The California Report

October 24, 2017

Largest Fire Cleanup in State History Begins in North Bay

In Northern California, local, state, and federal agencies are launching what they call the biggest fire clean-up effort in state history.

Pigs Fleeing North Bay Fires Find Refuge in Half Moon Bay

Those whose homes burned in wine country have to live somewhere else for awhile. That includes animals, as well as people. I recently attended a Pumpkin Patch day at a farm in Half Moon Bay that’s offering refuge to some of those animals.

Federal Agency Promoted Ranger Five Months After His Gun Was Stolen and Used in Steinle Killing

A Bureau of Land Management ranger is expected to testify in a high-profile murder case over the slaying of Kathryn Steinle on a San Francisco pier in 2015. The trial opened in the city yesterday.
Steinle was killed with ranger John Woychowski’s gun, which was stolen after he left it unsecured in his car.

Half of California Children Live in Household with Immigrant Parent

In California, nearly half of all children live in a household where they or one of their parents is an immigrant. That’s according to a new study released today by the Annie E. Casey Foundation.

State Senate Hires Outside Firm to Investigate Sexual Harassment

Fall out continues at the State Capitol over claims of sexual harassment within Sacramento’s political circles. The leader of the state Senate has hired two outside firms to investigate the problem.

Fierce Santa Ana Winds Predicted for Southern California

Just as extreme fire conditions are easing up in Northern California, they’re heating up down south.

Fresno Hopes ‘Nothing’ Is Enough to Attract Amazon Headquarters

Some cities are going to great lengths to get the company’s attention: New York temporarily turned the Empire State building orange, to match the Amazon logo; Stonecrest, Georgia offered to rename itself “Amazon.” And, of course, lots of cities are hoping to win the company over with massive tax breaks. But one California city is taking a gamble on a different offer: nothing.

Post-Disaster Checklist: Returning Home After Evacuation Order Lifted


The Valley Fire swept through the Spezza family’s rural community in Lake County in September 2015, destroying more than 1,300 homes. (Courtesy of Carolynn Spezza)

By Miranda Leitsinger and Michelle Cheng –


Returning to your home after a natural disaster can be tough — emotionally as well as practically. KQED gathered advice from FEMA, Sonoma County and Rob Goodman, who lost his home in the 2015 Valley Fire in Lake County, to help out those who have been given the OK to return to their residences.

“Some may not want to return, because of the difficulty of seeing your home and possessions in ashes. And seeing your neighbors’ homes gone as well,” Goodman said in fliers he created for survivors of natural disasters. “When we first returned to our street, we were shocked to see every home gone. Seeing our home in ashes left us feeling numb.”

“If you do decide to return I must urge great caution,” he added. “Your site will be toxic — containing everything from metals to plastics to wiring, plumbing, etc. Everything that was in your home will be melted and covered in ash.”

A Checklist From FEMA and Sonoma County:

What to Bring/Wear

☐ Sturdy shoes (steel toes and shanks are recommended)
☐ Heavy-duty mask (N95)
☐ Heavy-duty gloves
☐ Long pants and long-sleeve shirt
☐ Garden cultivator to sift through ashes
☐ 5-gallon bucket for any possessions
☐ Battery-powered radio to listen to emergency updates and news reports
☐ Battery-powered flashlight to inspect a damaged home

General Tips

  • Do not use your water if you suspect or have been told it is contaminated.
  • Keep hands clean during an emergency to help prevent the spread of germs.
  • If your tap water is not safe to use, wash your hands with soap and water that has been boiled or disinfected or use a large water jug that contains clean water.
  • Foods exposed to fire can be compromised (including canned goods).
  • Clean and sanitize your household after an emergency to help prevent the spread of illness and disease.
  • Hazardous chemicals and conditions may be present.
  • Inspect propane tanks for visible damage before turning on.
  • Be aware of slip, trip, fall and puncture hazards.
  • Watch out for animals, especially venomous snakes.
  • Stay off the streets. If you must go out, watch for fallen objects; downed electrical wires; and weakened walls, bridges, roads and sidewalks.

Rob Goodman’s Lake County home, which burned down in the 2015 Valley Fire. (Courtesy of Rob Goodman)

Before You Enter Your Home

Take care around the outside and check for loose power lines, gas leaks and structural damage. If you have any doubts about safety, have your residence inspected by a qualified building inspector or structural engineer before entering.

Do not enter if:

  • You smell gas.
  • Your home was damaged by fire and authorities have not declared it safe.
  • In the case of flooding, floodwaters remain around the building.

 Going Inside Your Home

When you go inside your home, there are certain things you should and should not do. Enter the home carefully and check for damage. Be aware of loose boards and slippery floors. The following items are other things to check inside your home:

  • Natural gas
  • Sparks, broken or frayed wires
  • Roof, foundation, and chimney cracks
  • Appliances
  • Water and sewage system
  • Food and other supplies
  • Basement
  • Open cabinets
  • Household chemical spills

Call your insurance agent. Take pictures of damage. Keep good records of repair and cleaning costs.

More details from FEMA and Sonoma County (Español).


Updating Your Association’s CC&Rs

governing-docs*Asked & Answered

Asked – Our documents were created in 1981 and have not been updated since that time.  I imagine that we are out of legal compliance with some of the items listed within both documents.  The HOA membership does not want to pay to have them rewritten and brought up to the codes and I am not sure what the implications are if we do nothing.

Answered – This a common question asked by many of our clients, especially those with governing documents that look like they were typed on a typewriter and digitally stored on microfiche.  However, it is important to note at the outset that just because your documents are old, does not mean that it is necessary to amend/restate them.  Nevertheless, there are several reasons why an association may want to update its documents.

The first, and most obvious, reason why an association may want to update its documents is to address particular issues affecting the community. While an association’s operating rules can easily be amended to tackle many of these issues, not all can be addressed through adopting an operating rule.  Thus, certain situations may require a CC&R or Bylaw amendment.

The second common reason why an association may want to update its CC&Rs is to remove developer-specific provisions. When an association is formed, the developer’s attorney prepares the governing documents, including the CC&Rs. And while the California Bureau of Real Estate exercises some oversight, many of the provisions are drafted to benefit the Developer and not necessarily the individual homeowners. Accordingly, it may be worthwhile to remove these provisions and reallocate the rights and responsibilities to the Association and its members.

Other reasons why an association may want to update its documents is to reduce quorum and membership approval requirements, and to address changes in the law. For example, a recent change to the Civil Code further defined the maintenance and repair responsibilities of the association and owners concerning Exclusive Use Common Area (“EUCA”) components. For condominium associations that have traditionally held owners responsible for EUCA repairs, changes in the law may require them to change that position if the provisions in their CC&Rs fail to address the issue.

California HOA lawyers Board members should be aware that amending an association’s governing documents can be an expensive endeavor. The expense is often exacerbated by the difficulty experienced in obtaining membership approval, either because of the unpopularity of the proposed amendments, or membership apathy. The foregoing is meant to underscore the importance of discussing potential updates with the association’s legal counsel to determine if they are necessary and/or advisable.

-Blog post authored by TLG Attorney, Matthew T. Plaxton, Esq.

At Least 31 Dead, 3,500 Structures Destroyed in Northern California Fires


Authorities say some of the most destructive wildfires in California’s history have killed at least 31 people. Seventeen people have died in Sonoma County, eight in Mendocino County, two in Napa County and four in Yuba County.

The Sonoma County Coroner’s Office has positively identified the following decedents and their next of kin have been advised:

• Carol Collins-Swasey, 76 years old from Santa Rosa
• Lynne Anderson Powell, 72 years old from Santa Rosa
• Arthur Tasman Grant, 95 years old from Santa Rosa
• Suiko Grant, 75 years old from Santa Rosa
• Donna Mae Halbur, 80 years old from Larkfield (Santa Rosa)
• Leroy Peter Halbur, 80 years old from Larkfield (Santa Rosa)
• Valerie Lynn Evans, 75 years old from Santa Rosa
• Carmen Caldentey Berriz, 75 years old from Apple Valley
• Michael John Dornbach, 57 years old from Calistoga
• Veronica Elizabeth McCombs, 67 years old from Santa Rosa

They join Charles (100) and Sara Rippey (98) of Napa who were identified earlier this week.

Firefighters gained some ground on the blazes but face another tough day with low humidity and high winds expected to return Friday night through Saturday night, leading to a red flag warning in the North and East Bay.

But Cal Fire’s Daniel Berlant says the agency wants to be as aggressive as possible on the fires Friday.

“Today we have a little bit of a window of opportunity as the winds are going to be relatively light throughout much of the day,” Berlant said. “We’re going to bring in some fresh crews and we’re going to be doubling up on some of the containment lines on the southern portion of these fires because the north winds are expected to pick back up late tonight.”

National Weather Service meteorologist Scott Rowe says winds will start to pick up late in the day.

“Right now we are most concerned about the North Bay mountains as well as the East Bay hills for the threat of strong and gusty off-shore winds and low relative humidity values,” Rowe said.

In those areas wind gusts out of the north and north east are expected to hit 20 to 30 mph and could reach 40 to 50 miles an hour.

Meteorologists say there’s a chance the area could see isolated gusts reaching 60 mph at the highest ridges and peaks.

High winds have created power outages in the North Bay, and Pacific Gas and Electric Co. said 34,000 customers are without electricity — most of them are in Sonoma and Napa counties.

The Atlas Fire burning in Napa and Solano counties has scorched 48,228 acres and is 27 percent contained.

The Tubbs Fire near Calistoga and Santa Rosa has burned 34,770 acres and is 25 contained.

Santa Rosa Mayor Chris Coursey said in a press conference Thursday afternoon that 2,834 homes had been destroyed by fires in the city alone.

Thousands of firefighters are battling at least 17 fires spanning more than 200,000 acres (about 300 square miles), according to Cal Fire.

Mandatory evacuation orders were issued Wednesday for the entire city of Calistoga, and residents are being told to leave immediately and shelter at American Canyon High School, 30 miles to the south between Napa and Vallejo. About 2,500 residents have evacuated their homes in Solano County because of the spreading Atlas Fire, which began in neighboring Napa County. The fire has destroyed two homes and 11 other structures and is still threatening 400 other homes in the county, according to Solano County Sheriff Tom Ferrera.

Geyserville and surrounding communities in Sonoma County were also put under evacuation Thursday.

A helicopter drops water on flames in Calistoga on October 11, 2017.A helicopter drops water on flames in Calistoga on Oct. 11, 2017. (JOSH EDELSON/AFP/Getty Images)Most schools in Napa and Sonoma counties are closed through the end of the week, in addition to schools in Solano, Marin and Contra Costa counties, which have closed due to poor air quality from smoke from the fires.Investigators Look Into Downed Power Lines, Exploding Transformers as Possible Cause of FiresCal Fire Chief Ken Pimlott said Wednesday that Oregon, Nevada, Arizona and Washington are sending firefighters and the U.S. Forest Service is sending fire engines, bulldozers and hand crews. Some 14,000 members of the California National Guard are on notice and could join members already assisting in firefighting efforts.“We have had big fires in the past. This is one of the biggest, most serious, and it’s not over,” Gov. Jerry Brown said at a news conference on Wednesday.Burned cars in the devastated Coffey Park subdivision in Santa Rosa. ” data-medium-file=”×527.jpg” data-large-file=”×672.jpg” class=”size-medium wp-image-11622855″ src=”×527.jpg” alt=”Burned cars in the devastated Coffey Park subdivision in Santa Rosa.” width=”800″ height=”527″ srcset=”×527.jpg 800w,×105.jpg 160w,×672.jpg 1020w,×777.jpg 1180w,×632.jpg 960w,×158.jpg 240w,×247.jpg 375w,×342.jpg 520w” sizes=”(max-width: 800px) 100vw, 800px” style=”box-sizing: border-box; border: 0px; max-width: 100%; height: auto; display: inline-block; vertical-align: middle; width: 800px;”>Burned cars in the devastated Coffey Park subdivision in Santa Rosa. (Sheraz Sadiq/KQED)The blazes have burned approximately 200,000 acres in 21 fires across Northern California, according to Cal Fire. Sonoma County officials said Wednesday that 600 people have been reported missing during the fires and that more than 315 have been located safely. People can call 707-565-3856 to report missing persons.Napa County is not releasing information on missing person reports.Video: Santa Rosa Reeling From Devastating Tubbs FireGiordano said Wednesday afternoon that people should not expect to go home until Monday at the earliest.Multiple fires broke out Sunday night as strong winds buffeted the area. Emergency lines were inundated with callers reporting smoke in the area.Cal Fire is investigating whether falling power lines and exploding electrical transformers may have caused some of the wildfires that started in the North Bay Sunday night. The Bay Area News Group reported Wednesday that Sonoma County dispatchers sent fire crews out to at least 10 locations over a 90-minute period, starting around 9:20 p.m. on Sunday, to respond to calls about electrical problems.The pool at Journey’s End Mobile Home Park in Santa Rosa, which has been completely destroyed. “

The Increase of Rental Property in Community Associations (HOAs) – The Subscription Economy

Subscription Economy Driving Increased Rental Property in Community Associations and HOAs

The increase of rental property throughout community associations and HOA’s is on the rise, there’s no doubt. And just because you’re a “tenant”, doesn’t necessarily mean you don’t care.

When is the last time you bought a DVD? How about the last time you bought a CD? The preference of buying and selling goods and services on a subscription model, rather than a one-time purchase, is becoming mainstream and probably sits somewhere between the early and late majority on the adoption curve – I’d argue it’s still early.


What is the Subscription Economy?

Subscription models have been around for a really long time. The surge of the subscription model is trending and becoming preference for many – both business and consumer. Think trade unions, magazines, Blockbuster, and contracted services as early adopters. Today we have Netflix, Amazon, and even Walmart pursuing the subscription business model. What’s so great about a subscription model anyways? You could argue it’s two fold:

  • It’s better for the business
    • Steady cash flow
    • Increased focus on long-term value
    • Predictable revenue
    • Reduced cost in customer acquisition
    • and much more…
  • It’s better for the customer
    • Flexibility
    • Better support and service
    • Easier to budget
    • Less upfront commitment

Although I don’t believe the subscription economy is the only contributing factor to the increase of rental properties throughout Community Associations and HOA’s, it may play a large part in why we might be seeing an increase in tenants, especially as the newest generations begin living on their own and others realize they don’t want the long-term commitment anymore.

The American Dream

In the United States, The American Dream is/was built on a foundation of owning your own home – it made sense when the world was less accessible globally, real estate was cheap, and careers were spent at a single place of employment. In my opinion, that’s no longer good supporting evidence. I have friends, under 30, that have had 2-3 professional careers already. Real estate is a 30 year “investment” and I can be anywhere in the world in less than 24 hours.

Times have changed and I believe purchasing and or owning a home is becoming a downward trend. It’s not even a generational thing, it’s a cultural shift. People are realizing that owning a home doesn’t really pan out to be a good investment if you want to be agile, work for multiple companies, and enjoy the freedom of less commitment. Granted, if you plan on staying put and you buy at the right time, it’s a great investment. The argument can go both ways, dependent on your future plans and commitment level.

What actually drives the increase in rental property throughout the community association? I’d be interested in hearing other’s thoughts on this topic.

Some other factors I believe contribute to the increase in rental property within HOA’s and Community Associations:

  • Access and speed to information
  • Real estate downturn during youth (2008 R.E. crisis)
  • Increased speed/pace of life
  • Career duration and frequency
  • Institutional investors purchasing within common interest developments

The student housing sector is hotter than ever—here’s what you should know

The number of people enrolled in higher-education programs—20.5 million at the start of the current school year—explains much about investor interest in the student housing niche. Find out who’s buying and who’s lending now.

Of all the statistics tied to education, one number does much to explain why lenders and investors look favorably on communities geared to college students: 20.5 million. That’s how many people attended institutions of higher learning last fall. What’s more, enrollment will continue to rise well into the next decade, according to the National Center for Education Statistics.

“What really attracts (investors) to our biz is the stability of cash flows,” said EdR Chairman & CEO Randy Churchey during a panel discussion at the 2016 NMHC Student Housing Conference and Exposition last fall. “When you remind investors that when the economy goes into a recession, enrollments go up—a light goes on in their heads.”

Financing remains in high demand on multiple fronts, driven in large measure by record deal volume. Transaction levels hit a new high for the sixth consecutive year in 2016: $9.8 billion, more than double the previous year’s total and three times 2014’s volume, CBRE’s National Student Housing Group reports. Even taking into consideration $3.3 billion worth of large-scale portfolio acquisitions, 2016 sales outpaced 2015 by 16 percent.

Topping the list of student housing lenders last year were the government-sponsored enterprises, which completed $4.2 billion in student housing loan purchases between them. That breaks down to $2.6 billion for Fannie Mae and $1.6 billion for Freddie Mac, all of it for acquisition or refinancing, and represents a 27 percent year-over-year increase.

The GSEs’ vehicles for the sector are their DUS Student Housing Loan Programs, which offer permanent fixed-rate and floating-rate products starting at $3 million, typically for five- to 15-year balloon terms, or 20 to 30 years’ full amortization. Maximum loan-to-value is 75 percent of the asset’s appraised value.

Life companies were also an important source of capital for student housing deals in 2016, including some for construction, though they tend to prefer Class A assets in major markets. Also, many life loans are at lower loan-to-values, usually 65 percent or less. Trailing behind were CMBS and commercial banks.


As student housing matures as an asset category, sophisticated players are pursuing larger transactions that require intricate capital stacks. “When I started out, smaller investors were the only ones interested in student housing,” said Brendan Coleman, a managing director for Walker & Dunlop. “That’s changed. Institutional investors are now very interested in the property type, and they’re more sophisticated borrowers, so the deals tend to be a lot more complex.”

A case in point is the financing for two student housing portfolios acquired by Scion Student Communities LLC, a joint venture of The Scion Group LLC, the Chicago-based owner-operator; GIC, which manages foreign investments for the government of Singapore; and the Canada Pension Plan Investment Board. Both portfolios were financed through Fannie Mae facilities arranged by Coleman and Will Baker, a Walker & Dunlop colleague.

For the first acquisition, which involved six student housing assets, Walker & Dunlop drew on the expansion and borrow-up features of an existing Fannie Mae credit facility to achieve $233 million in proceeds. A second Fannie Mae facility of $416 million was structured for the acquisition of 11 assets. That facility offers fixed- and floating-rate components with varying maturities. Many of the properties qualified for the GSE’s Green Certification Program, which discounts interest rates for properties that have been certified sustainable by a recognized organization.

The lion’s share of student housing acquisition deals tend to require somewhat less complex structures. In February, for example, HFF secured $45.4 million in financing for St. Croix, a 540-unit apartment community near the University of South Florida’s main campus in Tampa. HFF’s client, The RADCO Cos., obtained a seven-year, floating-rate loan through Freddie Mac’s Green Advantage Program.


Refinancing is another source of considerable demand in the student housing subsector, and those deals often require a touch of creativity. Such was the case when Capstone Capital negotiated a loan for The Boundary at West End in Greenville, N.C., which provides 550 beds for East Carolina University students. The sponsor, Taft Family Offices, sought at least $40 million in order to take out $34.4 million worth of existing debt plus its development equity.

To fulfill that wish list, Capstone Capital negotiated 14 waivers to standard Fannie Mae underwriting. The upshot: a $42 million loan with 10 years of fixed-rate financing at 4.21 percent, including two years of interest-only, followed by a 30-year amortization. Taft Family Offices took $7.4 million in proceeds to fund two new developments.

Development financing, too, is in demand, as attested by the 15,400 units that the National Center for Education Statistics estimates were in the pipeline at the end of 2016. Creative structures are emerging to meet these needs. Blinn College, a 134-year-old county institution in eastern Texas, is relying on a public-private partnership to expand housing at its flagship campus in Brenham. Servitas LLC is developing the 465-bed facility, which will meet the growing needs of a resident population that already numbers more than 1,300, the most of any community college in Texas.

At the heart of the plan is a partnership with National Campus and Community Development Corp., an Austin-based nonprofit that specializes in structuring public-private ventures. A nonprofit entity, National Campus and Community Development (NCCD)-Blinn College Properties LLC, would recieve a loan from the U.S. Department of Agriculture. The college would then lease the facility from the nonprofit for 40 years. When NCCD-Blinn College Properties repays the loan, ownership of the facility would revert to the college.

One hitch is that USDA financing is on hold, which has pushed back completion a year to fall 2018. To move the project forward, Blinn’s trustees authorized $2 million in interim financing, which will be repaid from the proceeds of the USDA loan, or if necessary, from the proceeds of bonds issued by the nonprofit New Hope Cultural Education Facilities Finance Corp. If the plan does pan out, it could serve as a model for cash-strapped schools with a need for housing.



Preventing Cyber Attacks, Part 1: How Residents Can Protect Your HOA

Ignorance is not bliss, especially when it means potentially leaving your homeowners association (HOA) at risk of a cyber attack. And that’s exactly what you’re doing if you don’t recognize that your HOA is as much of a target as any other small business.

Small businesses, including those in California, have become more attractive to cyber criminals, as a variety of sources indicate. For example, the February 2016 California Data Breach Report notes that small businesses accounted for 15 percent of the data breaches reported to the California Attorney General from 2012 through 2015. California, which was the first state to mandate data breach reporting, continues to tweak its legislation, with the most recent change likely to impact its future analyses. As of 2017, encrypted data that is breached will be subject to the same notification requirements as unencrypted data.

Another source that points to greater vulnerability among small businesses is Malware Trends for Small and Medium Businesses Q1 2017. It reports that California small- and medium-sized businesses experienced an increase of nearly 612 percent in spyware incidents from Q1 of 2016 to Q1 of 2017, ranking the state fifth in the country. In addition, an FBI report reveals that Californians lost more money to cyber crime in 2015 than any other state – more than $255 million.

Unlike other small businesses, your HOA is probably not run by business professionals and is even less likely to have technology experts among its leadership. So what can you do to keep your data safe?

In our two-part series, we share some tips that your association can apply to protect your community from cyber attacks. Read the first article to learn how residents can play a role in your HOA’s cyber security.