All Forum Posts by: Matt Devincenzo

I'll leave the possible ROBS part alone since I know about it, but not enough to provide advice. Maybe @Dmitriy Fomichenko can provide some info, or know someone who can. 

As far as the zoning/phasing...typically we would address that here with a 'Master Plan' or a 'Phasing Plan', so I'd ask if something similar is available there. When we master plan or phase, typically the only number that matters is the end, along the way your minimums don't 'count' because the project is being considered as a whole. Caveat is if there are safety items like 30 units need secondary fire access road, so the phase that hits 30 units also has to be the phase that builds the secondary access road if it isn't in yet...that kind of thing. 

Locally it isn't spelled out in the phasing rules regarding minimum units either way, so if locally they want to apply the stricter standard they could. I'd call someone in the planning side who is looking to get units built and explain how their perspective can kill the entire project resulting in no units...so maybe they can help the discussion on phasing it your way vs. the other way. 

I'd be interested in whether you know of any areas or builders that you can say have actually sold for discounts? 

Based on what I've seen in the industry in SoCal working as a civil engineer for builders, I don't believe any of them will ever give discounts. For the reasons Bill mentioned as well as, 1) the comps for future sales...AND because they have prior buyers in the neighborhood who will crucify them online if you kill their value with a low comp 2) many of them have loan, title etc as complimentary services in house, so some of the 'gimmick' they can make up or offset on other departments so it doesn't reflect directly to their accounts. 

The reality is they'd rather sit on the inventory than discount the sale. There are larger issues at play than just making a profit on that sale, and getting the same net on a higher sold price is worth more to them than just getting it closed sooner. 

I haven't invested in their funds, but they all have very strong reputations and I have purchased notes from one of them directly. 

1. @Chris Seveney 7e investments

2. Jamie Bateman Labrador Lending

3. @Dave Van Horn PPR (I've purchased notes from them)

These costs aren't to cover material costs, these are 'impact fees' essentially. Meters are assigned a cost based upon the estimated charge for pipelines, water treatment plants, valves, pumps etc. Those fees are reviewed and approved by the CPUC, and are based on actual costs. Your best bet is to 1) understand what the flow/EDU threshold is for a given meter size 2) determine ways to lower those demands to a lower threshold. 

Often one I see on small projects like this is that fire flow on sprinklers could be the high demand user. In City of SD they allow for a residential shut off valve to exclude this flow from the sizing. If that flow takes you from a 1" to a 1.5", then you can keep your design and save $30K by spending about $3-5K on the necessary plumbing change. 

Also a 5/8" for four units seems undersized. I wouldn't be surprised if your meter is undersized and part of the cost is capturing the additional cost for the demand that those four units have on the system. A little known issue is that because of all the water saving improvements of the last 30 years, water providers actually have to charge more for facilities. That's because the same facilities are now selling less water to customers, but the expenses are the same. So to cover the deficit they have to charge higher fees for facilities, as well as water rates to customers. 

I have a client that has a four unit in City of SD and we had this exact conversation three months ago when I told him his meter fees for a 1.5" would run over $70K. He designed around what would work with a new 1" in addition to keeping the old units on the existing 3/4".

I'm definitely not an expert, but I have been the engineer on a few projects that both condemned and were condemned on via eminent domain...

First don't necessarily accept the appraisal offer. There is a strategy to these appraisals and it is possible more compensation is available. For example my project was condemned for a widening project, my client countered with not only the value of the land but the cost associated with redesigning his entitled project, the additional cost of construction for deeper subterranean parking to achieve the same unit count and the negative visual impact to his project being closer to the road which he should be paid for. Maybe this really is the best offer, but you should confirm with a local expert of your own. 

The other aspect to consider here. You may be eligible for a section 1033 exchange...I don't know much about it, but it is an alternative to the 1031 that is available to people who lose their property unwillingly. From my limited research the timeframe may be as long as two to three years to complete the exchange. It's also possible there are some negatives to this option...

Finally whether 1031 or 1033, consider negotiating that there is no closing until you are ready. You could provide a license to work or another legal instrument for the project to proceed, but physically close only when you are ready to complete the exchange. That places you back in the driver seat for the timing of the exchange. 

You first need to explore 'how' it was rezoned and what the means in a local sense. Some locals it is actually rezoned 100% and you can proceed with any allowed use in that zone. At most you just need to submit building permits to build/modify whatever is needed for a commercial tenant to use the site. Others treat these rezones as kind of 'placeholder' zones and you need to come in with your own application to implement the change, so figure out what yours is. 

The other consideration is within the zone there are allowed uses. Meaning commercial could be everything from junk yard to gas station or even retail storefront, but some of those, like junk yard, are usually prohibited or restricted to certain commercial zones or criteria. So what could yours be, and is that desirable to you? 

And finally, does it even matter? There is a popular idea that commercial is more valuable, but my experience is it is not, at least not for most existing developed sites. On a per acre basis residential is typically always the highest value use, commercial tends to be big $$$ because it is large properties and large budgets so it sounds more valuable.

Commercial tenants are focused on the income production of their business, meaning they aren't paying premium rents unless the location is premium allowing for increased revenue. For properties that are existing SFR that is usually not the case, and even if it is the commercial tenant wants to negotiate more because it impacts their profitability.

So get a better understand of the "how and what" elements of the zoning to know what you may really have, but I would caution that you shouldn't spend any money on this until you're very confident its worthwhile.

I'll counter that to say, it's somewhat irrelevant.

If the home is truly in a class A area, then the school district being an F won't change the area...all the residents who already live in that Class A area, and make it the high quality area it is have decided the school rating isn't relevant. Maybe they're young DINK, or all attend private schools, or are in the area for amenities like being waterfront etc. But the point is that the school district quality isn't what makes it an A or not. Typically Class A areas will also include high quality schools since that can be what is drawing people there, but it doesn't have to be. 

You said you purchased, but do you know how you purchased? It sounds like you may have purchased via a CFD/Land Contract meaning you were not deeded the property, which is a perfectly legitimate way to buy property in many areas. But that may be why the lender is now trying to execute a PSA...I don't know if that is the right way to accomplish the 'refi' or not, but that would explain part of what may be happening here.

I don't have a specific carrier solution, but I know here in SoCal an engineer I work with said he is doing several 'protection district' reports. I can't recall the specific name, but essentially a few adjacent properties form a small voluntary group that includes brush management and fire access obligations and the carriers offer something like a 30% discount. I just wanted to mention it as it could be worth asking your carrier if there is a way to lower premiums that way. 

You say refi, which implies you closed at some time in the past. And down payment/owner finance, implies there was an agreed sale price which is partially fulfilled via cash and partially via loan. 

I assume the original loan amount was stated, and there has been some series of payments which may have reduced that loan amount? So it seems like they may be asking for you to "obtain a lender payoff from the existing lien holder". In other words, how much do we need to fund on this refi to make sure that loan is paid in full and we are in first position. 

At least that's what I came up with...though agreed with the above posters that this is very vague an unclear what the request really is looking for.