A Message from Greg Paielli

Hello Clients, Customers and Friends

Thank you for taking the time to read our quarterly newsletter and hope you have had a great summer! Many new things have been taking place in and around our company that I would like to share with you.

Secondly, I would like to announce that Luisa Ortega my long time assistant has now passed and applied for her Arizona associate broker license and will become the associate broker for our office shortly. I would like to congratulate her for all of her hard work over the years for our organization.

Thirdly, as many of you have noticed the rental situation has improved in the Valley. Vacancy has seemed to have improvement partly in the fact that much of the excess inventory has been absorbed. Much of this excess inventory has shrunk because of the reduction of foreclosures and short sales. However, I have been hearing that another round of foreclosures could be upon us shortly after the election in November. I stress that I have been hearing this from other industry professionals. The fact this could be true is in the latest jobs report as the economy seems to be in the same funk. All this as many people cannot find jobs, the engine to a better real estate market, higher rents, higher prices and less vacancy.

If we can be of any assistance to you please feel free to contact me or my staff whether it be to buy, sell or have us manage your property.

Respectfully,

Greg Paielli

There is a concentrated effort around the world to reduce and eventually eliminate the use of ozone-depleting refrigerants. We want to make you aware that legislation now exists that could have a direct impact in the future on a heat pump or air-conditioning system in a property you may own.

In most residential properties, HCFC (hydro chlorofluorocarbons) R-22 is the most commonly used refrigerant today and believed to contribute to global warming. The trend now is to replace a unit containing R-22 with one that has HCFC R-410A. This is one of the products reviewed and found acceptable by the EPA, the Environmental Protection Agency, under the Clean Air Act.

To put it simply, the EPA is not allowing continued production or importing of R-22. Currently, there is a definite schedule to phase out HCFC R-22 and it is as follows, per the EPA site.

Under the terms of the Montreal Protocol, the U.S. agreed to meet certain obligations by specific dates that will affect the residential heat pump and air-conditioning industry:

• January 1, 2004: the Montreal Protocol required the U.S. to reduce its consumption of HCFCs by 35% below the U.S. baseline cap. As of January 1, 2003, EPA banned production and import of HCFC-141b, the most ozone-destructive HCFC. This action allowed the United States to meet its obligations under the Montreal Protocol. EPA was able to issue 100% of company baseline allowances for production and import of HCFC-22 and HCFC-142b.
• January 1, 2010: the Montreal Protocol requires the U.S. to reduce its consumption of HCFCs by 75% below the U.S. baseline. Allowance holders may only produce or import HCFC-22 to service existing equipment. Virgin R-22 may not be used in new equipment. As a result, heating, ventilation and air-conditioning (HVAC) system manufacturers may not produce new air conditioners and heat pumps containing R-22.
• January 1, 2015: the Montreal Protocol requires the U.S. to reduce its consumption of HCFCs by 90% below the U.S. baseline.
• January 1, 2020: the Montreal Protocol requires the U.S. to reduce its consumption of HCFCs by 99.5% below the U.S. baseline. Refrigerant that has been recovered and recycled/reclaimed will be allowed beyond 2020 to service existing systems, but chemical manufacturers will no longer be able to produce R-22 to service existing air conditioners and heat pumps.

Here are additional facts you should know

• For several years, R-22 will continue to be available for servicing existing systems with R-22.
• Over time, the cost of R-22 will increase as the amount available for use depletes - this means that the cost of repairs for units with R-22 will escalate.
• There is no requirement for a property owner to change to a new unit with R-410A or retrofit a unit with an acceptable refrigerant by the EPA if you can have the unit repaired.
• You cannot retrofit an old unit, using R-22, with the new R-410A because of its higher working pressures - it would require making major and very costly changes to the unit.
• The Clean Air Act does require repairs on refrigerants be handled responsibly. This means you must use a technician who can successfully recover, recycle, and reduce leaks of R-22 into the ozone. System leaks not only damage the ozone but can also increase maintenance costs.
• Retrofitting or repairing an old system may be wasting money when a newer system could save overall. It can often be a difficult decision to make.

You may have already encountered problems regarding R-22 in your own personal home or investment property. If not, what do you do if you have a property with a problem regarding a unit with R-22? Depending on the problem, this can mean anything from a reasonable repair to the high cost of complete replacement. This will vary greatly depending on the unit in question. It is important to use qualified technicians and weigh repair vs. replacement carefully.

As your management company, we know this can be a stressful situation for a property owner. If this does happen to your unit, we will assist you with estimates from qualified technicians so you are well informed and can make the best possible decision for your property. One thing we cannot do is ignore the new regulations regarding R-22. You can obtain more information on the topic of eliminating R-22 at the EPA website.