Flotte’s Notes on
Mobile/Baldwin Real
Estate
An Unofficial Encyclopaedia
of Mobile & Baldwin Counties
Promoting local history, culture, outdoors,
businesses, attractions, food, people, and places
Please submit all comments, additions, and
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University of South Alabama Mitchell College of Business Center for Real Estate Studies
The Alabama Real Estate Research and Education
Center (AREREC)
USA’s CRES Mobile Market
and Baldwin Submarket Stats and Baldwin Coastal Stats
Mobile Real Estate Investor’s Group (Mobile-RIG)
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The Alabama Association of
Realtors has 14,821 Realtor members
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Alabama Real Estate Commission
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Eminent Domain: After a case where the U.S. Supreme Court said the
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Under the 2004 International Building Code, buildings
must be able to withstand 140 mph winds. Before, the requirement was 120 mph
winds.
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Caveat emptor
(let the buyer beware), as spelled out by the Alabama courts, means that
sellers and their agents in used real estate transactions, as opposed to new
construction, have no duty to disclose defects in the property. Law does not
require a seller’s disclosure statement. Most real estate purchase agreements
in
Environmental Regulation
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Wetlands
GO-Zone
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Congress approved
the Gulf Opportunity Zone Act of 2005
to boost economic recovery from Hurricane Katrina in
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The federal
government allows certain projects to qualify for tax-exempt bonds, meaning that bond buyers do not have to pay
federal or
o In its simplest form, financing through a
GO Zone Bond can be compared to the tax-exempt funding normally available only
to governmental borrowers and not-for- profit corporations. Interest on GOZBs is exempt from federal and State of
o The intent of such programs is to entice development
by making it cheaper for businesses and municipalities to borrow money.
o The bonds would be tax-exempt if 1.) 95 percent
or more of the net proceeds are used for "qualified project costs" in
the Zone, 2.) Governor Riley would designate the bonds as qualified for the
purposes stated in the bill, and 3.) the bonds are
issued prior to January 1, 2011.
o Eligible projects include nonresidential
real property (including buildings and their structural components and fixed
improvements), qualified residential rental projects (multi-family housing,
which requires a 20% affordable housing component), qualified mortgage issue projects
(single-family housing, which requires that certain income tests be met), and
public utility property.
o Eligible projects may include, but are
not limited to: retail stores, warehouses, manufacturing facilities,
industrial plants, office buildings, bank branches, hotels and motels,
restaurants, physician office buildings, medical hospitals and clinics.
o The money cannot be used for residential homes or
condos, although some rental properties might apply. Other uses that are not
allowed under the act include, golf courses, tanning salons, hot tub
businesses, movable equipment and businesses in which alcohol is sold or
gambling is allowed. Items that could
later be moved out of the area, such as light equipment, are not eligible.
o
o Because bonds will have to be arranged and issued for
the loans, offering warrants for less than about $2 million would not be
practical. Local businesses that need less than $2 million, however, will also
be included in the financing. Local chambers of commerce and the Baldwin County
Economic Development Alliance will be developing pools of businesses that can
join together on a bond issuance that would allow them to divide the funds.
o The bonds would be attractive to
investors because they would not be subject to alternative minimum tax.
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Businesses are
allowed to claim accelerated
depreciation on new property investments.
o People who restored or expanded commercial property
for commercial use after Aug. 28, 2005, can claim a 50
percent depreciation. People who buy existing businesses cannot claim the
purchase price, but if they spend money to repair or improve the building,
those funds can be claimed under the depreciation act. The
depreciation deduction would be exempt from AMT and applies to property placed
in service prior to January 1, 2008, or January 1, 2009 for real property.
Businesses or individuals that elect to claim the accelerated depreciation
deduction under the Act will NOT be able to benefit from the tax-exempt
financing outlined above.
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The bill also
doubles to $20,000 the deduction for
reforesting for small timber owners, those owning less than 500 acres. It also reduces their tax burden by spreading
this year’s losses against previous tax filings.
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Eligible
counties in
Other incentives
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Permitted under a 1999 state law, improvement districts, among other things, allow cities to extend
their tax-exempt status to private developers as an incentive to build
revenue-generating projects. Municipalities don't pay taxes, and in an
improvement district that benefit is extended to landowners who pay for
expensive infrastructure projects -- from installing sidewalks and parking lots
to drainage, lighting and sewer work -- that might otherwise be funded by
taxpayers.
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More complex arrangements, called cooperative improvement districts, allow developers and
municipalities to work out revenue-sharing deals and make it possible for
developers to self-impose taxes on their projects -- an extra penny of sales
tax, say, or an additional 2 percent levy on hotel rooms -- to help pay their
bond debt
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Property-tax
delinquent parcels are auctioned by the county tax collector at a tax sale.
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Bidders may bid
over the tax and cost to win the properties. Winning bidders are awarded a tax certificate.
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Owners have to
pay the tax and cost plus 12 percent interest on the bid amount to redeem the
property.
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The least
attractive properties often attract no bids. The state Revenue Department
assumes control of those leftovers, which are described as "sold to
state" (a misnomer because no money changes hands). The parcels come off
the local tax rolls, though 12 percent annual interest continues to pile up.
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In
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After three
years, the state can issue a tax deed,
a somewhat stronger claim to the land. But even then, state courts have opened
exceptions that could allow the old owner to return and reclaim land, even when
the new owner has built a house or made other improvements. In general, the
original owners can return and clear title at any time. It can take six years
and two trips to court to clear title to the land.
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In
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The top academic
study of
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Source: PR
11/20/07
Mobile Real Estate
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Mobile Area Association of
Realtors
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In August 2006,
a year after Katrina hit, prices stabilized at a new, higher price level. A
house that sold at $100,000 now sold for $140,000, and a $150,000 house was
selling for $200,000. Houses selling in the $120s per square
foot is in the $150s now. The most dramatic price increases have come in
the less expensive neighborhoods, rather than in high-priced developments – PR
8/27/06
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Ben Tom Roberts,
a Mobile Realtor whose seven-year stint on the board of the Federal Reserve
Bank of New Orleans ended in 2006, said that he believes the local real estate
market has moved past a Katrina-related price spike, but will land somewhat
softly at about 10 percent higher that pre-hurricane prices.
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What local
builders used to consider large -- 3,000-square-foot homes -- has been replaced
in the last several years with 3,500- to 8,000-square-foot homes.
That bucks a national trend that shows homes are getting smaller
o In Spring Hill people are paying $200,000 for a house
and tearing it down to build a $500,000 or $700,000 house.
o There are more than 20 homes under construction in
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The Mobile City
Council adopted a plan to create a land bank to seize abandoned, tax-delinquent
property, clear up ownership questions surrounding the land, and sell it. A
City Council committee approved the plan, agreeing the council would re-examine
operations in a year and decide if the council should create an advisory board.
– PR 11/20/07
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The concept has
been strongly pushed by City Councilman William Carroll, whose district
includes several distressed neighborhoods plagued by abandonment.
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Ideally, some
parcels will be attractive to for-profit developers. Others could provide a
cheap source of land for nonprofit housing groups, including Habitat for
Humanity, DASH for the
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The biggest risk
would be that the city takes over land it can’t sell. Mobile Mayor Sam Jones
has vowed that the city will only seize parcels when there is a new user lined
up. Wettermark said city officials plan to sign contracts
with buyers before condemning land and said those contracts would require
buyers to complete their plans by a specified time or give the land back to the
city.
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The other big
risk is that legal fees could exceed the value of the property.
Mobile Developments
Mobile Commercial Development
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The commercial
market in