Tagged: Transactional Real Estate & Leasing

NJ State Comptroller Releases Report Critical of Municipal Tax Abatements/PILOT Agreements

The New Jersey State Comptroller released a report Wednesday entitled “A Programmatic Examination of Municipal Tax Abatements.” The Comptroller’s report is critical of both five year abatements and long term abatements granted by municipalities and was being widely reported in the press yesterday. Referring to five year abatements (NJSA 40A-21-1 et seq.) and long term abatements (NJSA 40A-20-1 et seq.), the Comptroller’s report finds “numerous weaknesses in the regulation, implementation and oversight of these programs” including: PILOTs paid to municipalities are at the expense of counties, school districts and other taxpayers; there is lack of transparency and centralization of information about abatement agreements; criteria and processes for evaluating potential abatement agreements are weak; directly affected stakeholders are not adequately involved in the decision making process; municipal follow up on abatement terms and benefits is lacking; redevelopment areas in which abatements are granted are not periodically reviewed to account for neighborhood changes or improvement; municipalities often fail to use abatements to bring in the type of redevelopment that would address community needs or bring appropriate improvement; and the State does not closely monitor the use of abatements or offer significant guidance to municipalities on how to interpret relevant statutes or implement abatement programs.

Russell Bershad to Speak at New Jersey ICLE Program – Distressed Real Estate: Defaults, Workouts & Opportunities

Russell B. Bershad, Esq., Co-Chair, Gibbons Real Property & Environmental Department, contributing author, Commercial Real Estate Transaction in New Jersey (3rd Ed., 2010, NJICLE), will be a speaker at the New Jersey ICLE Program, Distressed Real Estate: Defaults, Workouts & Opportunities, Wednesday October 27, 2010.

No Room at the Inn – New York Closes the Door on Illegal Hotels

On July 23, 2010, Governor David Patterson signed into law, legislation that amends the New York State Multiple Dwelling Law to define permanent and transient occupancy. The new illegal hotel law forbids most residential apartment units to be rented out for stays less than 30 days. This legislation may be a reaction to City of New York v. 330 Continental LLC, a 2009 Appellate Division – First Department holding, which relied on the fact that the critical terms “transient” and “permanent” are not defined in either the Multiple Dwelling Law or the New York City Zoning Resolution.

Changes to Form RTF-1! NJ Realty Transfer Fee Applicable to Inter-Company and Affiliate Transfers for Nominal Consideration?

Inter-company transfers of real estate have always been subject to the NJ Realty Transfer Fee. However, in an October 2009 decision of the Tax Court, such transfers between commonly-owned entities were held to be exempt when the transfer is a sale of unencumbered property for less than $100 (as compared to a capital contribution of property by the grantor to the grantee with a simultaneous delivery to the grantor of equity in the grantee).

In the 9th Circuit, Under CERCLA, the Cleanup Hitter or Liable Owner is the One on Deck When the Cleanup Occurs, Not When the Suit is Instituted

Believe it or not, in the 30 years of recorded decisions under CERCLA, the issue of who is an “owner” has not been decided, according to the Ninth Circuit Court of Appeals in California v. Hearthside Residential Corp., case number 09-55389 (Decided July 22, 2010). CERCLA Section 107(a)(1) imposes liability on the current “owner and operator of a . . . facility.” 42 U.S.C. § 9607(a)(1). In the Hearthside case, Hearthside Residential Corporation (“Hearthside”) sold the property in question before the State of California sued it for reimbursement of clean-up costs. The Ninth Circuit determined that ownership for the purposes of CERCLA liability must be determined at the time of cleanup.

New Jersey Proposes Addition of Solar Power Facilities to its Green Initiative

Solar and Wind Energy Generation facilities may soon join the category of uses designated as permitted of right by New Jersey statute rather than by individual municipal ordinance, thus preempting municipal zoning powers granted under the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq. (MLUL). Identical Bills, Senate S2126 and Assembly A3139 are pending before their respective house of the New Jersey’s legislature and would amend the MLUL to provide that Solar and or Wind Energy Generation Facilities, when installed on the sites of former landfills, quarries and other extractive industries, are permitted uses. This status would be equally applicable to both public and private sites where landfills, quarries or other extractive industries are closed or closing.

Sale Leasebacks — New FASB Rules

FASB has proposed rules that, if enacted, would eliminate the distinction between operating and capital leases. Jonathan Hipp, President and CEO of Calkain Companies, Inc. writes in GlobeSt.com that the economics of transactions won’t change and questions the real impact of the proposed change in accounting rules that will require sale leasebacks to be moved from footnotes to the balance sheet because analysts who follow companies with sale leasebacks “have already baked the operating leases into the debt load of the companies.”

New Jersey Bulk Sales Act — Applicable to Deeds in Lieu?

Does the NJ Bulk Sales Act Apply to Deeds in Lieu? The Bulk Sales Act, NJSA 54:50-38, was expanded a couple years ago to cover transactions in which any seller makes a bulk sale, not just sellers who collect and remit sales tax. The Bulk Sales Act, NJSA 54:50-38, was expanded a couple years ago to cover transactions in which any seller makes a bulk sale, not just sellers who collect and remit sales tax. It provides: a buyer who does not comply by requesting a clearance letter and holding an escrow as directed by the Division of Taxation becomes liable for seller’s tax liability to the State, now including income taxes arising from the bulk sale itself in addition to past due taxes; bulk sale means any sale, transfer or assignment, in whole or in part, of a persons business assets, not made in the ordinary course of business; and business assets is defined to mean realty if the primary use of the realty is to support a business on the premises.

NJ Assembly Passes “Time of Application” Bill

On March 15, 2010, the New Jersey Assembly passed A-437, the “Time of Application” bill, by a vote of 52-15. The bill, which takes effect one year following enactment, provides that those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development, and any decision made with regard to that application for development. A-437 now heads to the Governor’s desk.

Acquiring Distressed Debt: Anatomy of a Mortgage Acquisition Transaction

By all accounts, banks and other lenders are holding enormous amounts — several trillion dollars — of commercial mortgages that are nonperforming, under-performing or approaching maturity with dim prospects for refinancing. Although lenders have not yet flooded the market with sales of distressed debt, there are many reasons to believe that the gates will open wider in the not-distant future. This article provides an overview of a distressed commercial mortgage loan acquisition transaction.