June 24 Industrial/Low-income Housing/Taxes/Governmental

We started off the class period talking about low income housing. An article that caught the attention of the class was about a developer in Dallas that had been applying for HUD money and the money was taken away from them to build upscale properties. Dallas wants a lot of sustainability developments. The city is somehow keeping low income housing out of the city even though they have been taking a fair amount of money and saying they are doing as much as possible to make low income housing available. For example, in Dallas there was a building built with low income housing on the bottom floors and nice penthouses built on the top floors. When people think about this kind of housing they think of drugs and crime everywhere. That might have been what it was like 5 years ago, but it has changed. Now this affordable housing is for teachers, police officers, and secretaries that work around in that area. You don't want to bus all these people in everyday for work so you have this kind housing for them instead. With low income housing you deal with NIMBY because a lot of the wealthy don't want it close to them, but they are needed so janitorial services and other low paying jobs can be taken care of. A great example of low income housing is the New Hope project in Houston. It was a very nice place and all residents have background checks. This makes the place a great environment. Studies show that when people have housing that they can afford it helps the community as a whole and makes it a better place to live. A big discussion we also had, was should we as people be responsible for relocating others that are misplaced from buying the low income land and building it up to be a nice place? As a person we need to help them somehow. In a way we already do because of the taxes that we pay to the government, but we shouldn't just give them to the government. The developer should have a responsibility to relocate these people without them having a loss.

Taxes were the next topic discussed. The government is trying to find ways to make more money through taxes. They are looking at taxing investors that have smaller incomes and currently pay less taxes because most of their profits/income comes from trades and investments. They only have to pay 15% capital gain taxes on this part of their income. That is why the government is raising it back up to 30-35%. They don't want people working the system and they want more tax dollars. Also, the government wants to lower the estate tax minimum before taxation. By doing this, the amount of people that will invest in real estate will be thinned and financing for real estate will cost more. City governments are also trying to get more money, for example in San Francisco, CA, they are trying to put a tax on commercial rent in order to lower their deficit by as much as possible. Most states have large deficits so the government is raising property taxes even though house prices are going down. This is the opposite of what the taxes should be doing. Governments are giving tax deductions to commercial properties for becoming green and also having ADA guidelines.

The last thing we talked about tonight was industrial markets. One of the articles talked about the DFW area and said that rents are going down and construction of warehouses is also going down. Just 345,000 square feet have been constructed in the first six months of this year. Last year in the first half of the year over 1.6 million sq ft were constructed.

We talked a little about Canada and its economy. It is doing well. Housing prices are very high. They are doing much better than the United States and many European countries because they have been keeping their financial regulation tight.

The government plays a big part in commercial real estate. GHS has a big hand in owning real estate. The government buys buildings to house new employees, and new parts of the government that are being created such as for the new health care system. They also redo office spaces and sell them to the private sector.