Summary:
Escalating government intervention, inflationary cost increases, and the growing unaffordability in the real estate market are not just trends but pressing forces rapidly reshaping the landscape of property ownership and lending. These are not issues to be merely aware of but urgent matters that demand immediate attention and action. The urgency of these issues should instill a sense of responsibility and prompt action from all stakeholders, making them feel the need for immediate action.
This intrusion into a market that historically operated under the principles of capitalism and wealth accumulation is not just causing a shift in the traditional values and rules; it is a direct threat to the fabric of our culture, family, and wealth accumulation. The impact is grave and should cause deep concern for all of us, invoking a sense of concern in the audience.
Article:
Today, in many major cities, the environment in commercial real estate lending, given today's self-serving political leaders, is in a systemic crisis and spiraling down into decay. Vacancies are accelerating, and decline is evident, with a questionable likelihood of replacement tenants willing to overlook the criminalized environment. States, cities, and local leaders that promote laws that encourage rampant crime are finding out that their commercial corridors of retail and office are imploding. Regional and national criminal activities affect all lending activities universally.
Smaller cities and suburbs will get sucked in because the same self-serving political leaders intend to transfer the less desirable and criminal behavior out of the cities and into the suburbs. A regulation known as AFFH (Affirmatively Furthering Fair Housing) will create progressive mini-urban cities within suburbs.
The strategy of transferring 'less desirable' elements and 'criminal behavior' from cities to suburbs under the guise of promoting inclusivity has significant and potentially disastrous consequences. This is not just a strategy but a potential disaster in the making. It spreads the progressive agenda into otherwise conservative suburbs, and the real reason behind this strategy is not just a shift of problems but a failure to address the root causes. The potential disaster in the making should prompt the audience to consider preventive measures, making them feel the need to take action.
The process allows federal regulations and mandates to take control of all zoning and development. Losing local government control is the plan to destroy the suburban lifestyle. The fundamental objective is to replace the essential character of suburbs, which are intended to be peaceful and family-oriented, with high-density urban developments. This shift will fundamentally alter the way of life in these areas, affecting property values and community dynamics.
The implementation of AFFH largely depends on the issuance of the U.S. Department of Housing and Urban Development (HUD) Community Development Block Grants. Suburban cities are effectively held hostage by these federal planning demands, as they are prohibited from receiving millions of dollars in HUD grants unless they comply with the regulations, which include eliminating single-family zoning and installing low and moderate-cost housing.
Failure to comply may result in highway funds not being distributed. Any objections by local municipalities will get the municipal leaders of the suburbs sued for discrimination by civil rights groups or the federal government. The federal government can spend unlimited money to destroy historic private property rights and capitalism in suburban settings. The process represents progressive social engineering at work.
Lenders are currently witnessing the degradation of neighborhoods and cities with a sense of skepticism. They are often forced to decline loan submissions in these areas, not out of choice but due to the prevailing conditions. The process of unwinding this mess will be long and arduous, and it is only possible by removing the parasitical political scoundrels, who are the elected officials responsible for the current state of decay, from their positions of power.
Who will start a business in California when a startup requires astronomical risks?
- A bureaucratic nightmare approval process,
- A new bureaucrat fee at every turn,
- Massive outlay required capital at risk,
- Excessive regulations, federal, state, and local,
- Never-ending taxation, many redundant and hidden.
- Tremendously high company and personal liability,
- A hostile court system that seems to hate successful capitalists.
If you successfully navigate the maze, the government encourages criminals to steal your profits, thereby rendering the entire enterprise parasitic at its core and virtually guaranteed to fail.
I am bringing up the current national crisis of invited criminal behavior because it is on the mind of every lender in the U.S. Lending and civil behavior go hand in hand. Promoting illegal activity, including overlooking packs of teenagers wreaking havoc and hostile and destructive gangs pursuing geopolitical rioting, has devastating consequences. They are not peaceful protestors; they are criminal gangsters and thugs who feel entitled.
Criminal activities are encouraged and feed the agenda of multi-national criminal cabals, large criminal organizations with global reach, attempting to overthrow our system of governance and culture.
Changing the Character of Real Property:
Removing single-family zoning and allowing high-density multi-tenant buildings in residential neighborhoods is now a law and a fact of life in California. Over the last few years, new rules have eliminated single-family and up-zoning properties to create more high-density multi-tenant residential apartments. Promoting low-cost housing is in vogue.
Primary changes include replacing the local municipality's control and oversight of building, planning, and zoning with state-level bureaucracies managed by state public employees who are labor union members.
Localized planning tends to focus on protecting neighborhoods' peacefulness and tranquility. Newly created state-run bureaucracies may or may not make decisions about maintaining or improving neighborhood lifestyles or having a vested interest in you, your family, and others.
I bring this up because local control and bureaucracies will not just lie down and disappear. There will be competing power structures between local governments and the state bureaucracy. This competition can lead to inefficiencies, increased costs, and a lack of focus on local needs. Government employee bureaucracies never disappear but are willing to compete with other bureaucratic agencies to cause more grief, time, effort, and expense. The losers are always the property owners and taxpayers.
Agencies operate on allocated tax dollars confiscated from property owners, while property owners must use personal money. With zoning codes, building codes, and administrative staffing, a process will still be necessary to obtain building permits to complete code compliance. All the above means more hassle and frustration in bringing non-conforming buildings into today's more flexible standards.
Valuation methods have changed, meaning the appraisal process for residential and commercially zoned properties. The long-standing industry standard has been using comparable sales in conforming neighborhoods and adjusting for location, quality, and amenities to arrive at a value conclusion.
On a going-forward basis, the appraiser(s) should determine the feasibility of tearing down or modifying existing structure(s) to replace or convert to vertically constructed high-density apartment units. Calculating how many units a purchaser/developer may hypothetically build on a parcel, considering the new state-mandated land-use-and-density requirements, the appraiser will most likely use the residual-valuation method to calculate per-unit land value for prospective future development. Per unit land value times the number of prospective units will result, in most cases, in higher valuations than the prior industry methods. Additional units will receive a bonus for building affordable units.
These newly mandated state-level building standards will apply to all types of properties in all property uses and zoning classifications. For example, a commercially zoned property occupied as a church may be subject to a highest-and-best-use analysis. It may be more valuable to tear down and replace it with high-density residential apartments.
As a hypothetical example, a property of 24,000 square feet may have a value of 1.2 million compared with sales of other church properties. However, using the new state-mandated standards, the property's highest and best use would be to tear it down and build 29 residential units. The church property would have an allowable land value of $74,000 per unit for a future residential rental unit development, or a total of $2,200,000. With affordable units, a density bonus will be available.
The neighborhood may gain 29 units, an average of 2.5 occupants, or 72 tenants moving into the quiet, tree-lined community with minimal setbacks and parking required. The building could see 50 or more cars to find parking around the neighborhood. Tree-lined, quiet areas can now expect transient tenancy void of traditional values. But, heck, this is what we voted for?
Using the above example, California can expect a massive flurry of new developments that may downgrade the quality of life for many who prefer a peaceful, quiet neighborhood lifestyle. Quiet neighborhoods may become high-density transient-occupant tenants that bring noise, neighbor conflicts, traffic congestion, crime, and increased neighborhood hustle and bustle.
The fact that the state government has taken over development oversight and allowed municipal cities only to be approved as an administrative action is problematic. State mandates decision-making does not mean that the property owner will not get bogged down in a nightmare of regulations at a local municipal level. The nightmare will be between state regulators and hostile local municipalities about sharing their power, approvals, and oversight. All parasitic bureaucracies, whether state or local, feed and grow on the available crop of property owners. Multiple bureaucracies can separately feed on the same property owner.
The U.S. has almost 3,000 trillion cubic feet of recoverable natural gas. Natural gas is a clean-burning energy source, adding 3 million jobs annually to the U.S. workforce. It is abundant, highly reliable, has many uses, and is reasonably inexpensive in comparison to other sources of energy. But there is one major problem. Using natural gas provides flexibility and independence to the population. Too many social engineers constitute a problem.
California is leading the charge to eliminate personal freedoms by requiring electrification in an updated building code. The state has passed new energy codes to incentivize construction (force) with electric appliances, heating, and cooling systems, all to stop the usage of fossil fuels and natural gas.49 Cities already require all electricity in new construction, including cooking, heating, and water.
https://gizmodo.com/california-takes-a-massive-step-toward-all-electric- hom-1847496829
Modifying the existing housing stock will cost ungodly sums of money. Changing wiring and adding 220-volt systems, including all new appliances, will cost more than the average homeowner can afford. Title 24 ensures the implementation over time, which makes the modifications a requirement.
Eliminating natural gas and fossil fuels is part of controlling the masses. When a family's life is controlled through their electric bill, they are easily manipulated and whipped into submission. As in California, the taxation capital has implemented a progressive income-based fee for electric bills. Those who have more income will pay significantly more for electricity.
Progressive taxation for electricity costs is now law, as almost all new rules and regulations serve as an income redistribution scheme. The scheme is that the upper tax bracket groups will pay significantly more. All members of society will be manipulated with promised tax incentives and excessive penalty taxes into an egalitarian socioeconomic living standard. If a taxpayer makes the wrong move, such as publishing this article, their electricity is instantly disconnected, which can turn any respectable family into beggars in 24 hours.
California Building Standards Code is a broad set of requirements for energy conservation, green design, construction and maintenance, fire and life safety, and accessibility that applies to the building's structural, mechanical, electrical, and plumbing systems. The borrower would most likely get stuck complying with Title 24. This borrower may need to hire a consultant to prepare a California Title 24 report as part of the approval process.
State-mandated standards control zoning. Still, the city may require significant upgrades, such as Title-24, California Building Standards Code enforced by the local or county building departments or jurisdiction at a municipal level. The owner of the bootlegged property will still be required to spend his capital to rectify the situation.
Title 24 of the California Code of Regulations is designed to reduce wasteful and unnecessary energy consumption in newly constructed and existing buildings. The reality of the mandated modifications' costs and purpose may differ.
https://www.energy.ca.gov/programs-and-topics/programs/building-energy-efficiency-standards
Planning and Land Use in California:
Building codes in California:
https://codes.iccsafe.org/codes/california
Bills passed include AB 3088, SB 91, SB-6, SB-9, AB -15, AB-946, AB 989, SB-10, SB 330, AB 816, and SB-1079. These new laws expanded government involvement in the ownership and operation of real property. The new regulations are designed to eliminate property rights and allow the state government to compete with private property owners; only the government has a monopoly on decisions. Over time, private property owners in California will realize they cannot compete with a hostile public employee monopoly.