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Tribute to commercial real estate pioneer, Sam Zell.

Last week, the commercial real estate world lost a giant when developer and investor Sam Zell died.
This is definitely a different type of article this week. But I think its ...appropriate. Because last week we lost a giant in the commercial real estate world. And not only was he a giant of the commercial real estate world, but he was also a fellow University of Michigan alum.

Sam’s Background was Impressive
In the realm of real estate, few names evoke as much admiration and respect as Sam Zell. With an entrepreneurial spirit and an uncanny ability to identify lucrative opportunities, Zell left an indelible mark on the industry.

He was born on September 28, 1941, in Chicago, Illinois, and grew up in a modest family in the Chicago suburbs. His parents were Polish immigrants who instilled in him a strong work ethic and resilience. Zell’s interest in entrepreneurship and finance emerged early on, and he demonstrated his acumen by starting a business at the age of 12, buying and selling bikes. He then attended the greatest university in the history of the world – the University of Michigan. After graduation, he stayed in Ann Arbor and began his real estate career right away. He began by managing the 15 unit apartment building he lived in for free rent. He then won over other management contracts from other apartment communities – all the while going to law school at Michigan. By the time he graduated law school, he and his business partner were managing over 4000 units.

After getting his law degree, in 1968, Zell co-founded Equity Group (EGI), a private investment firm that became the foundation of his success. Zell’s early ventures included purchasing distressed real estate properties and turning them into profitable assets. He understood the value of contrarian investing and possessed a knack for identifying undervalued assets in distressed markets. He famously called himself a “Grave Dancer” because of how he searched for underperforming assets to turn around.

It was in the 1970s that Zell made his breakthrough in real estate. Recognizing the potential in the emerging market for commercial real estate, he founded Equity Office Properties Trust (EOPT) in 1976. EOPT became the largest office real estate investment trust (REIT) in the United States, owning and managing a vast portfolio of prime office space.

Zell’s Real Estate Climb was Incredible
Sam Zell’s impact on the real estate industry is undeniable. With a shrewd investment strategy and an unwavering belief in contrarian thinking, Zell has built a remarkable legacy of successful real estate investment and development. Let’s explore some of the notable highlights of his career.

Zell’s journey in real estate investment began in the 1970s when he identified a market opportunity in distressed properties. His ability to recognize undervalued assets and turn them into profitable ventures set the stage for his future success. Notably, Zell’s Equity Office Properties Trust (EOPT) became a pioneering force in the office real estate sector, acquiring and managing a vast portfolio of prime office buildings across the United States.

As Zell’s reputation grew, so did his ambition. He expanded his investment horizons beyond office properties and ventured into various real estate sectors, including residential, industrial, and retail. One of his notable acquisitions was the Manufactured Home Communities (MHC), making him a prominent player in the mobile home park industry. Zell’s strategic diversification enabled him to capitalize on emerging trends and seize opportunities in different markets.

Zell’s reach extended beyond the borders of the United States. His investment prowess and entrepreneurial spirit led him to explore international markets. Notably, he invested in real estate projects in Mexico, Brazil, and Europe, further expanding his global footprint. Zell’s ability to navigate unfamiliar territories and adapt to diverse market conditions underscored his versatility and resilience as a real estate investor.

Zell’s career has not been without challenges. The financial crisis of 2008 tested his resolve, but he emerged from the turmoil with notable successes. In 2007, he orchestrated the sale of EOPT, earning a substantial profit and cementing his reputation as a master dealmaker. Despite economic downturns and market fluctuations, Zell’s strategic vision and calculated risk-taking have consistently positioned him as a formidable force in the real estate arena.

Zell was also very philanthropic. He has made large donations to establish programs at the University of Michigan, Northwestern University, and Penn. He also was a large donor to the arts and many causes in Israel.

Sam Zell’s history of real estate investment and development is a testament to his business acumen and entrepreneurial spirit. From distressed properties to global ventures, he has proven time and again his ability to identify opportunities and transform them into profitable ventures.[+] Show More

Tribute to commercial real estate pioneer, Sam Zell.

Last week, the commercial real estate world lost a giant when developer and investor Sam Zell died. This is definitely a different type ...

Austin City Council - Eliminates minimum parking requirements for real estate developers.

The City of Austin has traditionally required developers to include a minimum number of off street parking when they build multifamily ...

The City of Austin has traditionally required developers to include a minimum number of off street parking when they build multifamily housing.

Earlier this month, the City Council passed a measure ...that will eliminate parking requirements city wide.

Doing so will help reduce the cost of development and should lead to more affordable housing.

There was some pretty interesting housing news that came out of City Hall here in Austin a couple of weeks ago. And I’m a little behind on talking about it in this blog. But I want to circle back to it this week.

Austin has a lot of requirements and restrictions that are detrimental to increasing the housing supply. We have talked about a lot of them in this blog – lot size, compatibility, etc. The City Council talked about another one of these requirements at a recent meeting. Parking takes up a lot of space that developers could use for other, more beneficial reasons.

So lets talk about what the Austin City Council decided.
Austin Currently has Parking Minimums for Many Multifamily Developments
As you probably know, Austin currently has minimum parking requirements for developers who are building multifamily housing. These requirements specify the number of parking spaces that developers must provide for each unit of housing – depending on the type and location of the development. However, in recent years, there has been increasing debate about the necessity and effectiveness of these minimum parking requirements.

The current minimum parking requirements for multifamily housing in Austin vary depending on the number of bedrooms in each unit and the location of the development. For example, developments located in urban core areas have lower parking requirements than those in suburban or rural areas. The minimum parking requirements also vary depending on the size of the unit. One-bedroom units require 1.5 parking spaces and three-bedroom units require 2 parking spaces.

These minimum parking requirements, though, are a serious impediment to the development of multifamily housing in Austin. Studies have shown that the actual usage of parking spaces in these developments is often much lower than the minimum requirements. This leads to wasted space and increased construction costs that are ultimately passed on to renters.

In 2013, Austin basically eliminated minimum parking requirements for downtown developments. But they are still required in other parts of the city. That’s why the City Council took up the issue two weeks ago.

The City Council Voted to Remove Parking Minimums

The City Council, therefore, on May 4 voted to remove parking minimums for developments citywide. It was passed with only one dissenting vote. This marks a significant and welcomed shift in the city’s approach to parking requirements.

The sponsor of the resolution, new City Councilmember Zo Qadri said the city’s development code was standing in the way of boosting the housing supply and reducing carbon emissions. “I think our priorities should be space for people rather than mandating space for cars,” he said. The resolution instructs the city manager’s staff to draft a code amendment to eliminate parking requirements.* As a result, its not clear when this will be implemented.

The elimination of parking minimums for affordable housing is particularly significant, as it is often cited as a major barrier to the development of more affordable housing in Austin. By removing this requirement, the city hopes to encourage more developers to build affordable housing projects, which could help to alleviate the city’s ongoing housing affordability crisis.

Overall, the recent vote by the Austin City Council to remove parking minimums for multifamily development represents a significant step forward in the city’s efforts to promote more sustainable, equitable, and affordable housing options. While the full impact of these changes remains to be seen, they are likely to spur new innovation in the design and development of multifamily housing in Austin and beyond.

*Thank you to Jack Craver’s daily newsletter – The Austin Politics Newsletter.[+] Show More

What You Need to Know About Protesting Your Property Taxes in Central Texas.

Its property tax season in Texas. You should have received your Notice of Appraised Value by now. The deadline to file a protest is ...

Its property tax season in Texas. You should have received your Notice of Appraised Value by now.

The deadline to file a protest is most likely May 15.

Most property owners, therefore, ...should file a protest this week with their local appraisal district.

Well, if you are in Texas, you know it. I know it. We all know it. Its that time of year again. The deadline is upon us. It is property tax season. You should have received your notice of assessed value by now from the local appraisal district. And its time to get to fighting it.

I write a version of this article every year. But that’s because its such an important one. The deadline to protest your property taxes is a hard, unforgiving one. If you miss it, there is not a lot we can do. And in Texas, its really important to make sure you protest the property taxes for your commercial real estate. So lets talk about it.

Why Every Property Owner Should Protest Its Property Taxes
Property owners ask me a fair amount if they should protest their property taxes. And I always tell them the same thing – “There’s no reason not to.” And that advice is spot on. Every property owner should protest his or her or its property taxes every year. Because, at worst, you can just drop the protest and stick with the initial assessed value.*

On top of that, this year there is an especially good reason to protest. The commercial real estate market is in flux. It has loosened considerably since last year. Interest rates have increased significantly. And cap rates have followed. Yet, from what we have reviewed, it does not appear that the appraisal districts have taken notice. They have continued to increase the value of commercial real estate – sometimes in drastic amounts. As a result, if you own commercial real estate, you definitely should protest your taxes.

The Process for Protesting Property Taxes in Texas
As you probably know, in Texas, the local county appraisal district sets the appraised value of every property each year. The district sends property owners a notice of appraised value that indicates the estimated market value of their property. If the owner believes the assessed value is too high, they have the right to protest the appraisal. In doing so, the property owner should protest at least the market value and the equal and uniform value of the property.

To protest market value, the property owner must provide evidence that the appraisal district’s estimate is higher than the actual market value of the property. Evidence can include recent sales of comparable properties, income analysis, appraisals, or photographs of the property showing its condition.

To protest equal and uniform appraisal, the property owner must provide evidence that the appraisal district’s assessment is not uniform when compared to other properties. For example, if a property owner discovers that a neighboring property with similar features was appraised lower, he or she can use that information to argue for a lower assessment.

A property owner must file a protest with the appraisal district by the later of May 15 or 30 days after the Notice of Appraised Value is sent. That’s why this week is so important.

Once the protest is filed, the owner may be contacted by the appraisal district to discuss the protest and provide any additional information. If the owner and appraisal district cannot reach an agreement, a hearing will be scheduled before an appraisal review board. At the hearing, the owner will present their evidence and arguments for a lower assessment, and the appraisal district will present its evidence and arguments for a higher assessment.

At the end of the hearing, the appraisal review board will decide what the property’s value should be. The owner may appeal the decision to the district court if he or she disagrees with the appraisal review board’s determination.

It is important to note that property owners must continue to pay their taxes on time, regardless of whether a protest is filed. If the protest is successful, the owner will receive a refund of any overpayment.

In general, therefore, it usually makes a lot of sense for a property owner to protest the assessed value of his or her taxes. But to do so, the protest needs to be filed this week. So please do not delay – and if you need help, give us a call.[+] Show More

Business dispute? Let Bukowski Law Firm in Austin Tx. can help.

Bukowski Law Firm is expanding its focus beyond commercial real estate. Some of the lawyers at BLF have extensive litigation ...

Bukowski Law Firm is expanding its focus beyond commercial real estate.
Some of the lawyers at BLF have extensive litigation experience.
As a result, we will be expanding into general business litigation ...to help meet our clients’ needs.

A little bit different type of blog entry this week. I try to have two different types of posts in this blog: a) commentary on some news item that is relevant to the commercial real estate industry or b) a discussion of a legal issue that is relevant to our readers and colleagues.

Well this week I want to use the space to talk about a new development at Bukowski Law Firm. As you probably know, we are primarily a boutique real estate law firm. We handle both real estate transactional and litigation matters, as well as protest property taxes.

We are now, however, expanding beyond just real estate into a complementary area. And want to talk a little about that this week.

BLF Expanding Beyond Real Estate
Since Bukowski Law Firm was founded in 2010, we have primarily practice commercial real estate law – both transactional and litigation. And we have enjoyed that tremendously and hopefully brought a lot of value to our clients.

But I was not always a real estate lawyer. I started my career at Vinson and Elkins in Houston in its litigation section. And for the five years I worked at V&E, I was a litigator. My practice ran the gamut of all types of litigation – not really restricted to anything in particular. I was a general litigator.

Similarly, one of the great associates at Bukowski Law Firm – Aaron Gankofskie – has a strong litigation background. And while he has focused a lot in real estate, he also has a broad litigation background.

As a result, we realize that Bukowski Law Firm can provide our clients with more than just real estate services. We can also provide first rate general business litigation. And that’s what we will be doing from here on out.

What does it Mean that BLF Provides Business Litigation?
So what does that mean? In addition to your commercial real estate needs, if you have any general business issues, Bukowski Law Firm can help you solve those issues. This could include anything from formations, operating agreements, and contract review to business dispute litigation. And it does not have to be limited to the real estate industry.

So next time you have a business dispute, please let us know how we can help.[+] Show More

How the Pre-Suit Notice Can Help Resolve Disputes with Your Insurance Company

We talk about housing a lot in this blog. And for good reason. It’s a major issue in almost every American city. But we are not going ...

We talk about housing a lot in this blog. And for good reason. It’s a major issue in almost every American city. But we are not going to do that ...this week. At least not directly. We are going to focus on something a little more … exciting?

We do a good amount of litigation at Bukowski Law Firm. Specifically one of the areas we work in is first party insurance litigation. That means that if the roof at your commercial real estate building is destroyed by wind and hail – and your insurance company will not pay the amount you are owed to fix it – we come in and sue them to get you whole.

A few years back, the Texas state legislature added a very important requirement to any first party insurance claim – the pre-suit notice. And that’s what we are going to talk about this week.

Insured Must Give Insurance Company a Pre-Suit Notice
In Texas, before a policyholder can file a lawsuit against an insurance company for unfair claims settlement practices, they must comply with the pre-suit notice requirements under Texas Insurance Code Section 542A.003.

Under this Code section, a policyholder must provide written notice to the insurance company at least 60 days before filing a lawsuit. The notice must provide a statement of the acts or omissions giving rise to the claim, the specific amount of damages being sought, and a reasonable explanation of the basis for the damages. The notice must also include a copy of the policy at issue and all relevant supporting documents.

This provision was allegedly enacted to encourage parties to resolve disputes without the need for litigation and to ensure that insurers have the opportunity to investigate and respond to claims before being sued. If you have a cooperative insurance company, this can potentially help to resolve disputes without the need for a lawsuit and can also ensure that the insurance company has all of the relevant information necessary to evaluate the claim.

Insurance Company Should Respond to Pre-Suit Notice
Once the insurance company receives a pre-suit notice under Section 542A.003, it has 30 days to respond. The response must be in writing and must include a statement of the company’s position regarding the claim, any defenses that the company may have, and a request for any additional information that the company may need to evaluate the claim.*

If the insurance company fails to respond to the pre-suit notice or the response is inadequate, the policyholder can file suit 60 days after sending the pre-suit notice.

If Policyholder does not Send Pre-Suit Notice, Could Lose Right to Claims
It is important for policyholders to comply with the pre-suit notice requirements under Section 542A.003 in order to preserve their rights to file a lawsuit. Failure to comply with the notice requirements can result in the dismissal of a lawsuit, and may prevent the policyholder from recovering damages for their claim. In addition, the policyholder may not be able to collect attorneys’ fees if it does not provide notice.

It is, obviously, very important therefore to make sure you, as an insured, sends pre-suit notice before filing your lawsuit against your insurance company. If you have any questions or are currently having problems with your insurance company, do not hesitate to give Bukowski Law Firm a call.

*Beware an insurance company using this as a sword to delay its obligation to respond to your claim.[+] Show More

The Future of Housing in Austin: More Dense, More Sustainable, and More Affordable

The Austin Planning Commission put forth two proposals that could help affordability in Austin. Both compatibility waivers and the ...

The Austin Planning Commission put forth two proposals that could help affordability in Austin.

Both compatibility waivers and the proposed town zoning category were approved by the Planning Commission.

Its not clear ...when the City Council will take up these issues.
Guess what we are going to talk about again this week? It’s the biggest issue in Central Texas. And no, surprisingly its not why Austin FC has struggled so much this season. Though I would LOVE to find out the reasons for that from some soccer experts.

But if its Central Texas, then we must be talking about housing. As we have discussed many times, its probably the single biggest issue facing us as we continue to grow. And this week brought some hope – some optimism. And its at least partly because of an old friend of the firm – Greg Anderson.

So what did Greg do this week? That’s what we talk about below.

Austin Planning Commission Recommends New Zoning Standard
Last week, the Planning Commission approved two proposals that were put forward by Greg Anderson.* The first is a proposal to allow the Commission to waive compatibility setbacks. We have talked a lot about the harm that compatibility requirements have caused in hindering more dense, urban centers and preventing more housing. If this measure is approved by the City Council, then the Planning Commission will be allowed to waive some of those requirements to encourage more development.

The second proposal was to create a new zoning category called Town Zoning. The intent of the proposed new zoning is to allow more housing to be built across the city by encouraging mixed-use developments that are centered around a pedestrian-friendly town center. These developments would be designed to be walkable, bike-friendly, and transit-oriented, allowing residents to easily access shops, restaurants, and public transportation without relying on cars. The proposal also calls for a mix of housing types, including apartments, townhouses, and single-family homes, to create a diverse and affordable community.

Under Town Zoning, the base entitlements would be similar to what is currently offered under Commercial Services zoning. But Town Zoning would allow any residential use in the area. And would require a smaller setback than Commercial Zoning.

There likely will be an affordability requirement to get extra housing units approved. The developer would be required to make those units at 60 percent of the median family income.

These Planning Commission Suggestions Will Help Affordability
Its no secret that housing is issue one, two, and three in Austin. And these new proposals are exciting because they can potentially help that process along.

By allowing developers to build more dense projects with more units in a (hopefully) streamlined fashion, Town Zoning will help increase the number of units the city has. And by requiring developers to include affordable housing units in their developments, the city can ensure that low-income residents have access to safe and affordable housing in desirable areas of the city. This can help prevent displacement and ensure that Austin remains an inclusive and diverse community.

Town Zoning could also help reduce sprawl and promote denser development within the city. By creating walkable communities that are well-connected to public transportation, the city can reduce its dependence on cars and encourage more sustainable modes of transportation. This can also help reduce traffic congestion and improve air quality, making the city a more livable place for all residents.

Overall, the proposal for town zoning is an exciting development for the City of Austin. By promoting denser, more sustainable, and more affordable development, this new zoning category has the potential to make Austin a better place to live for all residents. While there are still many details to be worked out, and its not clear how long the overall process will take, the proposal represents a step forward in the city’s ongoing efforts to create a more livable, equitable, and sustainable future.

*Please subscribe to Jack Craver’s Austin Politics Newsletter. Its fantastic for keeping abreast of local news and developments.[+] Show More

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Tribute to commercial real estate pioneer, Sam Zell.

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