Penbrook litigation featured on ABC27 WHTM

Yesterday, ABC27 News in Harrisburg broadcast interviews with local business owners about the Penbrook situation.


Click here for previous posts about Penbrook, including posts about Penbrook charging business owners criminally with filing false tax returns - even when the Borough has not seen the owner's return at all.

Bedbugs and attorneys - a word of caution.

If you are an attorney seeking to make a big payday representing tenants in bedbug litigation, here is a word of caution from a recent New York Times article. Don't let your clients come to your office:

Even Steven Smollens, a housing lawyer who has helped many tenants with bedbugs, has his guard up. Those clients are barred from his office. “I meet outside,” he said. “There’s a Starbucks across the street.”

Once your office becomes infested with bedbugs, your business will suffer. Other clients will not want to come to your office:

In recent weeks, bedbugs snuggled into the seats at AMC’s movie theater in Times Square, crept around a Victoria’s Secret store on Lexington Avenue and the offices of Elle Magazine and hitchhiked into the Brooklyn district attorney’s office.

“There were attorneys that didn’t want to come to our building,” said an assistant district attorney who would identify herself only as Caroline A. “I don’t blame them; I wouldn’t want to go somewhere where there is known to be bedbugs.”

The consequences from bedbug litigation are only beginning, but I imagine that if an attorney (or his clients) brings bedbugs into his office building, the landlord would be justified in evicting that attorney. Check your own leases before you put your practice at risk.

Penbrook Borough updates

There is a new website dedicated solely to the battles involving Penbrook Borough and the Borough's fights against property owners and investors. Click here to view this site.

Check out my posts involving Penbrook here (or click the "label" at the bottom of this post).

Pennsylvania bedbug legislation; Senator Farnese; DDT

Bedbugs have become a more common problem in recent years, as these insects have spread mainly among hotels in urban areas throughout the Northeast.

They resist traditional insect treatments. The known insecticides that kill bedbugs were banned years ago by the federal government.

In 2010, Senator Farnese (D - Phila.) introduced legislation that would have imposed tremendous costs upon landlords in an effort to combat bedbugs. In particular the bill would have required landlords to provide for inspection every time a new tenant leased a unit or every time a lease was renewed. This bill expired with the end of the legislative session in 2010, but Senator Farnese expects to reintroduce it under a new bill number soon. He is now seeking co-sponsors.

On Tuesday, January 11, 2011, representatives of PROA met with Senator Farnese' staff in Harrisburg. We stressed the prohibitive costs that this bill would create for landlords and we presented various alternatives, including expedited eviction for tenants known to have caused a bedbug problem in the unit.

We also discussed the availability of pesticides. According to the New York Times:

Bedbugs, once nearly eradicated, have spread across New York City, in part because of the decline in the use of DDT.

While it was the federal government that banned certain pesticides (thus precluding a real solution by state legislators), state legislators can help address the problem. Senator Farnese's staff indicated that the Senator will conduct hearings in this matter. We asked that the Senator's committee seek testimony on pesticide bans and pesticide solutions. A growing public awareness of the pesticide aspect of this story could influence the federal government.

Meanwhile, real estate owners should contact their federal congressmen in an effort to push for repeal of DDT bans.

Housing market entering depression status nationwide

CNBC reported yesterday that the housing market nationwide is now officially in a "depression":

Home values have fallen 26 percent since their peak in June 2006, worse than the 25.9-percent decline seen during the Depression years between 1928 and 1933, Zillow reported.

November marked the 53rd consecutive month (4 ½ years) that home values have fallen.

What’s worse, it’s not over yet: Home values are expected to continue to slide as inventories pile up, and likely won't recover until the job market improves.

Zillow includes the following graph:


Zillow housing graph

Each year in gray shows a decline. The uptick following 2008 is merely a decline in the rate of decrease, not an actual increase in values or prices.







While most commentators think that the housing market will improve only when employment numbers improve, the real cure for this depression would be for the government to allow prices to fall. At some point, prices would finally reach the point where they should be - where real estate is affordable to consumers without the need for a credit bubble to spur buying. The government only delays this process by propping up prices with stimulus money, targeted tax credits, etc.

Harrisburg Ordinances 13 and 14 tabled by City Council

Click here for previous descriptions and discussions of Harrisburg's proposed Ordinances 13 and 14. [These Ordinances would impose vicarious liability on landlords for the actions of their tenants, impose a residency requirement on property management and ownership and modify the inspection program.]

Last evening, the Harrisburg City Council voted 4-3 to table both proposed Ordinances after a fair amount of discussion.

Numerous investors (and others) spoke out against the proposed ordinances at the beginning of the meeting. Investor and Realtor organizations such as CARPOA, GHAR and AACP participated in the public comment section of the meeting. We listed pending litigation in Allegheny County and Columbia County relating to similar legislation as bases for the Council to withold action at this time, especially since City officials have previously stated that these measures would constitute a source of revenue for the city (which is illegal under state law).

Council members stated that they wanted to explore the issues further and rework the Ordinances. Council invited investors and others to participate in committee meetings during the new year.

It is my hope that in these committee meetings we can address some of the more basic issues keeping city properties from being improved - such as the large volume of properties that suffer from title defects due to having been sold at tax sale at some point in the past.

Real estate market decline to continue in 2011

Real estate sales are expected to continue to decline in 2011 throughout the United States:

Home prices are dropping in the nation's largest cities and are expected to keep falling next year, as fewer people purchase homes and millions of foreclosures come on to the market.

H/T AP

The AP article attributes part of the downward pressure to foreclosures:

Millions of foreclosures are forcing home prices down. Many people are holding off on making purchases because they fear the market hasn't bottomed out, analysts say.

Foreclosures likely will remain high for the next two years, said Mark Zandi, chief economist at Moody's Analytics.

Despite the downward trend, mortgage rates are on the rise:

And more people might be less inclined to buy now that mortgage rates are rising again. In the last month, rates on fixed mortgages have surged more than a half-point to near 5 percent.