Thousands of College Hopefuls Could Leave California, and Never Come Back

As California’s population grows, and increasing numbers of high school grads meet college eligibility requirements, more and more qualified CSU and UC applicants have to compete for limited space. (Charlie Nguyen/Flickr)

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High school seniors across the state are waiting on news that will shape the rest of their lives. This month they find out whether they are among the thousands being admitted to the University of California or California State University.

Both UCs and CSUs are struggling to find space for qualified residents at overcrowded campuses, and tens of thousands of eligible students will be turned away. If they leave the state for college — and don’t come back — it could be trouble for the state’s economy.

This month, to mark the 150th anniversary of the University of California, President Janet Napolitano laid out steps to meet growing demand. She called on chancellors to graduate more students in four years, clearing the way for new students, and advocated for a policy that would guarantee admission to qualified community college transfer students.

Meanwhile, this week CSU trustees approved policy changes to redirect eligible applicants to campuses with space, instead of rejecting them outright. The changes go into effect for fall 2019 applicants.

But as California’s public universities scramble to accommodate more students, nearby out-of-state schools are welcoming them with open arms.

Two years ago, Danny Holton was the one waiting. He was a senior at Mountain View High School, in the heart of California’s tech mecca.

He had a 3.85 GPA. It wasn’t the 4.6 some of his classmates had, but still, he felt good about his prospects, and lucky to be in California.

“I grew up in a place where there are all these great schools just hours away,” he said. “Other states don’t have this opportunity just laid out.”

Danny Holton with his mom and dad, Carolyn and John, at a high school football game.
Danny Holton with his mom and dad, Carolyn and John, at a high school football game. (Courtesy Danny Holton)

Holton loved how friendly people were at his top pick, Cal Poly, San Luis Obispo. He also liked the UC campuses in Davis, San Diego and Irvine, with their big green spaces where students studied in the sunshine. He was excited to turn in his applications.

“You know, my whole high school career kind of led up to this point, you know, getting the acceptance letters from Cal Poly, the UCs,” he said.

When the letters started coming in it was bad news.

“They just kept coming. It was like the same letter, San Diego, Davis, Irvine: We regret to inform you that we won’t let you in.” Cal Poly didn’t let him in either. “No wait list,” Holton said, “It felt like I wasn’t even close.”

It’s become a common story.

Last year, the CSU system turned away more than 30,000 eligible students. In 2017, UC turned more than 10,000 eligible applicants away from their schools of choice, instead referring them to the only campus that has room to grow: UC Merced. And 124 of those students say they plan to enroll there.

As California’s population grows, and increasing numbers of high school grads meet college eligibility requirements, ever more qualified CSU and UC applicants have to compete for limited space, according to experts at the Public Policy Institute of California, who say the problem is compounded by a long-term trend toward declining state investment. PPIC data shows in 1976–77, higher education spending made up 18 percent of the state budget, but by 2016–17 it had fallen to 12 percent of the budget.

While California’s demographics have changed, its propensity for growth hasn’t.

“One of the main themes in California history is constant population growth,” said John Douglass, a research fellow at UC Berkeley’s Center for Studies in Higher Education and author of “The California Idea and American Higher Education.”

The difference now, he argues, is a lack of vision. The feat of California’s famed 1960 Master Plan for Higher Education was not that it established an accessible high-quality college system — that already existed — but that it secured that promise for the future.

“The great legacy of the Master Plan was an agreement about how the system should grow, what campuses should be developed, and what kind of money would be involved,” Douglass said.

It was supposed to be a plan through 1975, but the state hasn’t come up with an alternative.

“We’re living off of infrastructure and an investment by the state that’s 50 years old,” he said.

Danny Holton says he was a good student in high school. He was in AP classes, involved in school clubs, sports and activities. Here he is as homecoming royalty his senior year. (Courtesy Danny Holton)

So what students like Holton are experiencing is in part the result of a failure to adequately plan for the boom in college-eligible high school grads, according to Douglass.

“We don’t have anybody doing any long-term enrollment studies as of now, so we need a lot of homework to be done,” he said.

As Holton’s rejection letters piled up, he was grateful he had a backup plan. His college counselor had urged him to apply to a few out-of-state schools, and the news from outside California was better.

“When I got my acceptance from ASU (Arizona State University), that was awesome,” Holton said. He even got a certificate with his name on it, signed by the dean welcoming him to the undergraduate business school.

Not only did ASU welcome Holton, they offered him $54,000, or about half his tuition for four years.

Holton was placed on the waitlist at UC Santa Cruz and eventually admitted. But that was not until the summer, long after he had accepted admission to ASU.

The decision to leave the state for college is one a growing number of California families are making. Since 2002, Arizona State University has seen an increase of more than 200 percent in California student enrollment. At Oregon State University, California freshmen made up 3 percent of the incoming class in 2002. By 2017, California freshmen made up nearly 14 percent of Oregon State’s new students.

The last available U.S. Department of Education data, from 2014, shows more than 36,000 California freshman enrolled at out-of-state schools.

Those statistics trouble Lande Ajose, executive director of California Competes, an organization that advocates for higher education policies that increase access.

“Those are bright and talented students,” she said. “Those are students whose families are here in the state. Those are students who then may or may not return home.”

Holton is glad he went to ASU. He likes his classes. He got a good internship. He has another two years of college to decide what he’ll do next, but the longer he stays in Arizona, the harder it gets to leave.

“I just have the connections here,” he said. “This is where I am now. I’d call it my home.”

If Californians like Holton don’t come back, analysts warn the state is headed for trouble. The PPIC estimates by 2030 nearly 40 percent of the jobs here will require at least a bachelor’s degree, and state universities just aren’t turning out nearly enough of them. The institute projects the state will be over 1 million workers with bachelor’s degrees short of economic demand by then.

“Without a focus on how we’re going to move kids through,” Ajose said, “We’re leaving industries at risk of not being able to find the talent that they need to have.”

And she pointed out it’s not just about the economy. Studies have shown college graduates are more likely to be engaged in civic activities like voting and volunteering. “It also matters for the kinds of communities we want to live in,” Ajose said.

There is work being done on campuses and at the state Legislature to address the bleak forecast.

Lawmakers mandated UC increase enrollment by 10,000 in-state students over three years, a target the system has already surpassed. CSU’s Graduation Initiative 2025 aims to help students graduate on time, freeing up more space for new students, and there are signs it’s working: for 2016-17, 99,000 CSU undergrads earned degrees — almost 7,000 more than the year before, and a record high.

But experts warn more will need to be done if California is going to live up to the promise of access that created one of the greatest higher education systems in the world.

“Without a significant increase in the enrollment and academic program capacity,” Douglass said, “Californians can’t expect to continue to have the access rates they have today, let alone yesterday.”

The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting and the James Irvine Foundation.

For the Middle Class, the California Dream Has Become a California Joke

California’s lush coastline, balmy climate and post-World War II economic promise made it an easy sell as America’s middle-class paradise in the 1950s.

“The California Dream of two or three generations ago was, ‘I’m going to move from a place that’s cold and flat to a place where there’s lots of opportunity,’” said Joel Kotkin, a presidential fellow in Urban Futures at Chapman University in Orange. “’I’ll get a job in an aerospace factory, in an oil company. I’ll buy a house with a pool. I’ll die and go to heaven. And I’ll do it all in good weather.’”

Today the weather remains. But access to the California Dream is being choked off.

Stratospheric housing costs, the exit of key companies and the failure to replace the jobs that left with them have downsized the state’s middle class.

‘We could keep up, but we could never get ahead’

Since 1970, California’s share of the middle class fell from 60 percent to just over half the population. That trend almost mirrors patterns across the country. The number of middle-income Americans slipped from 61 percent in 1971 to 50 percent in 2015, according to the Pew Research Center.

In California, some have risen to the upper class and others have slid down. And some have left the state.

“The key group leaving is basically in their 30s, 40s and 50s tending to be making about $100,000 to $200,000 a year,” Kotkin said, citing Internal Revenue Service data.

Between 2007 and 2016, California lost 1 million more domestic residents than have come into the state, according to the IRS. Many are moving to Texas, Arizona, Nevada and Oregon.

“California opened their doors and basically kicked us out,” Kelly Rudiger said. “We couldn’t afford to live there with almost half of our income paying for our housing, our property taxes, our utilities. So my husband and I, both being full-time employees, we could keep up but we could never get ahead.”

Rudiger and her husband, Tony, moved their two children to Texas last year.

“We sold an 1,800-square-foot home in San Diego and now live in a 4,000-square-foot home and are still paying less on our mortgage,” Rudiger said.

She said her middle-class income goes a lot further in Texas than in California.

The Rudiger family: Tony, back left; Kelly, back right; and their children Renae and Branden Bingham -- moved to Texas in 2017 because San Diego was no longer affordable for their middle-income family.
The Rudiger family: Tony, back left; Kelly, back right; and their children — Renae and Branden Bingham — moved to Texas in 2017 because San Diego was no longer affordable for their middle-income family. (Courtesy Kelly Rudiger)

The Public Policy Institute of California classifies middle-income earners as those making between $49,716 and $174,006, based on 2017 calculations.

Kotkin said California families used to pay three times their income for a home in 1970. Sometime over the next decade it changed, and now that figure has jumped to as high as 10 times.

“Who has got that kind of money?” asked Kotkin. “Where I live, all the older people keep complaining, `My kids keep visiting me just waiting for me to drop dead so they can have the house.’ ”

Peter Brownell, research director at San Diego’s Center on Policy Initiatives, said the inability of California’s middle class to afford homes exposes a vulnerability in the state’s economy.

“Even though as a whole, our economy is successful in terms of what it’s producing and the amount of wealth it’s producing, we’re not seeing that translate into incomes that will support families here in San Diego and across California,” he said.

And he believes that is not economically sustainable.

“When people have stable, middle-class incomes, it means they have money in their pocket to consume all kinds of goods, whether that’s purchasing housing, buying new clothes, buying cars, buying refrigerators,” Brownell said. “Our economy is driven by consumer spending.”

Kotkin said California’s middle class started to dwindle when the Cold War ended in the 1990s, devastating the state’s aerospace industry. California has lost 280,000 aerospace jobs over the last 30 years, according to the book “Blue Sky Metropolis: The Aerospace Century in Southern California.”

Kotkin said real estate and construction jobs also went away. More recently, jobs in the business sector have taken a hit.

“Toyota, Occidental Petroleum, Nissan, companies that employed a large number of middle-class people, are going,” Kotkin said. “These were companies that had a lot of good paying jobs — $80,000, $100,000, $120,000 —  enough to support a middle-class lifestyle.”

And he said many companies that remain are not expanding because of California’s land, energy, housing and regulatory costs.

The Center on Policy Initiative’s Brownell said the companies that are expanding are contributing to the state’s income inequality.

“Here in California, we’ve had great success in creating highly skilled, high-paying jobs — in the tech industry in Silicon Valley and in San Diego the biotech industry,” Brownell said. “A lot of those really successful and well-paying industries have built into them a structural demand for low-wage work as well, the nannies, the restaurant workers and the dry cleaners.”

Brownell said it is important to note that even people earning more than workers in low-wage jobs are struggling to survive.

Sharon Mintz runs a floral arrangement business in San Diego. She said she offers free meals to her employees and has increased their pay from $15 to $20 an hour over the past few years but still cannot hold onto them.

“It works and then the rent goes up,” Mintz said. “And then we offer a little bit more and then groceries go up. It feels like we’re always trying to catch up.”

Brownell said a middle-class revival lies in the hands of government, strong unions and companies.

He said policymakers need to encourage the creation of quality jobs in the state. Unions set standards for wage and working conditions. And Brownell said companies with healthy profits should pay their employees more.

“The more prosperous a company becomes, the more of an obligation it has to share its success across the company,” Brownell said.

Without any fixes, Kotkin said California is headed away from the enchantment of the 1950s toward a more primitive time.

“Today, we have a society which over time is becoming more and more feudal with the very rich, very successful — some of the richest people in the history of the world — at the very top, and then a diminishing middle class,” Kotkin said. “And what’s more frightening is you have young people, some of them with college educations, working at Uber, working at Starbucks, essentially barely making it.”

The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting and the James Irvine Foundation.

Keeping Up with the Boomers

According to the Baby Boomer Survey conducted by PulteGroup, Inc., Baby Boomers are planning to retire earlier than before – at an average age of 63.7 today rather than age 65 in 2013. One-third of these retirees will be purchasing a new home specifically for retirement. 33% of them will be downsizing and be moving to a specific location – near family and a relaxed lifestyle.

Retiring Sooner and Keeping Their Lifestyle

In certain areas that Boomers are moving to, such as Arizona and Florida, there is a huge opportunity in real estate for downsized housing meant for retirees. Most of the neighborhoods and districts that are built around this theme have peaceful lifestyles with stable home prices and plenty of public amenities to attract the best clientele from around the nation.

With 25% of 65-year-olds today set to live at least an additional 20 years, there is time for retirees to purchase a new home in full. These are active, highly motivated people (72% of people reported a happy retirement in a MassMutual survey) with good retirement savings. The average 401(k) in the middle of 2017 (for all ages) was $97,700. The average IRA account held $100,200. Retirees tend to be at the top of these curves.

Keeping Up with the Boomers

All they need is someone to sell them the dream! Revenue streams that could be a real possibility for property owners and property managers include the following.

  • Splitting multifamily homes – Retirees usually need much less space than families and first-time homebuyers. They can also be usually quieter than the average tenant. With a bit of additional sound insulation, a property owner may be able to rent a multifamily home twice to multiple retirees.
  • Property management – Retirees can be some of the best-behaved tenants and homeowners a property manager could ask for. If you’re a professional manager who is looking for a good opportunity to make money at scale, focusing on retirement properties could be a great option for you.
  • Helping retirees find the perfect home – Many Baby Boomers want to live near family, golf courses, and clean parks. Property managers who can help retirees find homes, condos, or apartments like these will have a huge opportunity as the Baby Boomer class retires – in very large numbers in the coming years.

As a property manager, looking for ways to make your properties more attractive to retirees or even soon-to-be retirees might find you some strong resident retention in the years to come.

A Sheriff Speaks Out Against a Sanctuary Law

Attorney General Jeff Sessions speaking about his lawsuit against California at a meeting of law enforcement officers in Sacramento.
Attorney General Jeff Sessions speaking about his lawsuit against California at a meeting of law enforcement officers in Sacramento.
Jim Wilson/The New York Times
When Attorney General Jeff Sessions traveled to Sacramento two weeks ago to tell law enforcement officials why the federal government was suing California over its sanctuary laws, he was greeted by protesters in the streets and a tongue lashing by Gov. Jerry Brown.
But some law enforcement officials in California agree with Mr. Sessions that sanctuary policies go too far. The California State Sheriffs’ Association has been consistently opposed to one of the sanctuary laws, Senate Bill 54, which limits cooperation between state and federal authorities when minor crimes are involved.
We spoke with Sheriff Bill Brown of Santa Barbara County, who is president of the association and attended Mr. Sessions’s speech. (Our chat has been edited and condensed below.)
Q. On what grounds do you oppose SB 54?
A. We believe that it has a negative impact on public safety. And we believe that fundamentally it is wrong to limit communication between federal law enforcement agencies and law enforcement officers regardless of their jurisdiction.
Q. What does SB 54 restrict you from doing?
A. We want to make sure that we do not unnecessarily release people from custody who could otherwise be removed from the country if they are criminals, if they have a likelihood of reoffending or re-victimizing people in our communities.
Q. The law allows state law enforcement to communicate with federal immigration authorities in the case of serious crimes. You think the list of crimes isn’t broad enough?
A. That’s correct. For example, repeat drunk driving — you get someone who is arrested two or three times; domestic battery, assault on a peace officer; animal cruelty or abuse; serial theft — someone who has been arrested multiple times for shoplifting.
Q. You are also concerned about gang members.
A. If someone is in custody — and it could be for a minor offense — and if that person is a known member of a gang that is a criminal enterprise, like MS-13 for example, we see no reason why that person should be released back into the community. We should be able to contact ICE [Immigration and Customs Enforcement] before releasing them.

Victorian church readapted as vibrant coworking space & future home


With the rise of the freelance economy, more and more people are working for themselves — either at home, from a backyard office shed, or from a collaborative coworking space, where there are more perks and opportunities to network. These new professional spaces are popping up not only in conventional places, but also in less conventional ones like restaurantsbuses, and even churches, as this project by Surman Weston (previous) has done — converting a Victorian-era Methodist church into a co-working space for the architects, an animator, two illustrators and a print designer.

Seen over at Dezeen, architects Tom Surman and Percy Weston transformed the old London church by removing old paint off the walls, and adding new furniture, a wall of adjustable-height shelving, vibrant stained glass walls and a floating staircase. They say:

The diamond motif used here echoes the geometry of the existing timber trusses, while the stained glass panes reference the building’s past as a place of worship. The aesthetic of the project was derived from the existing timber trusses. Sandblasting to remove the many layers of paint applied over the last 130 years revealed the remarkable texture of the original timbers.

Wai Ming Ng© Wai Ming Ng
Wai Ming Ng© Wai Ming Ng
Wai Ming Ng© Wai Ming Ng

The idea was to create a “canvas of textures,” all painted white, which would contrast with the brilliant stained glass surfaces to produce an airy, open space with depth and visual interest.

Wai Ming Ng© Wai Ming Ng
Wai Ming Ng© Wai Ming Ng

Besides serving as a temporary coworking space, the design can also transform into a residence in the future. That’s accomplished with the insertion of two mezzanines at either end of the space, which now function as a model-making studio and meeting space, but which can later become a bedroom and a study, say the architects:

The concept embraced the dual purpose required in the brief. Rather than designing a studio that could subsequently be transformed into a home, it combines the warmth of materiality that you might find in a home, with the size and flexibility that is required in a studio or office.

Wai Ming Ng© Wai Ming Ng

In addition to the central open space that acts as a multipurpose place for work, meetings and meals, a kitchen and bathroom have been added under one of these mezzanines, to facilitate its future conversion into a home.

Wai Ming Ng© Wai Ming Ng

We talk often about how adapting and reusing existing buildings is a better and more sustainable option than demolishing and building from scratch; not only is there less waste, but it also lends a certain unique appeal that only comes from rehabilitating the old into something into new and unexpected. For more, visit Surman Weston.

6 Pro Tips for Property Managers to Get More From Their Taxes

6 Pro Tips for Property Managers to Get More From Their Taxes

One of the benefits of owning and managing properties is the ability to leverage your taxes as a property owner. If you’re not an accountant, however, it can be more daunting than exciting—especially if you don’t know what you can deduct, or how to best position yourself and your income.

We’ve talked with a variety of professionals in the fields of property management, tax laws, and accounting to bring you their best tips for getting the most from your taxes.

1. Don’t forget to deduct repair costs

“If you pay a repairman or other person $600 or more during the year to perform services for a client’s property, you must separately report those payments to the IRS.”

—Stephen Fishman, Tax expert, attorney, and author

2. Claim your home office

“You may not consider your rental income to be a business with a regular office, but it is. You have to record your income and expenses somewhere and that is likely to be your desk or a room in your home. If you use a room or other dedicated space in your home exclusively for your rental activities you can claim a portion of your house expenses as a deduction against your rental revenues.”


3. Add additional revenue streams where possible

“In multi-family properties, look for the opportunity to add services like coin-operated laundry and vending machines, which will not only provide revenue but will add resale value by raising the property’s return on asset value, or capitalization rate.

In single-family homes, offer extra house cleaning and landscaping services to tenants when they sign the lease. They may be happy to pay extra to avoid responsibilities they’d otherwise take on. You can negotiate the rates of independent landscaping and cleaning services, contract them out, and collect a fee as the contractor. For instance, if a cleaner agrees on a $75/month fee, you may offer the service to your tenant for $85/month, increasing your annual revenue by $120.”

—Blake Hilgemann, Property Manager and contributor to

4. Use rental losses to your benefit

“If a taxpayer is an ‘active participant’ in a real estate activity, they can normally use up to $25,000 of rental losses to offset other sources of income. Unfortunately, if a taxpayer’s Modified Adjusted Gross Income (MAGI) exceeds $100,000 those losses begin to be reduced and at $150,000 are phased out completely. Essentially, you can use rental losses to reduce your ordinary income unless you start making too much money.

One interesting exception to this is if you are a real estate professional. In those cases, the entirety of rental losses can be used against ordinary income—regardless of income level. There are other considerations, but the two main requirements are that:

  • More than one half of your personal services performed across all businesses and activities are performed in real estate trades or businesses
  • More than 750 hours of services are performed in real estate property trades or businesses in which the taxpayer materially participates

As with anything tax related, who exactly qualifies would vary on a case-by-case basis, but property management companies would be in a very good position to qualify as real estate professionals for the purpose of this deduction.”

—Micah Fraim, CPA and best-selling Amazon author

5. Minimize tax liability when you file

“Whether you’re running a property management business full-time or are a realtor who’s working as a property manager on the side, you can take steps to minimize your tax liability as a Schedule-C filer. [For example] track your mileage for every site visit and errand that you complete, which includes making bank deposits, buying office supplies, driving to the post office, affixing for rent signs, showing apartments, and attending meetings.”

—Thomas J. Williams, EA, Tax Accountant & Owner of Your Small Biz Accountant, LLC

6. Join the landlords’ association in your area

“Joining an association will provide you with a wealth of experience as well as sample leases, copies of laws and regulations, and lists of decent lawyers, contractors and inspectors. Some associations may even allow you to join before you buy a rental property.”

—Andrew Beattie, Investopedia

Jessica Thiefels has been writing and editing for more than 10 years and is now a professional freelancer and consultant. She’s worked with a variety of real estate clients and publishers, and has been featured on Forbes and Market Watch. She’s also an author for Inman, House Hunt Network, and more.

Formalize These Four Policies in Your High-Rise Association Right Now

High-rise living appeals to many people for the wealth of amenities, concierge-level services, convenient location and unique culture. But with this lifestyle comes unique challenges. Close quarters and the need for residents to exercise mutual respect can sometimes lead to friction and conflict. This is when formal policies need to come into play.

“Part of the draw for high-rise living is the diverse cultural experience of an urban neighborhood,” said Andrew Schlegel, CMCA, EVP at FirstService Residential Urban Management Division. “But bringing together a diverse group of people introduces an array of varying opinions, lifestyles and ways of conducting oneself. This can be a great thing, but to prevent the potential negative effects of natural differences, specific policies are a necessity for the association.”

Well-crafted community rules are a tool for creating harmony among residents. The challenge is creating policies and enforcing them in a fair and polite way. Many of the major issues residents face in a diverse high-rise community are complex. Your association may benefit from the help of a good high-rise management company in dealing with many of them. A solid company not only has experience, but also a vast knowledge of the law and a sense for what works best for residents.

Keeping that in mind, let’s take a look at some of the areas where concrete policies can help create order within a high-rise building.

1. Smoking – Yes? No? Restricted? 
The hazards of smoking are undeniable. It’s the leading cause of preventable death throughout the U.S. and Canada. But increased fire risks create even more immediate danger for residents living in a high-rise building. That, among other reasons, is why so many buildings are going smoke free…a step you may want to consider if you haven’t already done so.

But how do you get there without potentially upsetting residents? Just take it step-by-step:

A) Form a committee to explore the issue (include owners and board members), and review public health data and research from medical professionals.

B) Seek feedback from your residents via a simple online survey. Ask them how they feel about a smoke-free environment and if they’ve experienced second-hand smoke. Ask them if they’ve seen cigarette butts or burn marks in common areas.

C) Review your governing documents to see what it takes to officially implement this policy, and communicate it clearly to your residents. You can read more tips on how to implement this type of policy here.

2. Pets – Yes or No? Some? What kinds? How big? 
There’s a pet for every kind of person, but not every pet is viable for high-rise living. If there are no pet guidelines in your governing documents, draft clear policies that define what types of pets are acceptable, including animal types, size and weight.

The key here is communication – you’ll want to ensure all residents know the rules so they can comply. Remember that there will be common-sense exceptions, such as grandfathering in non-compliant pets. Also, keep in mind that federal law requires that all service animals be accommodated, at no cost to the owner. For a full discussion, read our pet policy article.

3. Flooring – No one wants to hear their neighbors. 
Most problems with a neighbor probably boil down to a single word: noise. While you can address this issue with ordinances regarding quiet hours and music/television volumes, real conflicts arise when the problem is the flooring itself.

Some flooring materials make every step sound like a thunderclap, which can make life unbearable for people living downstairs. So what to do? If your governing documents or architectural guidelines don’t already address this, draft a policy that clearly outlines which types of flooring are acceptable and which ones aren’t.

Board members who would like to establish an effective flooring policy should lean on the expertise of architects and acousticians who can go beyond defining acceptable flooring types. These experts lend real knowledge in terms of how the floor should be constructed to minimize sound. Additionally, your new policy should include details about the construction approval process and who can complete the work. Most associations require that unit modifications be performed by a licensed and insured contractor. (Refer to your association’s governing documents for specifics.)

Clearly communicate the new rules to your residents, and you’re on your way to having a flooring policy that keeps the building quiet and fellow neighbors happy. For a deeper dive into how to implement a comprehensive flooring policy, check out this article.

4. Short-Term Rentals – Yes? No? On a limited basis? 
The “sharing” economy is growing, but allowing owners to rent their units on a daily or weekly basis through online sites like Airbnb might not always be a good fit for your high-rise community.

Short-term renters are not subject to the vetting that long-term residents of the community undergo. They may be unaware of fire safety codes and other rules in the community that keep everyone safe, and that can be dangerous in an emergency. On the other hand, unit owners living in popular vacation areas might want to have the option to rent their space while they’re not at home. Not only can this generate extra income for the unit owner, but it can also increase property values by making the property more marketable to those looking to make income from their unit. Consider surveying your residents and then implementing the right short-term rental policy for your community.

If your community chooses to ban short-term rentals, don’t be afraid to enforce compliance with penalties. Likewise, create procedures that prevent unauthorized people from entering the premises, and document those instances when they occur. As with all policies, open communication with residents is the key to successful implementation. You can find out more about the sharing economy and how to address this growing trend by downloading our white paper.

There is no doubt these can be tough issues to tackle. But seeking the help of a knowledgeable high-rise management company can help you find clarity, develop a policy and achieve the kind of harmony that defines a great high-rise community. For additional help defining and implementing policy for your high-rise building, contact FirstService Residential, California’s leading property management company.

How Driverless Cars Could Disrupt The Real Estate Industry

by Ely Razin  – self-driving cars during a trial run in February in Guangzhou, China. (Photo by VCG/VCG via Getty Images)

Driverless cars could become a regular feature of the roads as early as April – at least in California, which has decided to allow fully autonomous vehicles to be tested on the roads (none of those pesky humans who have been present in test drives so far). Arizona has already become a fair-weather center for testing driverless vehicles, thanks in large part to the governor’s support, and Uber announced last week that it has finished testing its self-driving trucks in Arizona and is now beginning to use them to move goods across the state.

It’s not just the U.S., either. The British government launched a review last week of laws governing self-driving vehicles, with the aim of getting autonomous cars on the road by 2021, and other countries around the world are also experimenting with autonomous vehicles.

Clearly a big step for the technology and automotive industries – no surprise that companies working on driverless vehicles include Google and Uber, as well as traditional automakers like Audi, BMW, Ford, GM, Volkswagen and Volvo – the advent of human-less driving could also redirect the traffic of our days, how we live our lives and get around. Perhaps somewhat less obviously, a future filled with autonomous vehicles could also spur some big changes in where we live and work, thus affecting the real estate market in addition to the transportation and tech industries.

Of course, we realize that for all the buzz, driverless cars could turn out to change the world no more than Google Glass or to transform transportation no more than the much-hyped Segway. While the success rate of driverless cars may not be as predictable as some may like to believe, it can still be instructive to peer through the windshield of a driverless future and see what twists and turns might lie on the road ahead.

The value of transit hubs

One question worth considering is what the proliferation of autonomous cars could mean for public transportation and the value of the real estate that has been built around transit hubs.

The proximity of office and residential buildings to public transit hubs has traditionally been seen as adding value to the property by making commuting easy, a phenomenon that would seem to be bolstered by the low car-ownership rates of millennials.

“Clearly, any sort of big transit infrastructure program can act as a huge stimulus for the development of surrounding real estate,” said Scott Homa, a director of United States office research for real estate firm JLL. “It’s starting to emerge as a universal theme across the U.S.”

Sections of the U.S. that have seen real estate development near new rail systems or train stations include the Somerville suburb of Boston; Chicago’s Fulton Market; downtown Kansas City, Missouri; and Austin, Texas, the New York Times reported last spring.

It’s possible that the availability of driverless vehicles could, like the increasing prevalence of ride-sharing, simply become one more reason for urbanites to avoid buying a car – thus making proximity to public transit at least as valuable as before.

But there’s another possibility, too: The introduction of a driverless vehicle option could make access to public transit less important to commuters. And that could have a major impact on the needs and demands of the buyers, tenants and renters of office and residential properties (whether single-family or multifamily).

“AVs [autonomous vehicles] are expected to significantly reduce travel cost, time and congestion, while increasing safety,” accounting firm KPMG said in a 2017 report on the impact of autonomous vehicles on the public transport sector. “Cost-efficient self-driving cars could change commuter preferences away from conventional public transport.”

It’s important to remember that it’s not just privately owned four-door sedans that could be roaming the roads without any humans behind the wheel. The Netherlands, China and Switzerland have been testing self-driving public transportation options such as electric driverless shuttles with capacities of up to nine people, as well as full-sized driverless buses.

With driverless cars, shuttles and buses thrown into the mix, offices and residential buildings that might previously have been seen as less attractive for commuters because of their distance from transit hubs could become more appealing than before. Seen through a real estate lens, that greater appeal could translate into increasing demand and rising property values.

The flip side is that properties that commanded high value due to their proximity to transit hubs could suddenly find themselves losing their edge.

Even in neighborhoods already served by public transit, autonomous vehicles could potentially become a threat to existing transportation systems. By supplementing public transit – or in some cases, even replacing it – autonomous cars could potentially render the existing public transportation system less important, ultimately voiding the assumption that proximity to transit hubs boosts property values.

The need for parking

Many of us drive to work in the morning and park near the office, where our cars sit unused until we’re ready to head home at the end of the day. The average privately owned car in the U.S. is in use just 5% of the time and spends the rest of the time parked, according to architecture, planning and consulting firm Gensler.

“America’s parking footprint, estimated at 500 million parking spaces, consumes more land than Delaware and Rhode Island combined,” Gensler said in a report on driverless cars. In New York City alone, parking covers the equivalent of two Central Parks.

But that picture could change to the extent that autonomous vehicles roll into action.

Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., left, speaking at the 2018 Consumer Electronics Show in Las Vegas in January. Nvidia said Uber and Volkswagen will use its artificial intelligence expertise to help bring self-driving cars to the roads. (David Paul Morris/Bloomberg)

If driverless cars really do put the pedal to the metal, one ramification of having a car zoom away as soon as you get to your destination could be a reduced need for parking lots – which are, of course, a form of commercial real estate, even if they typically don’t involve buildings.

“AVs remove commuters’ demands for street and lot parking,” KPMG said in its autonomous vehicles report. Consulting firm McKinsey & Co. estimates that autonomous vehicles could reduce the need for parking space in the U.S. by more than 61 billion square feet.

That’s because driverless cars could potentially pick people up from their homes, drop them off at the office or the mall and then leave to park in a less prime area – or, like taxis, won’t even need to park, but will just move on to the next customer and the next trip.

Uber, already a popular alternative both to cars and to public transit, in November agreed to buy 24,000 SUVs from Volvo to form a fleet of driverless vehicles. Uber has said its driverless cars could hit the roads as early as next year.

A reduced need for parking could have a mixed effect on commercial real estate.

It could reduce the real estate costs for owners who currently assume they need to be able to provide parking, and it could spark construction and development on the site of existing parking lots and garages, such as 143 W. 40th Street and 14 S. William Street. Both Manhattan sites are among the 300 locations run by Icon Parking, New York City’s largest parking lot operator, which would presumably need to decide how it wants to change lanes should driverless vehicles lower demand for parking.

On a larger scale, in densely packed cities like New York, where land is at a premium, a diminished need for parking lots and garages could have a dramatic effect on the supply and demand equation. If there were to be a sudden influx of land available for redevelopment (and yes, that’s a big if), that could go a long way to creating a buyer’s market.

And once we’ve got driverless cars pulling up in the pretty near future and reducing the utility of parking lots, the next question is: What’s going to happen to those parking lots?

The answer: We don’t know what exactly they’ll become, but it’s safe to say that if all the ifs and whens come to pass, those suddenly superfluous parking lots and garages will be turned into something, meaning increased construction and development.

Driverless cars are increasingly getting the green light. Whether they’ll become merely one more transportation option or fundamentally alter the way we go is still unclear – but if it’s the latter,  transportation is not the only industry that will be disrupted. The prospective ubiquity of autonomous vehicles might ultimately turn out well for commercial real estate as a whole, but we would be wise to expect some potholes along the way.

What home buyers and renters need to know about Trump’s steel tariffs

This is how much Trump’s protectionist trade policy will add to the price of new homes

Getty Images
Steel and aluminum tariffs will likely increase the costs of building new homes.

A can of soda and a six-pack of beer may become more expensive thanks to the Trump administration’s proposed tariffs on steel and aluminum imports. And housing could cost more too.

Trump announced on Thursday that he plans to impose a 25% tariff on steel imports and a 10% tariff on aluminum, in a bid to boost domestic production and add new jobs. Home builders immediately slammed the plan. “This announcement by the president could not have come at a worse time,” Randy Noel, chairman of the National Association of Home Builders (NAHB) and a home builder and real-estate developer from LaPlace, La., said in a statement.

“Tariffs hurt consumers and harm housing affordability,” he said.

Also see: Could stock market volatility cause house prices to fall?

The tariffs on steel and aluminum likely will have an impact on new home prices if the cost of those materials increases in the U.S. But that effect will likely be more muted because new homes typically have more wood than metal, said Aaron Terrazas, senior economist at real-estate website Zillow. Whereas buying lumber represents one-third of the cost of building a new home, steel and aluminum contribute to between 0.5% and 1% of a home’s cost.

New apartment buildings and condos will be hardest hit

There are exceptions to that rule, however. Unlike with single-family homes, however, apartment and condo buildings require a significantly more steel and aluminum in their construction than they do lumber. “You’ll see more price pressure in the multifamily space,” Terrazas said. And those costs may get passed onto both buyers and renters.

And home-building activity had begun to pick up in recent months. Therefore, there’s less potential for an inventory slowdown. “The supply situation isn’t quite as dire,” Terrazas said. “The concern is more the supply at the right price point, and adding to construction costs will only make it harder to build at an affordable price point.”

This is what happens when homes are made permanently affordable

Lumber tariffs from Canada had a bigger impact

In November, the Department of Commerce imposed a 20.83% tariff on shipments of softwood lumber from Canada. While the move was forecast to spur new jobs and increase domestic lumber production, it caused the price of lumber to jump nearly 15%. “Those costs have largely been passed along to consumers, and you’ve seen new home prices touch new highs,” Terrazas said.

It added $6,000 to $10,000 to the cost of a median-priced home, he said. By contrast, the NAHB estimated that the cost of an average multifamily unit would increase by just $478.

Don’t miss: This city saw the biggest home-price growth in 2017 — and, no, it’s not on the West Coast

But the cost of new homes isn’t the only way tariffs have an effect on single-family housing. The Canadian lumber duty was also projected to reduce investment in single-family structures by $1.1 billion, according to the NAHB. If a similar reduction were to now occur because of these new tariffs, that could slow new home building. Inventory constraints could be further exacerbated and fuel even more competition for homes.

Six Do’s and Dont’s for HOA Board Meeting Success

Attend any HOA board meeting, and you’ll notice how different every board member and resident is. When it comes to your community, everyone brings their own set of opinions and preferences to the table. And while having a unique group of people with different backgrounds and viewpoints can be a great thing for your community, it may also lead to unproductive meetings and in some cases, conflict.

Your first step toward more cohesive board meetings is to enlist the help of your community management company. An experienced community management company can help you develop a great vision and give you the tools and resources to improve your board meetings. Better board meetings can play an important role in unifying your community, boosting its reputation in the market and ultimately enhancing resident lifestyles and property values.

By implementing a few principles before and during your association board meetings, you can make vast improvements to your meetings.

Read more in the article below, and fill out the form on this page to download a free, printable guide: “Six Principles for a Better Board Meeting.” By keeping these tips in mind, you’ll be well on your way to board meeting success.

Do: Plan ahead
As with most things in life, planning ahead is always a good idea. Before your meeting begins, review the agenda and any other need-to-know information. An accessible and responsive community manager, properly supported with the right resources from a great community management company, can develop an effective agenda for you. At FirstService Residential, community managers typically send out a board packet about five days before the meeting. This packet often includes the meeting agenda, suggested motions and answers to frequently asked questions. Plan to review this information before the meeting so that you’re prepared to tackle any important topics that may arise.

Do: Be professional
Take a deep breath and repeat the old adage, “It’s not personal, it’s business.” Occasionally, board meetings can get heated because people are passionate about their communities. In any case, it’s best to treat your position as you would a job. If you don’t think you would bring something up in a business meeting, don’t bring it up in an HOA board meeting. To make sure you and your fellow board members are on the same page, make sure that you and your board members understand the basic meeting structure and procedures involved (e.g., making and seconding motions). You will want to work with an experienced community management company that can help you get additional training on board meeting procedures and communication tactics.

Do: Keep it concise 
Who likes long meetings? Spoiler alert: No one! This is especially the case with board meetings, where long meetings can often hinder decision-making. That’s why you should aim to keep the meeting at about 45 to 60 minutes. By planning ahead and staying under an hour, you’ll be able to keep the meeting productive. To create a brief but effective agenda, you’ll need to work directly with your community manager. And your community manager should have the support and resources they need in order to help you.

Don’t: Get emotional
If you’ve been a volunteer board member for any amount of time, you know how easily a board meeting can become grounds for a personal venting session. To help combat these situations, it’s helpful to place some limitations on topics and speakers. For example, you may want to limit an individual’s time speaking on a topic to a maximum of three minutes. A well-trained community manager can help you put together proper guidelines for board meetings and facilitate them.

Don’t: Forget the rules
Board members and residents alike are held to a code of conduct that should be outlined in your governing documents. These policies are designed to ensure a respectful and courteous environment. Your board’s code of conduct should include time limitations on speakers and identify who can attend and speak at meetings, among other policies. If you don’t have a code of conduct, your community management company should be able to help you both develop and enforce one.

Don’t: Tune out
As a rule of thumb, listen more than you speak. Often, board members and residents just want to be heard and valued. Even if you don’t fully agree with what an individual has to say, you should actively listen to their concerns and opinions.

Without a doubt, HOA board meetings play an important role in your community, but they are often bogged down by conflicting opinions and differing personalities. Following these do’s and don’ts can help you avoid common roadblocks and hold more successful and productive board meetings.

A smooth and productive board meeting can go a long way in setting up your community for success. By improving your board meetings, you’ll effectively help enhance your association’s reputation and strengthen your community’s relevance in the changing market. It’s important to partner with an experienced and knowledgeable community management company that can help you develop helpful guidelines and establish best practices in order to reach those goals.

Get Your Free Guide

Want to get additional information on board and community dynamics? Fill out the form to download your complimentary guide, Six Principles for a Better Board Meeting.