This is an investor letter we will be sending out to all our investor clients, authored by Tonia Carson - Real Estate sales agent.





NEW LEAD REGULATIONS
EFFECTIVE JULY 1, 2006

To all investors working with Beechwood Development Real Estate and Property Management:

The city of Rochester has new lead regulations going into effect July 1, 2006. These regulations have been set to try and reduce the number of children with high lead levels. Lead affects a child’s brain function and can have long term consequences. We all need to do our part to help protect the children of the community. As investors, we also need to do our part to reduce our liability with this problem.
Any house built prior to 1978 is suspected to have lead based paint in it. The main hazards are chipping or peeling paint inside or outside the house and bare soil around the exterior of the houses.
Beechwood Development has been at the forefront of reducing lead and lead liabilities since it was founded in 1999. Cheryl Hurley and Walter Dutcher have both worked closely with investors, tenants, city officials, and city inspectors to help eliminate lead hazards in the rental properties that they own. We are making recommendations to all investors based on the experience and knowledge that we have.
The regulations affect the entire city and have different inspections and testing for different areas of the city. There are two high risk areas that have been selected by the city to start the major lead remediation. These two areas were selected based on a 5 year study done to evaluate the highest areas of lead poisoning. By 2010, the city expects to have the entire city following the same testing guidelines.

The high risk areas are best defined by the city ward involved. Attached is a ward map and the ward number can also be found at the top of an MLS listing (AD number) The northeast sector includes AD05, AD06, AD07, AD16, and AD17 in their entirety and the western most portions of AD18 and AD22 (from Goodman St. west). Much of this area is the 14621 zip code.
The northwest sector is AD01, AD02, AD09, AD15 in their entirety, the southern part of AD10 (Driving Park and south), AD11 from W. Main north, and AD20 from West Ave north. Beechwood property management will be sending a letter to all investors who currently own in these areas on the necessary maintenance and inspections that will need to be done.

The regulations will be enforced through the C of O inspection. A certificate of occupancy (C of O) is issued once every 5 years on any rental property. It is required on all rental properties. The C of O is performed by a NET office inspector and in the past has not been as strict as the Section 8 inspections. (For a list of Section 8 requirements please refer to our website.) When real estate agents preview a property for an investor, we are evaluating it based on the stricter Section 8 standards. Section 8 also inspects on a yearly basis to insure your properties are well taken care of.
The C of O inspection in the high risk areas will now include a mandatory lead test which will be paid for by the city. If the test comes back positive, lead remediation will be required by a lead certified contractor or worker. At this time, Karen and Roger Jackson, K and R Home Repairs, are the contractors of choice. They are lead certified supervisors and are able to do all necessary lead remediation with any crew that they have. All of the Beechwood maintenance crew will have the 8 hr lead certification, but that only allows them to do small jobs. This includes touch up paint or landscaping. After the work has been done the owner will be required to have a lead risk assessor or certified lead inspector do a clearance test. This cost will be paid by the city. If the clearance test passes then you have a lead free certificate that is valid for 2 years and will transfer with ownership. If it fails, then you will be required to have a second lead test (approximately $400-500) and clearance test (approximately $500-$800+) at your expense.
In the areas that are not high risk, there will be a visual inspection done of the exterior and interior and remediation will be needed if problems are noted. A work order is required by the city within one week of the citation and remediation to be done within one month.

The most common citations will include:
1. bare soil
2. any area greater than 20 square feet of deteriorated paint on the exterior of the house or accessory buildings (garage, shed, porch)
3. any area greater than 2 square feet of deteriorated paint on the interior of the house
4. any small building component (window, door, crown molding, base trim, etc.) where more than 10% of its total surface area is deteriorated

With any remediation that needs to be done, if the units are tenant occupied, the tenant must relocate at the tenants’ expense. The owner is not responsible to pay for any relocation expenses. However, you will not be able to collect rent during the time of remediation.
RECOMMENDATIONS

We are strongly recommending that all old wood windows be replaced with new vinyl windows. We have recommended this in the past and it has been rejected by most investors due to the cost. If you have old wood windows and choose to not replace them, yearly painting will be required.
Vinyl siding, aluminum siding, asphalt, or asbestos/composite (may be painted) siding are recommended. If you own or buy a house that has wood exterior that is painted it will need to be on a schedule to have a Beechwood employee visually inspect once a year and maintain as necessary (annually or biannually).
Interiors will need to be painted as needed and at turnover. There is not a significant change with the interior painting because previous and current Section 8 guidelines would have failed any unit with the new city criteria.
The flooring of choice is hardwood or linoleum. Carpeting will collect lead dust and will need to be replaced periodically. The lead test samples will be taken from the floor or the deteriorated areas.
All surfaces will need to be cleaned thoroughly. The cleaning is more than a basic turnover cleaning. Surfaces need to be vacuumed and washed. Carpets may not be able to be lead free without replacement.

When purchasing a new property, the real estate agents will be giving a breakdown of annual maintenance required to keep lead free certification. We will continue to recommend properties in the high risk areas because these are the properties with the most potential. We will also continue to ask all sellers to provide a current C of O dated after the date of the contract with all purchases. In addition, we will now start requiring the lead free certificate be transferred also.

We are trying to stay ahead of this, but there is a lot of information that we do not have yet. We will keep you informed as we learn more. Please direct all questions to your real estate agent, via email, on any properties that you already own or are purchasing. The real estate agents will have the most time and knowledge to answer your questions.

If you are not currently working with Michelle, Tonia, Karen, or Walter, please send the email to tonia.carson@frontiernet.net.

We thank you for your business and your patience. We look forward to working with you to make Rochester a safer place to live in and invest in.


Sincerely,

Cheryl Hurley, owner/broker, and the entire Beechwood staff