There are other types of rent increases such as capital improvements, increased operating and maintenance expenses and utility costs, but they need rent board approval.

Managing Declining Rents & GRM

The trick now is to respect the trend, keep the unit occupied and preserve equity.

Here’s the problem: You have a vacancy or a recent tenant wants a rent reduction and the unit rents for $1500. But similar units are now going for $1400. Its bad enough to have to forgo $100 a month, but if lower your base rent you may be paying for that long after the market has recovered, perhaps even 10 or 20 years.

Here’s why: lets assume your base rent was $1500 and it becomes clear that you have to reduce it by $100. At $1400 (assuming this years maximum annual increase of 2.2%) it might take you three years just to get back to $1500. One down year affects the entire future income stream if you use a lower the base rent to accommodate new market realities.

Preserving GRM

Keeping the higher base rent in tough times

1. Attractive Gifts: Keep the rent at $1500, but offer gift certificates or other amenities. A rent reduction to $1400 is a $1200 annual loss. Maybe an offer of a new Dell notepad ($350) is attractive enough. If this worked, you would have kept your base rent at $1500 and saved $ 850 this year. In forward years, rent board increases would be based on $1500 and not $1400.

2. Skip a Month: Offer one month free rent. Tenants are open to this and it allows you to preserve your $1500 base rent. Never make it the first months rent, since you may find yourself with a tenant that doesn’t pay in the second month either and now you have a squatter.

3. Improvements: A really great idea is to offer amenities that will increase the value of the unit. Consider amenities tenants can’t take with them such as: stackable washer/dryers, microwaves or dishwashers. Tenants really do like the added convenience and it adds value to the unit. A good win-win choice.

4. Increase Market Depth: Consider pets. You can reduce risk by asking for a pet deposit in addition to the security deposit. Be sure not to exceed 2 x rent for unfurnished or 3 x rent for furnished rooms rules for San Francisco.

5. Section 8: Increase your applicant base by considering Section 8 . .

6. Advertise: Maximize your marketing presence by using Craigs List and an internet listing company such as apartments.com

7. Hire a property management company: If it saved you just one month, because of their leasing expertise or visibility, you would be ahead of the game.

** A note to home buyers: Preserving the base rent for future rent increases also skews the GRM. It’s important to compare the rent roll to actual rental income reported, when buying or representing buyers.

Thanks for Reading
Howard Bell

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The State of San Francisco Rental Markets

Silicon Valley and San Francisco are One

Ive been looking through some recent reports to try and sleuth out the general economic level of malaise and Im am happy to say that we are not yet feeling the pain in a serious way. . At 4 to 5%, our jobless rate is painful. but not devastating. Our vacancy rates are still less than 5% and we are among the top rental markets in the country.

I have this theory.....San Francisco is host to huge commuter buses that stop in most areas of the city. They pick up workers from Google, Apple, EBAY, Genetech and other south bay companies. The commuters are picked up in central locations throughout the city and driven to work and back. This has brought huge numbers of well paid employees whose only alternative to living and in San Francisco and working in the south bay was to endure a hour plus commute or take Caltrains.

The bus alternative is a no cost convenient way to live in San Francisco and work in Silicon Valley. The net of this, (my theory) is that San Francisco and Silicon Valley are becoming economically interdependent and this has fueled our rental boom.The health of the tech industry is even more closely aligned to the economic health of San Francisco than ever before. The human typography of this city has been undeniably altered.

San Jose as a Leading Indicator

San Jose is experiencing a very tough time. The San Jose unemployment rate is now 7.2%, compared to 4.9% a year ago and help wanted ads are down by 35%. If San Francisco has benefited with a healthier economy Its hard to believe this isnt a leading indicator for softer rent rates. Remember... its well paying jobs that led the boom and it is jobs that will herald the decline.

San Francisco is not experiencing the price declines that many homes have. However, if you consider that the major employers of the city are restaurants (hurting), the financial district (dead) and technology (weakening) then its time to adjust to new realities.

Reading the Curve
What Now

Markets precede peoples perception of them. In other words, people are still trying for historic rent rates. Waiting is too expensive. Rather than continue to try for historic returns. Its time to lock in cash flow rather than hit a home run. Focus more on reasonable cash flow guaranteed for a least the length of the lease. Its the best way to manage rental property today and get safely through this nasty downturn.

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Howard Bell

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Help is On The Way

From the sfgov website

Maria Shriver’s WE Connect campaign is a pioneering public/private partnership designed to help California’s working families become more financially secure by connecting them to important programs and resources.

What They Do

1. WE Connect Community Events have and will provide working families and individuals with one-on-one application assistance at no cost. Learn how to apply for key services and programs while having the opportunity to have their taxes prepared for free.

2. An online tool, developed by our partner Intuit for this campaign, will help working families determine exactly which programs they may be eligible for and how to apply

3. Education and job training provide working families with opportunities to get ahead and find better paying jobs. Icanaffordcollege.com, ScholarShare 529 college savings plans and the Employment Development Department are just some of the most helpful resources for information about saving and paying for college and job training opportunities.

WEconnect Partners:

Statewide programs, unions, small businesses and major corporations to connect with working families. WE Connect partners include: Intuit, Bank of America, Legal Aid Society of Orange County, Central California Legal Services, California Volunteers, AmeriCorps, California Department of Social Services, United Way of Greater Los Angeles, United Way of San Francisco, La Opinión, ClearChannel, California First 5, SEIU, AFSCME, Save the Children, AT&T, PG&E, Sempra Energy Utilities, California Black Media Association.

Passing it Forward

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property News Brief

http://yourpropertypath.blogspot.com/

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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