Government Policy, Real Estate and You! with Liz Recchia

I was able to attend the AAED state conference in late April. As part of the conference, I facilitated a workshop that was more facilitated discussion than presentation. What was clear was that wage earners across the state making between $45,000/yr gross and $95,000/yr gross make us the majority of people seeking housing, and that entry level housing product is few and far between.

The truth is wage earners earning $45,000/yr to $95,000/yr gross live on a considerably less take home or net income. Usually that net income looks more like $43,000/yr to $80,000/yr.

For a rental property to be easily afforded by these households, rents need to be no more than 25% to 30% of the household net income. That means rents in the $885/month to $1,800/month range.

For purchase product, the price point varies depending on downpayment and interest, but here is a sample of price points if we only consider principal and interest payments:

$250,000 house with 10% down at 5% interest = $1,125/month P&I payment

$250,000 house with 10% down at 6.7% interest = $1,535/month P&I.

Follow those payment assumptions and the max price point for this group wage earners becomes $375,000. At

$375,000 and 10% down at 5% interest the P&I payment would be about $1,811/month. That same $375,000 house with 10% down at 6.7% interest would have a $2,261/mo P&I payment.

At the Arizona State Legislature, we have been seeing attempts to preempt local zoning over the past 3 years, but this year it has really ramped up. Mostly, the discussion revolves around “affordable” government program housing. The perplexing part of the various legislative proposals is their non sequitur nature. Here are a few examples:

1 – Proposed bills that would no longer allow a city or town to designate where residential development could be built. This of course means cities and towns who have adopted zoning and are mandated by state law to produce a voter approved General Plan, with public review a key element of planning, would be in conflict with the law itself. 

2 – State legislation that tries to mandate setbacks, driveways, garages, and other specific elements of housing. Some of the bills I have read require cities and towns to not have a minimum size driveway. And those same bills set the max required driveway length at 10 feet. Have you measured your car, SUV, Truck or mini van? Camry’s are 16 ft long, SUVs, trucks and minivans are longer with 20 ft being common.

3 – State legislation that seeks to take away a local community’s ability to require streets wide enough for on street parking in two directions and the ability of emergency, delivery and other vehicles to traverse the street. At the same time in the same piece of legislation, there is a prohibition of mandated off street parking.

City of Chandler is updating several of its codes. You can read the proposed changes and learn more at www.weservgad.org.

The cities of Surprise and Peoria are seeking public input on housing needs in the community.

Those in the Douglas INA with water rights is to secure those grandfathered water rights in the new AMA. The application to preserve grandfathered water rights is March 1, 2024. If the application is not received by that deadline, water rights will be relinquished forever.

Our next government affairs orientation and committee meetings are on June 7th. The orientation will be from 9:30am to 10:30am at our Peoria office. The government affairs meeting will be immediately following at 10:30am.

You may attend these meetings in person or via zoom. Go to weservgad.org or to weserv.realtor to register to attend in person or via zoom.

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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In April we met with Apache Junction and Chandler. Our members provided context and market information in addition to the data. Cities and towns are interested in knowing what our members experience in residential, commercial and agricultural real estate, and members who join me in these conversations provide the impetus for necessary conversations.

Across the WeSERV territory entry level housing is missing or less available than the wage earning population’s needs. WeSERV identified entry level as wage earners making between $45,000/year gross to $95,000/year gross. Net income is the important criteria when determining long term suitability of housing. At this wage range net income would be between $43,000 and $80,000/year. 25% to 30% of net income spent on housing costs is a sustainable level of monthly budget so that no matter the oopsies of life, the tenant or buyer has a better chance of maintaining their home.

Read the WeSERV Housing Study: The Web of Housing Solutions

Financing changes at Fannie Mae and Freddie Mac: As the headlines at some media have been trumpeting the increases in upfront fees going into effect May 1st, it is sometimes difficult to figure out exactly what is happening.

The changes were first described in the Fall of 2022 and delayed until this upcoming May because of all the other fee and guideline changes last Fall. Now the FHFA is bringing the DTI based lending fees forward in May.

I have a link to the Framework document and the LLPA matrix in the podcast notes so you can review these changes for yourself.

The concept that common sense financial principles of saving for a down payment that makes the home loan truly affordable for the individual is wrong headed, is quite astonishing. 

Our April 5th Government Affairs Orientation meeting was fun and members discussed new home build problems and short term rental ordinances.

As a result, we now have two new Task Forces: A New Home Build Task Force and the Short Term Rental Ordinance Task Force. 

the next Government Affairs Orientation will be on June 7th at the WeSERV Peoria office 9:30am and the Government Affairs Meeting will be immediately following at 10:30am. As always you may join one or both of these meetings in person or via zoom.

the WeSERV Housing study may be found at www.weservgad.org

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits:

“Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits:

“Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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The WeSERV housing study, The Web of Housing Solutions has been released.

WCR East Valley Lunch is April 20th from 11:30am to 1:30pm at Avion Center. Mayor Hartke (Chandler), Ryan Smith (Phx Gateway Airport), Brad Smidt (GPEC), Alex Khalfin (Amtrak), and Chris Shcleicher (Tempe Economic Development) will join me for a discussion of planning today for the tomorrow of 50 to 100 years from now.

NAR committee application are now open. You may find more information at www.weservgad.org.

The next WeSERV Government Affairs Orientation meeting will be April 5th from 9:30am to 10:30am at WeSERV Chandler (Avion Center). We will review a city STR ordinance and practice presenting comments. Please register to attend in person or via zoom.

The next WeSERV Government Affairs Committee meeting is April 5th from 10:30am to 12 noon at WeSERV Chandler (Avion Center). Please be ready to discuss updates to our advocacy statements, 1-3 water issues in your area, and 1-3 housing issues in your area. Please register to attend in person or via zoom.

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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Water: It is an ongoing and sometimes emotional topic. While others discuss and debate various water issues, in our industry it is central to everything we do. 

History tells us the rivers have dry seasons, people repeatedly think the worst, and wet weather, technology and better water management provide us with a future.

What can buyers and sellers of real estate do today to confirm for themselves water sources and water rights so they can properly disclose important water issues to buyers and buyers can perform appropriate due diligence?

The WeSERV Water Issues Task Force is busily working on a tool designed to help buyers perform appropriate due diligence, spur buyer questions and research, and prompt sellers to find answers prior to a buyer’s questions about the water availability, source and rights.

Don’t forget, our next Government Affairs Orientation meeting is on April 5th at 9:30am, at our Chandler office. Our next Government affairs meeting is immediately following at 10:30am. You may attend via zoom or in person. You may register to attend one or both of these meetings at weserv.realtor 

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR Business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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In November 2022, WeSERV members in the West Valley and in the Southeast Valley met with several cities and towns to discuss the real estate market, its trends and to have casual conversation between WeSERV and local government elected officials and staff. That went so well, we are planning our Spring 2023 visits to cities, towns and counties.

If you would like to be on a city team and participate in our conversations about the real estate industry, market trends and local issues impacting real estate, email or call me to volunteer for the city, town or county you are most interested in speaking with.

We are asking members to contact us with 1-3 housing issues specific to their area, 1-3 water issues specific to their area and comments on their city, town or county’s STR ordinance. Please bring those suggestions to our next Government Affairs meeting, or email me at weservgad@weserv.realtor. 

February 8th was our first Government Affairs Orientation Meeting. These orientation meetings will be take place the hour prior to the Government Affairs Committee meeting. You can find a summary of the Government Affairs meeting on the weservgad website.

George Washington’s Birthday was on February 20th. As a young man of 14 years, he penned his own 110 rules to live by. I posted a blog highlighting several of his rules I think will aid us all in our daily interactions with others. 

We congratulate former WeSERV member, Susan Nicolson. She has been appointed by the Governor to serve as DRE Commissioner. 

Our next Government Affairs meeting and orientation will be held on April 5th at our Chandler office (Avion Center) and via Zoom. The orientation begins at 9:30am, and the meeting begins at 10:30am. Register to attend and I will see you on April 5th.

Review of Legislation Blog

How a Bill Becomes a Law Video

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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As 2022 ends, I thought you might to take a look at some of the highlights at WeSERV Government Affairs. You can read about all 21 of the highlights at www.weservgad.org. Click on Director’s Notes. Here are few:

1 – The Az Dept of Revenue has made several changes suggested by WeSERV and its property manager members. Property managers now have a PMC specific webpage on the ADOR website and a PMC specific email address.

2 – City Meetings: WeSERV hosted small group roundtable discussions with various city officials and members.

3 – SR30: In January WeSERV distributed its study analyzing the various build out scenarios for SR-30 and opportunity costs. 

4 – Candidate Interviews and Forums: WeSERV chapters hosted candidate interviews in West Valley, Southeast Valley and Sierra Vista. Our Santa Cruz chapter hosted a Nogales candidate forum.

5 – Local Advocacy: WeSERV members engaged directly with city officials on questions of land use ordinances, sign ordinances, definitions of abandoned and housing product.

6 – Arizona REALTORS Caucus: WeSERV members provided several suggestions for corrective legislation and new legislation when they attended the REALTOR Caucus.

7 – GAD Events: Government Affairs hosted several issue driven events in 2022, some with CE approval. The Right to Private Contract, Coffee with Decision Makers, Land Acquisition and Entitlement and the Homestead Act changes, were all events this year.

The Government Affairs committee is forming now. If you are a member of WeSERV, Affiliate or REALTOR, and would like to serve as a voting member – please let me know via email. You may attend our meetings in person or via Zoom.

The Government Affairs meeting calendar is now set:

February 8th at the WeSERV Peoria office from 9:30am to 10:30am is the orientation, from 10:30am to 12 noon is the meeting.

April 5th at the WeSERV Chandler office from 9:30am to 10:30am is the orientation, and from 10:30am to 12 noon is the meeting.

June 7th at the WeSERV Peoria office from 9:30am to 10:30am is the orientation and from 10:30am to 12 noon is the meeting.

Aug. 9th at the Chandler office from 9:30am to 10:30am is the orientation and from 10:30am to 12 noon is the meeting.

Oct. 11th at the Peoria office from 9:30am to 10:30am is the orientation and from 10:30am to 12 noon is the meeting.

And finally, from Dec. 6th at the Chandler office from 9:30am to 10:30am is the orientation and from 10:30am to 12 noon is the meeting.

May 2023 bring you and yours, serenity and equanimity.

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/megaphon

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The Arizona Department of Revenue (ADOR) has made several updates to their systems and is providing new resources to help PMCs and their clients submit TPT and fees due for residential rental activity. I will be highlighting these helpful resources and changes made on a regular basis at www.weservgad.org, in the monthly WeSERV flipbook “The Word at WeSERV” and in the WeSERV broker newsletters. Here are a couple of recent highlights: The ADOR has a special webpage for PMCs, The DOR staff has created a helpful video tutorial series starting with the first video “Welcome Property Management Companies”, DOR for PMCs, free live, interactive virtual workshops and trainings for you and your clients. Go to www.weservgad.org or the PMC webpage on the DOR website to see the next scheduled workshop series.

MAG, the Maricopa Association of Governments, is seeking public input on a preferred active transportation facility along the SR-30. Submit your comments in today. You will find a link to the survey at www.weservgad.org or you may visit the MAG website.

December 7th, 1941: It is now 81 years since the bombing of Pearl Harbor. The USS Arizona was a proud warship and the largest in the American fleet. She had been commissioned in 1915 and led the American fleet back from Europe after WWI. She was also sitting in Pearl Harbor on Dec. 7th 1941, along with most of the Pacific Fleet, when the bombing began. Read more about the USS Arizona, watch of video of President Roosevelt declaring war, and read a copy of the draft speech at www.weservgad.org. 

You can see artifacts of the USS Arizona at the Arizona Capitol Museum or get a better feel for the shape and size of the ship, go to the USS Arizona memorial gardens at Salt River Fields. The USS Arizona Memorial Gardens at Salt River will be conducting the annual flag breathing ceremony with the flag that flew over the USS Arizona at Pearl Harbor in 1941. The ceremony begins at 8am on Dec. 7th. 

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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The promised video of ADEQ’s Visit to WeSERV in October is now up. Wendy and Terza provided us a tutorial to navigating the new ADEQ website to find super fund sites, septic tank and UST (underground storage tank) info. Watch the video to learn more about the resources ADEQ provides you and your clients and how to access those. Go to www.weservgad.org, click on Videos.

The City of Maricopa’s updated sign ordinance has confused WeSERV members and other businesses in the community. In October WeSERV sent a letter to the City describing our concerns and offering suggestions on clarity so members, staff and others in the community could better understand the sign ordinance. The city will be hosting a public workshop on the sign ordinance December 13th. 

The week of November 14th saw WeSERV host several cities in roundtable conversations. November 15th our Southeast Valley chapter hosted the cities of Tempe, Chandler, Mesa and Gilbert. On November 18th our West Valley chapter hosted El Mirage, Surprise, Goodyear and Avondale. WeSERV provided each city or town a book with data specific to them, general market data and market trending data.

WeSERV members provided context to that data by discussing their client’s needs and what the members see going forward. Cities were able to tell WeSERV about upcoming projects and ask questions about the real estate market. It was an opportunity for members to get to know city officials and for city officials to get to know WeSERV. 

The Department of Labor has proposed new rules for workers to qualify as Independent Contractors. You can find the proposed new rule in the Federal Register. Public comments are open. While NAR actively defends REALTOR members ability to function as Independent Contractors, there are many other businesses that also rely on IC status. Several affiliate members of WeSERV may be negatively affected if the proposed new rules go into effect.

Many of you remember the Sackett v EPA case that gain notoriety in 2008.To remind you, the Sackett’s purchased a property in a lake subdivision in Idaho. All around them lots had been built on and so the Sackett’s began the process of building their house. Now the Sackett’s are back at the Supreme Court asking the court to clarify the Clean Water Act definition of navigable waters and the limitations on the EPA to broaden interpretations and impinge of private property rights.

The case was heard on October 3, 2022. You may read a transcript of oral arguments or listen to the oral arguments on the United States Supreme Court website.

WeSERV Government Affairs events and meetings are now concluded for 2023. Our Government Affairs Committee decided to cancel the December meeting. I want to thank our 2022 chair Rae Goepfert for her great leadership this year. Here’s a special note: Rae is also a recognized painter and has been selected to show her artwork at the new Goodyear library. If you get a chance, pop by the library and admire Rae’s work.

Our 2023 chair will be Duane Washkowiak along with our chair-elect Nathan Claiborn. Join us for meetings and event in 2023. 

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR business!

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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The election is upon us and WeSERV Candidate Interview Workgroups have completed their interviews and candidate forums. If you would like to see the candidates WeSERV endorsed running for office, you can see the complete list at www.weservgad.org. click on Candidates and Elections.

As you look over your ballot for the Tuesday election, you will see judges are on the ballot. Those of you in Maricopa County are looking at 55 judges. So how do you make a decision on which judges to re-elect? I posted a blog last week with resources and tools to help you judge the judges.

On October 20th WeSERV was able to host ADEQ, the Arizona Department of Environmental Quality at our West Valley office. Wendy Flood and Tereza Marks presented updated information to members on superfund sites, site cleanup, septic tank and UST resources and a variety of other information members and their clients need or want to know.

Last week, WeSERV hosted small roundtable discussions with property managers and the Department of Revenue. One at our Southeast Valley office and one at our Peoria office. The Department updated us on several improvements and resources. First of all, the PMC only email has been active since early summer. Do not use the old PMC data email. 

An updated tool you may not have seen, when you submit TPT, there is the ability to click a button to show the entire amount of TPT due and to see each property and its amount owed. This preview page will help you to see if there are any discrepancies prior to submitting TPT and that should help reduce the automated fines.

DOR has also created a PMC only webpage with checklists and video tutorials.

The CFPB is back in the news. In September a complaint was filed against the CFPB regarding the agency’s 2022 update to its unfair, deceptive or abusive acts and practices or UDAAP for short. 

The second case is a ruling form the 5th U.S. Circuit Court of Appeals. In that ruling the court found the funding mechanism for the CFPB is unconstitutional since the agency gets its funding form the Federal Reserve not the legislature through the appropriations process.

GAD Events:

Our November Government Affairs meeting will be on November 9th, from 10:30am to 12noon. All WeSERV members are invited to attend in person or via zoom. Please register to attend whichever attendance option you choose.

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/ 

WERQ Song Credits: “Werq” Kevin MacLeod (incompetech.com), Licensed under Creative Commons: By Attribution 3.0 License, http://creativecommons.org/licenses/by/3.0/

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WeSERV is still interviewing candidates running for local office. Last week our Cochise Chapter interviewed candidates running for city council and mayor of Sierra Vista. This week our West Valley Chapter will be interviewing candidates running for Peoria city council in the Mesquite district.

Look for the WeSERV REALTORS candidate endorsement list on our websites: weserv.realtor and www.weservgad.org. 

On August 31st, the Arizona REALTORS hosted our annual Legislative Caucus. WeSERV Government Affairs prepared for this important opportunity to impact and influence the Arizona REALTORS 2023 legislative agenda by bringing specific issues of concern and our suggestions for solutions to the discussion.

The New Homestead Act: With the changes made to the Homestead Act taking effect in January 2022, WeSERV has identified a few concerns and provided solution suggestions.

The “Wholesale Buyer/Seller” Law: Through this new law, two new definitions were created for people assigning a contract – Wholesale Buyer and Wholesale Seller. When assignment of a contract is performed, the correct and long-standing terms are Assignor and Assignee. It also requires buyers with the intention of assigning the purchase contract disclose their intention in the purchase offer.

Frequently, property owners may not realize a lien has been recorded against their property. This is a favorite tactic of scam artists, but sometimes a property owner may not realize an action has been taken and a legal lien has been placed on their property.

Definition of Institutional Buyers: the term Institutional Buyer is becoming synonymous with “big, unfeeling, hedge fund, corporation or iBuyer”. Most of Arizona’s residential rental property is owned by individual or small group investors in an entity. By defining them in the same way as a hedge fund, government or large institutional buyer, it will be increasingly difficult for them to help provide rental housing.

Increasingly, WeSERV is seeing a definition of abandoned property, first put forth by the Cleveland Fed during the 2008 crash, being written into city ordinances. That definition was subsequently adopted by HUD about 2012. The definition states property with a property tax paid in arrears with a property lien, or a property with a notice of default on a mortgage or deed of trust, is deemed to be abandoned. 

GAD Events:

WeSERV has created the City of Maricopa Sign Ordinance Task Force. 

ADOT has opened the public comment period for the proposed expansion of I-10 from Wild Horse Pass to Casa Grande.  

The next Government Affairs meeting will be on October 12, 2022. Also in October we will have a morning of update and information from ADEQ, the Arizona Department of Environmental Quality and from Rep. Debbie Lesko.

WeSERV GAD: Advocating for private property rights, the right to private contract and YOUR Business!

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