Archive » April 5, 2007
Real Estate View
By Mark Schneidman
Musing Over Back in the Day, and Today
Last week, we celebrated the 140th anniversary of the real estate transaction that was widely ridiculed as “Seward’s Folly.” On March 30, 1867, U.S. Secretary of State William H. Seward reached an agreement with Russia to purchase the territory of Alaska for $7.2 million. This made think: What could $7.2 million have bought you recently in the Santa Barbara area?
In July 2006, someone paid $7.2 million for 100 feet of ocean frontage on Sand Point Road. The two-bedroom (plus den) and three-and-a-half-bath house has a pool and a one-bedroom, one-bathroom poolhouse. This delightful home sits on three acres in a gated community.
Remember that Alaska also has ocean frontage. The state covers 570,373 square miles of land and, instead of the pool, offers an additional 45,000 square miles of water.
It’s the biggest state in the country, 2.3 times the size of Texas, 10 times the size of Georgia or Florida and 499.7 times the size of frequent comparison victim Rhode Island. Alaska covers 20% of the total U.S. area.
In comparison, the purchase on Sand Point Lane was a good buy.
Also on March 30, this time in 1822, Florida became a U.S. territory. As expected, the following day on March 31, 1822 the first condominium development broke ground in Florida so New Yorker “Snow Birds” could move down for the winter.
In 1977, I parked my car right in front of Casa Blanca on the 500 block of State Street. I was new to town and was shocked at being able to find a parking space in the downtown area of a city – let alone right in front of the restaurant. When driving into New York City (I grew up in the suburbs 20 miles north of the city), I would either pay big bucks in a parking lot or drive around for 30 minutes to find a spot. (Come to think of it, being on a teenager’s budget, I never did spend big bucks on the parking lot.)
Today, not only is Casa Blanca gone, but so is the ability to park on lower State Street. I admit to opposing the State Street parking removal but do now enjoy the wide sidewalks. Can we not have both?
I also did not like the idea of building Paseo Nuevo. To show my disapproval, I did not visit the mall for the first three years after it was built. Then I went to a movie – but I didn’t buy popcorn.
Back in the day you could park in the city lots on Sunday for free and, after a certain time, it was free in the evenings as well. We have gone from the first 90 minutes ‘free’ to the first 75 minutes ‘free.’ Before long, there’ll be toll booths located at all freeway exits.
Now you are not allowed to park your car overnight in the city lots, which does not encourage people to leave their cars downtown when they have had too much to drink.
The Big Box concept wasn’t something I supported either. I could have lived the rest of my life without ever having gone into Home Depot to save a few dollars on plywood, or to buy 90 rolls of toilet paper at Costco.
My arrival here to finish college at UCSB, and my subsequent decision not to leave, helped populate and alter the small town charm I loved about Santa Barbara. Therefore, for the first five years after arriving in 1977, I promised to leave Santa Barbara in order to protect its existing charm and atmosphere. Of course the caveat to my offer was that everyone else who arrived after 1977 would also have to leave. After all, that would be the only way for my plan to succeed. Surprisingly, no one took me up on my offer.
After five years, I withdrew my offer to leave because I became tethered to Santa Barbara’s umbilical cord, which made leaving a life-threatening situation. As my friends will attest to, I have difficulty making it as far as Carpinteria.
Despite my discontent with much of the development that has altered the landscape, Santa Barbara is still better than any alternative city.
Of course I could move to Alaska. I bet those parts are the same as they were in 1867. And still not that expensive.
Q. After completing a 1031 exchange, when could you owe tax even though you followed all the rules?
A. One is able to exchange income property for vacant land in order to defer paying capital gains tax. However, since you are exchanging into vacant land where there are no improvements to be depreciated, the IRS requires that you pay the 25% recapture tax on the depreciation taken on your relinquished property, according to First American Exchange Corporation. For tax and legal advice, consult your lawyer, accountant and mother.
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