The Maine Real Estate & Development Association (MEREDA) Recognizes Retiring Board Members

Jaimie Schwartz 2015Jaimie Schwartz of Bernstein Shur served as a contributing member of the MEREDA Board for the past 13 years. MEREDA recognized Schwartz in 2011 with its Robert B. Patterson, Jr. Founders’ Award, which honors members of MEREDA who have distinguished themselves by making significant contributions to the industry and the organization over many years. In addition to serving on the Board of Directors, Schwartz has also been a valuable participant on MEREDA’s Conference Committee. Schwartz consistently identified relevant topics for MEREDA events and the organization has greatly valued his creativity.

Drew Sigfridson 2014Drew Sigfridson of CBRE | The Boulos Company retired from MEREDA’s Board of Directors after 12 years of service. Sigfridson consistently went above and beyond in his service to MEREDA. He was recognized with MEREDA’s Volunteer of the Year Award in both 2006 and 2014. Sigfridson served the organization as President from 2012 to 2014, during which time he spearheaded a number of initiatives, including the MEREDA Index, the Mainebiz Real Estate Insider and the Bowl-A-Thon scholarship fundraiser. He also contributed significantly on various MEREDA legislative initiatives.

“As one of MEREDA’s only two staff members, I can personally tell you how much the organization relies on the support of its volunteer Board. We are deeply thankful to Drew and Jaimie for their many years of service to the organization and our industry,” commented Shelly R. Clark, Vice President of Operations for MEREDA.

For further information, please contact MEREDA’s Vice President of Operations, Shelly R. Clark at 207-874-0801 or visit www.mereda.org.

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The Role of the Real Estate Appraiser

By Mark L. Plourde, MAI, Maine Valuation Company

What is the role of the real estate Appraiser in a purchase and sale transaction? Why isn’t the contract price used as the measure of market value?

Well, for starters, one proposed transaction does not constitute a “market” in terms of value. Just because one buyer and one seller have reached a “meeting of the minds” to forge an agreement based upon self-interest, it does not mean their actions reflect what most others would do in the greater marketplace. The various elements of any proposed transaction price need to be examined in relation to the definition of Market Value itself to ensure that the contract price is actually reflective of the market, and not based on atypical conditions. When conducting due diligence, Appraisers often find transaction related information that is not accurate. Unfortunately, such misinformation has only gotten worse with the explosion of on-line “secondary” internet resources. The knowledge and motivations of participants in a transaction can vary quite widely as well. So do you think the actions of just a few should speak for most/all market participants? Separating the facts from fallacy does take time and effort. It is the real estate Appraiser’s responsibility to uncover the facts to be found, and to conduct appropriate due diligence and analyses of comparable market data when forming an opinion of market value.

It should come as no surprise that the real estate appraising is a highly regulated profession – and it should be. After all, important financial decisions rest upon such appraised opinions of value being accurate and unbiased. The Uniform Standards of Professional Appraisal Practice (USPAP) is the primary guide to professional practice in this industry. USPAP defines an Appraiser as “one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective”[1] Thus, it is the expectation of the marketplace that the role of the Appraiser will reflect competence and independence when rendering his or her services, and such actions are codified by regulatory laws, rules, and ethical standards.

In addition, of all the participants in a real estate transaction, whose compensation is not based directly or indirectly on some form of contingent fee basis?  The Appraiser – that’s who.  Anyone is capable of convincing themselves as to what the property’s market value may be when there is some financial reward to be gained from that opinion. The payment of a fee for an appraisal service however is not contingent upon the concluded market value opinion, or whether the deal closes or not. This is a significant difference between Appraisers providing Appraisal Services and others in a typical transaction. So when faced with multiple opinions of value from multiple sources, perhaps you might want to ask yourself who stands to gain the most financially?

In conclusion, estimating the market value of a property may appear to be fairly easy on the surface. However, providing a qualified and accurate appraisal of market value is quite involved. Limitations can also result from the availability of sufficient confirmed primary market data coupled with “commodity approach” demands of ever faster turn-around time and lower appraisal fees. Whatever the limitations are however, the role of the real estate Appraiser is to properly define the appraisal problem to be solved, develop an appropriate scope of work, and then provide such appraisal services in a competent, independent, and unbiased manner in compliance with professional standards.

Mark L. Plourde, MAI is the Managing Partner of Maine Valuation Company and a MEREDA member since 1997.  Maine Valuation Company provides unbiased professional opinions of value on commercial real estate along with appraisal review services throughout Maine.  www.mainevaluation.com

 

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The Lead Poisoning Control Act: What it Means for Maine Landlords

Jonathan P. Hunter, Attorney, Rudman Winchell

Over eighty percent of all homes built prior to 1978 contain lead-based paint.  The Lead Poisoning Control Act, 22 M.R.S. §§ 1314-1329, originally enacted in 1973, attempts to address the health hazards posed by lead paint and other lead-based products.  In doing so, however, the Act presents several challenges for Maine landlords.

Pursuant to the Act, the Department of Health and Human Services (DHHS) may inspect any dwelling unit when there are reasonable grounds to suspect that there are lead-based substances on the exposed surfaces of the unit, at the request of the owner or occupant with whom children reside, or upon a report of lead poisoning.

If DHHS concludes that a dwelling contains an environmental lead hazard, which includes any condition that may cause exposure to lead from lead paint that is in poor condition, DHHS must give notice of the hazard to the owner and occupants.  DHHS will also order that the lead-based substances be removed, replaced, or securely and permanently covered within thirty days in accordance with rules adopted by the Department of Environmental Protection.

The good news for both landlords and tenants is that most lead abatement projects take less than two weeks.  In the meantime, however, the owner cannot knowingly rent the unit to new tenants.

 The landlord’s responsibilities are more onerous if a lead hazard is discovered in a unit already being rented to a family with children.  Until the hazard is addressed, the owner must move the tenants to a substitute unit after giving reasonable notice.  The owner is responsible for the tenants’ reasonable moving expenses and any use and occupancy expenses exceeding the rent for the vacated unit.  The tenants may not be evicted on the basis of the lead hazard.

There are some notable qualifications to the landlord’s responsibility to provide substitute housing during the lead abatement process.  First, the substitute unit provided by the landlord need not be one that the tenant prefers—it need only be lead-safe and similar in location and accommodation to the vacated unit.  Second, DHHS has the discretion to waive the requirement of moving a tenant to a substitute unit if it determines that adequate measures can be taken to limit exposure to the lead hazard until it is fully abated.

Any landlord with properties built before the 1980s is likely to have to address a lead paint issue at some point in the future.  In the event that a lead hazard is discovered, landlords should protect themselves by seeking the advice of an attorney.  The Act is complex and the penalties for noncompliance can be severe.  By promptly and properly complying with the required abatement procedures, landlords can keep their tenants safe while minimizing the strain on their business.

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An Increase in the MEREDA Index Provides Encouragement for the Real Estate Development Community

Index Logo 110 Spring 2015The MEREDA Index is the leading way our industry tracks changes in Maine’s real estate markets. It’s a composite of nine measures reflecting activity in both new development and existing properties, in commercial and residential markets, as well as construction employment.

The Index is quarterly beginning in the first quarter of 2006, which serves as the baseline—an index of 100. This report, which was originally presented on May 12, 2015 at our Annual Spring Conference, covers activity through the first quarter of 2015.

Please note that this report marks a change in methodology to smooth out some of the sharp spikes in certain Index components. As part of this adjustment, some prior quarters have been reconfigured.

The Composite Index

Driven by significant improvements in the commercial sector, particularly in large property sales, the composite index is up to 110—the highest level ever. This is 25% above early 2014.  Most of the dramatic growth occurred in early-2015, and the trend below is reflective of that growth being annualized:

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
  88    95 108 110 110

As discussed below, this growth is largely the result of dramatic gains in the commercial sector. The residential and construction components of the index are still below the early 2006 base level.

The Residential Market

Residential real estate has been showing strength in sales of existing houses and mortgage originations over the past year. New housing construction (as measured by permits) was very weak in first quarter 2015, reversing an upward trend through 2014. However, this may have been influenced by the harsh winter. The median home price is up only slightly (2%) over year-ago on a seasonally adjusted basis. The total Residential Index stands at a 77, just 5% above the 73 of a year ago. The second quarter Index may reveal more.

The Commercial Market

All components of the commercial index contributed to a record Index level of 143, compared to a 102 a year ago. The volume of commercial transactions was up 24%, and price per square foot was up 18%.  Lease rates per square foot have grown more slowly, at 5% over the past year.

The largest growth of any index component, however, has been in commercial square footage sold.   A number of large commercial property sales from late 2013 through early 2015 have pushed this component to five times the level of first quarter 2006. The sale of four large office buildings properties in particular—One and Two Portland Square, and 100 Middle Street—played an immense role in this component.

A full copy of the Spring 2015 MEREDA Index can be found at mereda.org/currentindex.php.

Technical Notes

All data is either quarterly or monthly, converted to quarterly and then either seasonally adjusted or trended using moving averages and then compared to the value of each variable in the first quarter of 2006 (2006Q1 = 100).

Data sources for the index include: the Maine Association of Realtors, the Boulos Company, Bureau of Labor Statistics, Mortgage Bankers Association, U.S. Census, and Moody’s Analytics.

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Longtime Board Members Retire from Real Estate Organization

The Maine Real Estate & Development Association Recognizes Board Members for their Many Years of Dedication and Service

PORTLAND, Maine (June 4, 2015) –The Maine Real Estate & Development Association (MEREDA) relies on the generous support of its volunteer officers and Board of Directors to fulfill its mission of promoting an environment for responsible development and ownership of real estate throughout Maine. Many have distinguished themselves by making significant contributions to the real estate industry and to MEREDA over many years. Two of MEREDA’s longtime Board members will be retiring from the organization and were recently recognized at MEREDA’s Board Meeting on May 27. 

James C. Otis of Scarborough, is one of MEREDA’s biggest fans and wholeheartedly believes in the organization’s mission and reason for being. He is also one of MEREDA’s original founding members and has been supporting MEREDA since its inception 30 years ago. He currently serves as MEREDA’s Assistant Treasurer, and has been a very dedicated and active Board Member through the years. Jim received MEREDA’s President’s Award in 2009 and the Robert B. Patterson, Jr. Founders’ Award in 2006 for his commitment to the organization and the real estate industry. Jim founded Otis | Atwell, a CPA firm providing accounting and tax services to businesses throughout the Northern New England area with a special emphasis on matters of affordable housing, in 1974.

Thomas N. Lea of Cumberland Foreside, has served on the MEREDA Board for the past 25 years, as President from 2010 to 2012 and as an active participant on its Legislative Affairs and Conference Committees. He was the 2014 recipient of MEREDA’s Robert B. Patterson, Jr. Founders’ Award for his instrumental role in the organization. He recently retired from People’s United Bank, after a long career as a residential and commercial real estate lender for over 43 years.

“We are grateful to Jim and Tom for their dedication and service to MEREDA over the years,” stated Michael O’Reilly, MEREDA Board President and Senior Vice President, Southern Maine Commercial Banking Team Lead at Bangor Savings Bank, “The organization would not be the strong voice in our industry that it is today without the efforts of these two members.”

(From LEFT to RIGHT): MEREDA Board President, Michael O’Reilly of Bangor Savings Bank,  with longtime Board members, James C. Otis of Otis | Atwell, Thomas N. Lea, formerly with People’s  United Bank and Shelly R. Clark, Vice President of Operations for MEREDA.

(From LEFT to RIGHT): MEREDA Board President, Michael O’Reilly of Bangor Savings Bank,
with longtime Board members, James C. Otis of Otis | Atwell, Thomas N. Lea, formerly with People’s
United Bank and Shelly R. Clark, Vice President of Operations for MEREDA.

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The Right Equation for Responsible Development: Spotlight on Falmouth Schools Redevelopment Project

by Jessica Estes, CBRE | The Boulos Company

In the first of a 7-part series exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.  Please join with us in celebrating Falmouth Schools Redevelopment Project.  A conversation with developer, OceanView at Falmouth.

MEREDA:     Describe the building and project.

OceanView at Falmouth:  The former site of the Falmouth elementary schools was a twenty acre parcel abutting OceanView at Falmouth.  When this property became available, John Wasileski submitted a successful request for proposal bid to the Town of Falmouth. A Purchase and Sale Agreement was signed in January, 2012 with the closing in March, 2013. The multi-phased redevelopment of this property includes …

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MEREDA returns to Bangor to host its Annual Networking Social on June 25, 2015!

June 25, 2015 – 5:00PM to 7:00PM

Sea Dog Banquet & Conference Center
26 Front Street
Bangor, ME

MEREDA provides members and guests great networking opportunities throughout the year and our social gatherings are “must-attend” events for players in Maine’s real estate industry. We look forward to seeing you on June 25 in Bangor for hors d’oeuvres, spirits, and great conversation with other industry professionals.

Join us for a cocktail or two, and reconnect with colleagues and friends, both old and new!

Registering for this Event:

MEREDA Member: $25 each | Non – Member: $35 each

Register After June 18: Member: $35 each | Non-Member $45 each
Includes (2) Complimentary Beer or Wine Tickets & Extensive Hors d’oeuvres Selection – Full Cash Bar also Available

Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after June 18, 2015.

To register or for more information, visit www.mereda.org

This event is sponsored by Bangor Savings Bank, Eaton Peabody, Webber Group, and WBRC Architects/Engineers

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MEREDA’s Morning Menu Breakfast Event – Maine’s Aging Trades & Workforce: Who is Going to Build our Buildings?

BreakfastLogo

Buffet Breakfast: 7:30 ~ Program: 8:00 – 9:00 AM

The average age of our trade workers (plumbers, electricians, sheet rockers, etc.) is over 50. Like our state workers in general, our tradespeople are starting to retire in droves. How do we ensure our younger workers are trained in the trades. Our aging trades workers present a significant challenge for not only our State, but the real estate industry itself. How will this affect the labor pool for real estate and development projects?

We invite you to join the Maine Real Estate & Development Association (MEREDA) for breakfast on June 17, 2015 from 7:30 – 9:00 AM at DoubleTree by Hilton in South Portland, ME to hear from three panelists who are seeing these challenges first hand.

Registering for this Event:

Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after June 11, 2015.

Member: $45 pp | Non-Member: $55 pp
Register After June 11: Member: $55 | Non-Member: $65

For more information and to register, visit www.mereda.org

This event is sponsored by Norway Savings Bank & The Associated General Contractors of Maine

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Maine’s Historic Rehabilitation Tax Credit

by Greg Paxton, Executive Director, Maine Preservation

Historic Preservation may be the least understood major economic development strategy in Maine, bringing numerous financial benefits to the state’s communities.  Preservation drives downtown revitalization and neighborhood rehabilitation, enhances real estate markets, grows the tax bases, attracts heritage tourists and new retiree residents, and allows for a more sustainable reuse of infrastructure. But largely through historic tax credits, the understanding of preservation’s impact is growing.

The Maine Historic Rehabilitation Tax Credit passed in 2008. Since then, 62 privately developed projects have been completed or are underway, investing over a third-of-a billion dollars ($335million) in construction expenditures. These projects have facilitated creation of …

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Maine Real Estate & Development Association Awards Top 7 Notable Projects of 2014

Projects from Portland to Ellsworth to Farmington Received Special Recognition at MEREDA’s 2015 Annual Spring Conference

2014 MEREDA Notable Project Awards were presented by MEREDA President, Michael O’Reilly to the Hampton Inn by Parallax Partners in Lewiston; The Bay House Condominiums by Reger Dasco Properties in Portland; Falmouth Schools Redevelopment Project by OceanView at Falmouth; Brookside Village by Farmington Land in Farmington; Seaport Village & The Inn at Seaport by First Atlantic HealthCare in Ellsworth; Courtyard by Marriott by J.B. Brown & Sons and Hyatt Place Hotel by East Brown Cow in Portland.

2014 MEREDA Notable Project Awards were presented by MEREDA President, Michael O’Reilly to the Hampton Inn by Parallax Partners in Lewiston; The Bay House Condominiums by Reger Dasco Properties in Portland; Falmouth Schools Redevelopment Project by OceanView at Falmouth; Brookside Village by Farmington Land in Farmington; Seaport Village & The Inn at Seaport by First Atlantic HealthCare in Ellsworth; Courtyard by Marriott by J.B. Brown & Sons and Hyatt Place Hotel by East Brown Cow in Portland.

The Maine Real Estate & Development Association (MEREDA) recently announced winners of its 2014 Notable Projects Awards at its annual Spring Conference in Portland last week. Each of the selected seven projects fulfill MEREDA’s mission of responsible development, but also involved a significant investment of resources and job creation statewide. All of these “noteworthy and significant” real estate projects were completed in 2014 and are fully tenanted. Projects were selected for recognition based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.

“Once again, we have seen the incredible vision and integrity demonstrated by our developers right here in Maine. MEREDA is pleased to recognize these exemplary projects, which have aided Maine’s economic growth,” noted Michael O’Reilly, President, MEREDA Board of Directors and Senior Vice President, Southern Maine Commercial Banking Team Lead, at Bangor Savings Bank.

The recipients of MEREDA’s Top 7 Most Notable Projects of 2014 included:

  • In Lewiston, the Hampton Inn by Parallax Partners: Award being accepted by Chris Thompson with Shari Young of LodgeSys Management;
  • In Portland, The Bay House Condominiums by Reger Dasco Properties: Award being accepted by Gordon Reger and Demetri Dasco;
  • In Falmouth, Falmouth Schools Redevelopment Project by OceanView at Falmouth: Award being accepted by Chris Wasileski and Matt Teare;
  • In Farmington, Brookside Village by Farmington Land: Award being accepted by Buzz Davis and Bill Marceau;
  • In Ellsworth, Seaport Village & The Inn at Seaport by First Atlantic HealthCare: Award being accepted by Craig Coffin & Kenneth Bowden;
  • In Portland, Courtyard by Marriott by J.B. Brown & Sons: Award being accepted by Vin Veroneau; and
  • Also in Portland, Hyatt Place Hotel by East Brown Cow: Award being accepted by Tim Soley.

More information on each of the projects can be found here.

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