Archives for August 2018

In June, the U.S. Supreme Court issued its ruling in the case of South Dakota v. Wayfair, Inc., holding that states may require online retailers to collect and remit sales tax on purchases, even when those retailers do not have a physical presence in that state.
This ruling is a victory for NAR and commercial real estate practitioners, who have long been advocating for sales tax parity between online sellers and brick-and-mortar stores. Main street retailers are an important commercial sector and competing against online sellers offering goods at lower prices due to not charging sales tax has hurt their ability to grow and, in some cases, caused them to go out of business. It will also help states struggling to make up for lost sales tax money, estimated to be in the billions of dollars each year.
The Wayfair decision reverses a 1992 Supreme Court case, Quill Corporation v. North Dakota, which held that states could not require remote sellers (at the time, catalog retailers) to collect state sales tax unless they had a “nexus” to the state, via a physical presence within its borders. “Congress may be better qualified to resolve [the problem],” the Court stated. Since that decision, Congress has introduced several bills in the Senate and the House to allow states to require remote sellers to charge sales tax on purchases. NAR, which is a member of the “Marketplace Fairness Coalition” advocating for internet sales tax fairness, has long supported these measures.
The Wayfair decision opens the door for other states to enact similar laws to South Dakota’s, which will help level the playing field between retailers regardless of where they exist. The majority opinion, written by Justice Kennedy, reflects the changing nature of 21st century commerce, declaring the physical presence test is out of date and “economic and virtual contacts” with a state are enough to satisfy the nexus requirement.
This decision does limit states to the scope of the South Dakota law, which requires sales tax collection by sellers delivering more than $100,000 of goods or services into the state, or engage in two-hundred or more separate transactions for the delivery of goods or services per year.
Estimates vary, but it is agreed billions of dollars are lost each year via uncollected sales tax on online purchases (technically residents are supposed to remit that money when they file state taxes each year). States will now be able to reinvest that money into infrastructure, schools, public works projects, and other areas that make communities attractive and increase property values.
NAR is pleased with the result from the Supreme Court on this issue, and looks forward to seeing Main Street businesses once again competing on a level playing field with e-commerce retailers.
By: NAR
Click here to view source article.

TaskUs, a provider of outsourced customer support and other services for companies like MailChimp and Tinder, announced Wednesday it will open an office in downtown Albuquerque and hire 695 employees over five years.
The company is headquartered in Santa Monica, Calif., and currently has offices in California, Texas, Mexico and the Philippines. Its Albuquerque outpost will be located in First Plaza at 200 Third St. NW, a building the company will spend $9 million improving, according to information provided by officials.
Last month, a city commission approved an incentive package for TaskUs comprising $2 million from the state’s Local Economic Development Act fund, $1 million from the city’s closing fund and an industrial revenue bond package that functions as a property tax break. The deal is expected to come before City Council in September.
TaskUs CEO Bryce Maddock told the Journal he is confident city officials will approve the incentives and is excited to break ground on the project in October. He said the office will include an arcade room and a nap and meditation space.
“We like creative offices that mirror our Silicon Valley customers,” Maddock said at a press conference announcing the jobs.
Economic development officials said New Mexico beat out Utah, Nevada and Texas for the project. Maddock remarked at the conference that Albuquerque was chosen because of its low cost of living, the availability of direct flights out of the Albuquerque International Sunport, and pool of college students from the University of New Mexico and Central New Mexico Community College, among other attributes.
Gov. Susana Martinez called the project proof that New Mexico “is not just a fly-over state now; (companies) are actually looking at us as a place for business.”
Albuquerque Mayor Tim Keller said that between TaskUs and recent job announcements from health care company CareNet and technology startup Lavu, about 1,000 new jobs are coming to downtown Albuquerque.
Maddock said TaskUs will begin hiring management for the Albuquerque office at the end of the year, and other employees at the beginning of 2019. He did not have a salary range for the jobs, but said most of positions will be in either customer service or “content security”– more specifically, ensuring user-submitted content and advertising complies with a website’s terms of service.
Annemarie Ciepiela Henton, Albuquerque Economic Development’s vice president of business development and marketing, said in an email that TaskUs visited Albuquerque multiple times over the past year and interviewed 18 Albuquerque-based employers before making their decision.
By: Marie C. Baca (ABQ Journal)
Click here to view source article.

The retirement and downsizing of Baby Boomers coupled with the continued emergence of Millennials will support the need for self-storage space in the coming years, providing a positive long-term tailwind.

The self-storage industry is entering a period of transition as rising interest rates, elevated development and more historically normal property performance temper buyer aggression. This period of maturity is evident as supply-side pressure begins to impact fundamentals. Still, the underlying demand for storage space remains strong.
However, aggressive development activity in the past two years is starting to overtake absorption. Moving forward, nationwide vacancy and rent growth may soften amid greater competition, particularly in construction-heavy metros, according to a report by Marcus & Millichap.
The strength of the apartment market could positively impact self-storage demand as the smaller average residence size offered by rentals encourages the use of storage space. Furthermore, strong small-business optimism may underpin additional commercial usage as lower tax obligations and high expectations about the future of the economy incentivize expansion.
Sellers, on the other hand, continue to expect peak pricing and are baking strong revenue growth forecasts into current values. As a result, a gap between buyer and seller pricing expectations remains open, weighing on transaction volume and elongating closing times.
The major self-storage REITs have become more conservative on the acquisition front amid growing industry headwinds. While high-end properties in quality locations will still be actively pursued, REITs may shift focuses to expanding third-party management business. Management partnerships with existing private owners and new development have been an effective strategy used by REITs to control more assets while avoiding direct upfront purchase.
The Fed is widely expected to continue raising its overnight rate through 2018 to restrain potential inflation risk. Average self-storage cap rates remained relatively stable in the mid-6% range for the last couple years, with a yield spread above the 10-year Treasury of about 410 basis points. Many believe cap rates will rise in tandem with interest rates, but historically, this has not been the case.
Self-storage financing remains available, however, underwriting standards are tightening in the face of oversupply risk, lower revenue growth expectations and greater regulation. Construction loans will be especially scrutinized as lenders continue to show resistance to suboptimal deals and inexperienced sponsors.
With regard to construction, Rosewood Property Company is now underway on a new self-storage facility in Tigard. The project, located at the intersection of SW 68th Parkway and Highway 99W, will be a multi-story facility that will consist of 83,375 rentable square feet and 850 storage units, 94% of which are climate controlled. The project will be managed by and branded under the Extra Space Storage name.
“This new facility will add another important project to our expanding presence in the self-storage sector and we are excited to expand to the Portland-area market,” said Bill Flaherty, chief executive officer of Rosewood Property. “It was carefully and thoughtfully designed in a strategic area. We will continue our focus to selectively add self-storage projects in multiple markets that are a strategic fit within our portfolio.”
This is Rosewood’s first self-storage project in the Portland, OR market. Rosewood owns multiple facilities on the West Coast, including operating properties in the Seattle/Tacoma market, Los Angeles and Palm Desert, CA.
Moreover, Rosewood Property Company currently owns a portfolio of 43 operating self-storage projects in 11 states totaling more than 3.25 million square feet and approximately 26,500 storage units. Rosewood is selectively developing new multi-story storage projects in targeted markets and remains focused on actively building its self-storage portfolio, mainly through acquisition.
“Rosewood’s development program has concentrated on temperature-controlled facilities, often multi-story, that meet the needs of today’s customers and enhance their experience,” Flaherty tells GlobeSt.com. “This often includes customers with valuable possessions and collectibles that require video surveillance and motion-controlled lighting to provide clean, safe and bright facilities while being environmentally responsible.”
The retirement and downsizing of Baby Boomers coupled with the continued emergence of Millennials will support the need for self-storage space in the coming years. This demand will only strengthen as these generational forces unfold, providing a positive long-term tailwind, says the M&M report.
By: Lisa Brown (GlobeSt)
Click here to view source article.

After several cash-lean budget years that prompted spending cuts and other austerity measures, a big revenue boom has hit New Mexico.

State lawmakers will have an estimated $1.2 billion in “new” money available in the coming budget year due to unprecedented oil production levels and overall economic growth, according to new revenue figures released Wednesday by legislative and executive economists.

The state is on track to spend $6.3 billion this budget year, while revenues are expected to reach $7.5 billion for the 2020 budget year, which starts next July 1.

New money is defined as the difference between projected incoming revenue and current state spending levels.

“Hopefully, we won’t foul this thing up,” Sen. John Arthur Smith, D-Deming, vice chairman of the Legislative Finance Committee, said after the revenue estimates were presented at a meeting in Taos. “It’s great news for the entire state, but we still have huge economic problems.”

The eye-opening revenue figure could allow for state spending levels to hit an all-time high, and give lawmakers options to increase spending on public schools, health care and other programs next year, when a new governor will be in office.

One legislator even raised the possibility of its paving the way for a funding boost for several University of New Mexico athletics programs that are scheduled to be eliminated.

However, economists cautioned that the projected revenue growth – an 18 percent spike from current spending levels – is based primarily on taxes and royalties associated with oil drilling in southeastern New Mexico, a historically volatile revenue source.

“This spike is unprecedented,” Legislative Finance Committee chief economist Jon Clark told lawmakers. “We’re relying on the oil industry more than we ever have before.”

Clark and other economists recommended lawmakers maintain cash reserves of at least 20 percent of state spending – or more than $1 billion.

In addition, the state’s two large public retirement systems are facing long-term funding concerns and lawmakers have been ordered by a judge to come up with a plan by April to ensure at-risk public school students, including Hispanics, Native Americans and English-language learners, receive an adequate education.

Rep. Patricia Lundstrom, D-Gallup, chairwoman of both the LFC and a key House budget-writing panel, said the revenue boom will allow lawmakers to backfill funding for programs that were cut in recent years.

But she cautioned that not all state agencies will receive budget increases, saying, “I would not suggest that will necessarily be the case.”

Lundstrom suggested the infusion of new dollars could also allow state lawmakers to provide funding to save men’s soccer and other UNM sports teams that university regents recently voted to eliminate at the end of the year. However, she told the Journal that she felt university leaders had largely ignored legislators’ suggestions during the run-up to the regents’ vote and suggested any additional funds provided would not be a “bailout” to allow UNM to continue to outspend their revenues as has happened in past years.

“I’d be very interested in restoring those four sports, but I’ll be taking a very close look at everything else for UNM,” Lundstrom said.

‘Economic driver’

New Mexico is among the most volatile states in the nation when it comes to annual revenue streams, and it has historically relied heavily on oil and natural gas taxes and royalties to help pay for state government operations.

There are now 104 active drilling rigs in the state, up from 62 year a year ago, according to the New Mexico Oil and Gas Association, whose executive director, Ryan Flynn, on Wednesday called the industry the state’s “economic driver.”

Specifically, surging oil production in the Permian Basin in southeastern New Mexico accounted for 85 percent of the state’s forecast revenue growth since January, according to the LFC.

The oil boom has also had a ripple effect on other industries, as two oil-rich counties – Lea and Eddy – accounted for roughly two-thirds of the state’s gross receipts tax revenue growth in the budget year that ended in June, according to the Department of Finance and Administration.

There has also been economic growth, albeit slower, in Bernalillo County and other parts of the state, including in the construction, manufacturing and retail sectors. And the state’s jobless rate dropped significantly over the past year – from 6.1 percent to 4.7 percent.

But 12 New Mexico’s counties, most of them largely rural, still posted declines in their gross receipts tax collections in the most recent budget year, and the state continues to have one of the nation’s highest poverty rates.

“While we are seeing rising revenues at the state level, not every county is experiencing this,” Clark said.

At a state level, the revenue boom has already allowed New Mexico to replenish cash reserves that were depleted during the recent economic downturn and $177 million is projected to be set aside next July in a recently created “rainy-day” fund that would be available to lawmakers for future budget crunches.

Political implications

The state’s revenue uptick could also play a role in this year’s election season.

Republican gubernatorial nominee Steve Pearce urged using the available dollars to increase funding for public schools, infrastructure needs and the state’s mental health system, while also potentially allowing for tax cuts for the elderly to be enacted.

He also said his opponent, Democrat Michelle Lujan Grisham, would curtail the oil drilling boom, an apparent reference to her plan to bolster the state’s renewable energy industry.

For her part, Lujan Grisham also cited infrastructure and education as top budget priorities, while claiming Pearce had voted against renewable energy and career education programs while a member of Congress and, previously, the state Legislature.

Meanwhile, acting Taxation and Revenue Secretary John Monforte attributed much of the state’s budget turnaround to the policies of outgoing Gov. Susana Martinez, who inherited a budget shortfall upon taking office in 2011.

Some lawmakers and economists have questioned that claim, and Senate budget guru Smith said Wednesday that lawmakers had already been working on fixing a previous budget crunch before Martinez became governor.

In a statement Wednesday, the two-term Republican governor described the revenue boom as the “largest budget surplus in New Mexico history.”

“By right-sizing government, cutting taxes and strengthening our economic development tools we are growing and diversifying our economy,” Martinez said. “Our private sector is booming, and we are creating new jobs and bringing investment to our state.”

By: Dan Boyd (ABQ Journal)
Click here to view source article.