The Anna Maria Island Sun Newspaper

Vol. 8 No. 48 - August 20, 2008

BUSINESS

Outdoor dining menu expands

HOLMES BEACH – Over the objections of Commissioner David Zaccagnino, the board approved an ordinance allowing restaurants to have more outdoor seats.

Zaccagnino said the requirements of the ordinance are burdensome and Skinny’s Place, the one restaurant that requested more outdoor seating, is being left out of the process. Skinny’s Place is in a residential zoning district making it a nonconforming use, which can’t be expanded without a variance.

"Skinny’s has been there for 50 plus years and they have to go to the Board of Adjustment (for a variance)," Zaccagnino protested. "We’re excluding them.

"Just agree on a number of seats and not go through all this expense to the taxpayer to add a thicker layer of government. This has become ridiculous."

Commission Chair Sandy Haas-Martens pointed out, "All they have to do is come into the building department with a site plan and say what they want to do. It’s not tied to parking. This ordinance helps the majority of the restaurants."

Commissioners Pat Morton and Pat Geyer agreed and Geyer noted, "If you don’t have room, you can’t put people out on the street. It has to be safe."

Mayor Rich Bohnenberger said a letter from the owners of Skinny’s asked the commission to remove the portion of the ordinance regarding nonconforming restaurants, which would leave them out entirely.

Zaccagnino persisted in lobbying to amend the ordinance to allow a certain number of seats and eliminate the other requirements.

"The standards address noise and safety," City Attorney Steve Dye explained. "We tried to draft it to be as reasonable as possible. We did not put a number on it; you could have 100 here."

Morton asked Dye if a person is hit by a vehicle while dining outdoors, could the city be sued for permitting outdoor dining?

Dye said a vehicle recently crashed into an indoor restaurant dining room in Bradenton, so being indoors offers no guarantee against an accident.

"There’s not anything the city can do about an accident," Dye replied. "For that reason, cities have sovereign immunity that caps the liability."

Commissioners approved the ordinance 3 to 1 with Zaccagnino dissenting and Commissioner John Monetti absent.

Anna Maria Island Sun News Story
Investment Corner

Residential real estate not ready to rebound

Back at the end of 2005 and early 2006 ,I sounded the alarm over the speculative behavior being exhibited in residential real estate, warning that it would not go on much longer. I was right, as it turned out, but I did not foresee the peripheral issues related to real estate speculation that are now causing much bigger problems.

It would take three or four of my biweekly columns to cover the full story. To briefly summarize:

Speculative behavior + easy money loaned from banks = residential real estate bubble. Add in loans packaged, securitized and sold to large institutional investors by major brokerage firms + use of leverage to buy more loan packages than they could really afford = contagion when it all falls apart.

Real estate bubble + pin prick from forced sales and foreclosures by those who couldn’t flip properties in a few months for a huge profit = a long slide down the worst real estate price declines since the Great Depression. Contagion effects include selling pressure in the stock market and banks now afraid to lend due to worries about how bad the economic slowdown might be, resulting in low consumer confidence.

So now the bubble has move over to commodities, which I believe will also receive the inevitable bursting pretty soon, but that leads me back to the title of this article. I don’t believe the price declines are over for real estate, but we are closer to the end of the process than the beginning and that is good news. Good news that is for investors who buy the securitized form of real estate through ownership of real estate investment trusts, known as REITs. Most of these investment vehicles have undergone price declines of about 30 percent or more from peaks set at the beginning of 2007, but are recently starting to recover.

REITs are effectively a real estate holding company which owns physical properties. Most specialize in a particular type of real estate, ranging from office buildings and industrial parks, to apartment complexes and shopping malls. Also available are REITs which own hospitals or assisted living facilities.

The neat thing about REITs is that the average investor can get a lot of diversification of property type and geographic location very quickly. While single family homes are likely to languish in price for perhaps several more years, the demographics for apartment REITs are looking very good, and we are optimistic about many forms of commercial property as well

Many of you reading this (like me) are members of the baby boom generation (born between 1946 and 1964). Our generation is about 85 million strong and has changed consumption patterns as we moved through the various economic phases of our life. Well, spending money isn’t the only thing we’re good at because we created the echo boom generation, now over 100 million strong. The bulk of the echo-boomers are in their 20s, finishing college and getting ready to move out on their own, which usually means renting an apartment for a few years.

I don’t recommend that you run out and put your entire nest egg into REITs, which own apartments, but they would be a good piece of a diversified real estate portfolio. What about the current economic slowdown? I believe that outside of the aforementioned greedy financial firms, corporate America is pretty healthy, flush with cash and not likely to begin abandoning its office buildings.

Sure, there will be some more pain before this is over, but remember that as a tradable, equity type security; REITs tend to discount the news of the day well in advance. I think REITs are not a bad place to start establishing positions again over the remainder of 2008. I suggest a mutual fund or an exchange-traded fund, which can give you ownership across a broad spectrum of properties in just one purchase. Current dividend yields are over 4 percent and there is the potential for long-term appreciation in addition to the income.

The best part? Few are talking about buying these vehicles. When everyone wanted to own them (back in 2006), it was, of course a mistake. Now that they are ignored, they are a much better buy for the patient investor.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.


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