I have really enjoyed putting together the construction report in this issue. It’s allowed me to wallow in my comfort zone the Southern California design and construction industry. My jobs prior to walking down the path of journalism included being the marketing manager for Langdon Wilson Architects and then JCM Group, an offshoot of the now-defunct Peck/Jones Construction. I then spent eight years as a recruiter for general contractors and developers. So in pulling together the list of construction projects, interviewing people I’ve competed against and had as clients, romping around jobsites and climbing in and out of construction trailers, I have been in my element. Thanks to the architects, contractors, real estate gurus and planning department staff that helped us pull together a massive amount of information. It’s a given that we have missed some, and were unable to get information on others, so let me know how we did. But it’s not only putting together this report that’s had me in somewhat of a time warp; I’ve also worked through an economic meltdown that is not unlike the one we are currently undergoing. Remember the early ’90s? The S & L; scandals, the see-through office buildings in downtown Los Angeles, and the collapse of housing prices. Fast forward to 2006. Like so many others, I watched the mortgage industry offer no-down loans, and option ARMs with negative amortization, and hoped that they also remembered the bad old days. It seemed obvious to me that while the goal of making home buying affordable for just about everybody was laudable, it just wasn’t practical. Generally speaking, there’s a reason not to lend money to people with bad credit, especially if all you’re getting in return is a home with an over-inflated price. Did I mention my first full-time job was as an assistant in the real estate lending department of Union Bank? Perhaps part of the problem is that those of us on the sidelines assume that the players on the field know what they’re doing. We think that coach up in the box calling in the plays must have a better understanding of the big picture of the game. But that isn’t always the case. A panel of Southern California multi-family development leaders at the Apartments 2008 conference on Oct. 2 were asked the question, “If you knew then what you know now, what would you have done differently?” The most honest response, I thought, came from Connie Moore, president and CEO of BRE Properties, who said, “I would have listened to my gut.” She also chided businesses who are contributing to the credit crisis by hoarding cash, raising equity for no good reason and increasing their credit lines unnecessarily. “Times like these show character,” she concluded. I say it’s time for those with character to speak out and take action against greed, mismanagement and grossly inflated executive compensation. It’s also time to stop rewarding those who keep leaving the rest of us holding the bag. Take, for instance, the proposed Panorama Place retail project. As the Daily News reported, the key players on the development team vying for that project have less-than-stellar records locally. Will we all be distracted by the shiny models and interactive community meetings and the desire to finally rehabilitate a site that has been in dire need of attention for many years? We’ll see. Speaking of Apartments 2008 It was standing room only during the luncheon and CEO Panel at the Apartments 2008 conference at the Bonaventure Hotel downtown. Panel moderator Tom Bannon, chief executive of the California Apartment Association, asked “What are we going to see in the fourth quarter of 2008?” Immediate response from Harvey Green, president and CEO of Marcus & Millichap: “I don’t know.” Big, nervous laughs from the panel and the audience. “Cutting expenses and sitting and waiting for people to react is not the thing to do,” Green counseled. “It’s not what I’m doing.” Al Brooks, president of the commercial group for the institution formerly known as Washington Mutual, concurred, saying “This is one of those times you’re going to have to have some courage.” He assured the group that the multi-family asset class is not a problem for the lending industry, confirmed he would continue on in his position under new owners, J.P. Morgan Chase and said they “still have money to lend.” Brooks gave his own analysis of how things got so bad from the lending side of the equation. “We quit being old fashioned in my business,” he said. “When we start being creative and you start thinking we’re smart, you’re in trouble.” Words to the wise. Mortgage Reform Terminated In case you missed the Daily Update posted to our website recently, Gov. Arnold Schwarzenegger vetoed Assembly Bill 1830 which, among other things, would have capped prepayment penalties on existing loans, banned negative amortization loans, and would have made mortgage lenders fiduciaries. Schwarzenegger said that while the bill meant well, it “overreaches and may have unintended consequences,” adding that it would only have applied to state-regulated firms but not those regulated by federal agencies. Well, gosh, we wouldn’t want to start cleaning up our own backyard first, would we? Let’s wait for the feds to step in. It’s just that they’re a little busy right now. He courageously did sign the completely non-controversial SB1461, requiring real estate agents to disclose their license numbers on marketing materials; and the equally innocuous SB1737, closing a loophole to prevent violators of real estate law from continuing to practice in the state. Staff Reporter Linda Coburn can be reached at (818) 316-3123 or at [email protected].
