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    Newsletter— Real Estate

    Real Estate

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    Robert C. Herr
    Partner
    San Francisco   
    +1.415.983.1038
    2/10/2014
    IRS Issues Long-Promised Guidance Following Historic Boardwalk Decision
    Author: Thomas D. Morton
    To welcome in the new year, the Internal Revenue Service (the “IRS”) issued Rev. Proc. 2014-12, 2014-3 I.R.B. 415, to provide administrative guidance to the federal historic tax credit industry in the aftermath of the Third Circuit’s decision in Historic Boardwalk Hall, LLC v. Commissioner, 694 F.3d 425 (3d Cir. 2012), cert. denied, 133 S.Ct. 2734 (2013). Rev. Proc. 2014-12 includes a safe harbor (the “Safe Harbor”) pursuant to which the IRS will not challenge the allocation of rehabilitation tax credits (“Historic Credits”) under Section 47 of the Internal Revenue Code of 1986, as amended (the “Code”), among partners in a partnership. Overall, the guidance is a good faith and useful attempt by the IRS to set reasonable Safe Harbor parameters while addressing its concerns with the deal structure in the Historic Boardwalk case. Unfortunately, it does also include some puzzling elements.
    6/27/2013
    Perspectives on Real Estate
    Authors: Thomas Klaus Gump, George P. Haley, Lynn A. Soukup
    This issue of the newsletter examines amendments to Article 9 of the Uniform Commercial Code (UCC), which will become effective in many jurisdictions on July 1, 2013.
    6/26/2013
    Perspectives on Real Estate
    Author: Roberto P. Garcia
    This issue of the newsletter examines Maryland’s recordation and transfer tax exemption for transfers of real property between related entities becoming available to limited liability companies, effective July 1.
    6/20/2013
    Perspectives on Real Estate
    Author: James P. Bobotek
    This issue of Perspectives on Real Estate discusses what to look out for in order to ensure adequate coverage against property and business interruption losses in the wake of natural disasters.
    05/31/2013
    Perspectives on Real Estate
    Author: Geoffrey J. Greeves
    This issue of Perspectives on Real Estate discusses what to look out for in order to ensure adequate coverage against property loss.
    05/06/2013
    Perspectives on Real Estate
    Author: Roberto P. Garcia
    This issue of the newsletter examines the impact of the Stormwater Remediation Fee in Maryland and the Regional Congestion Relief Fee in Virginia, effective on July 1, on residential and commercial property owners.
    2/15/2013
    Catching Up with Winding Down: The Status of California Redevelopment Successor Agencies
    Authors: Robert C. Herr, Noa L. Clark, Paul C. Levin
    Successor agencies to California’s dissolved Redevelopment Agencies (“RDAs”) continue to wind down the operations of the former RDAs under the supervision of oversight boards pursuant to Assembly Bill X1 26 (“AB 26”) as modified by Assembly Bill 1484 (“AB 1484”). Successor agencies are currently addressing several issues for the first time relating to enforceability of contracts, the distribution of agency funds, and the future of properties formerly owned by RDAs. This advisory explains the current state of successor agencies and how successor agencies are dealing with issues raised by the wind-down process.
    2/4/2013
    Trends in Single-Family Housing
    Authors: Craig A. deRidder, Peter G. Freeman, Joseph T. Lynyak, III
    Rising home values in many areas of the country and improved economic data have buoyed hopes that the recession may be behind us, but no one expects an immediate return of either pre-2007 home value appreciation or the loose mortgage underwriting and servicing standards that were exposed during the housing crash. Not only have federal regulators issued numerous rules to prevent another housing-based recession, but many communities still face a daunting inventory of distressed single-family housing.
    Fall 2012
    Perspectives on Real Estate
    Authors: James P. Bobotek, Samuel S. Cavior, Eric A. Kremer, Dana Proud Newman, Carmela D. Nicholas, Deryck A. Palmer
    The 22nd edition of Pillsbury's Newsletter: Perspectives on Real Estate features articles on energy consumption data reporting (AB1103 and 531), construction and risk management, new foreign tax withholding forms, chapter 9 and public-private partnerships.
    9/10/2012
    Lenders Beware: Default Interest Provisions Within Acceleration Clauses Are Not Automatically Triggered by Maturity
    Authors: Steven D. Hamilton, Angela M. Yates
    The Court of Appeals of the State of California, Second Appellate District has ruled that because the default interest provisions of a promissory note were included within the acceleration clause of a promissory note, the default rate was not triggered when the promissory note matured by its terms. Based on this ruling, default interest provisions in promissory notes should provide that the default interest rate applies not only following a default or acceleration of the maturity date, but also after the scheduled maturity date.
    August 2012
    Shutting Down the Construction Project
    Authors: Noa L. Clark, Robert A. James, Amy L. Pierce
    Trouble, in the form of adverse changes in financial conditions or the property marketing environment, sometimes strikes urban real estate development projects during the period between construction contract signing and completion of procurement and construction activities. In many cases, the course of action that will maximize value for all stakeholders is to allow the work to continue. Project completion will result in improvement to a base level and more security from casualty risks, as well as satisfaction of the conditions from a seller or redevelopment agency to drawdown of the land rights. But if financing for that continuation is not available, or if prospects for selling or leasing the improved property appear sufficiently bleak, the developer may reluctantly determine that the construction contracts and work should be suspended for some period of time or terminated altogether.
    5/16/2012
    Significant Changes to California's Mechanics Lien Law Coming July 1, 2012
    Authors: Chris R. Rodriguez, William S. Hale, P.E., Robert A. James, Amy L. Pierce, John S. Poulos
    Effective July 1, all of the existing statutes governing mechanics liens, stop notices and payment bonds in California will be repealed and replaced by updated statutes.

    May 2012
    Project Finance in Iraq, Part 1: Project Ownership
    Source: Iraq Perspectives Newsletter  - May 2012
    Authors: Christopher D. Gunson
    Iraq is recovering from decades of war, sanctions and domestic unrest, and the country is in urgent need of all types of infrastructure—including power, manufacturing, transportation, telecommunications, housing, healthcare, and water. With Iraq's oil production and exports on the rise, Iraq is now in a position to move forward with these projects, for which it will need significant foreign investment. In this article, the first in a series, we consider some of the key issues involved in project finance in Iraq, particularly with respect to the challenges associated with land ownership by foreign investors and the impact that this has on project finance structures.

    May 2012
    Iraq Perspectives Newsletter
    Authors: David J. Cynamon, Christopher D. Gunson, Craig A. deRidder, Mostafa El-Erian, Esq.
    Introduction to Iraq Perspectives
    This is the first issue of Iraq Perspectives, a newsletter by Pillsbury Winthrop Shaw Pittman LLP on important legal issues regarding Iraq. Iraq Perspectives is written for companies and individuals who are interested in investment and development opportunities in Iraq.

    May 2012
    Iraq's National Investment Commission
    Source: Iraq Perspectives Newsletter - May 2012
    Authors: Mostafa El-Erian, Esq.
    The Investment Law of 2006 established the National Investment Commission (NIC), the Iraqi government institution responsible for promoting investment by granting licenses to develop major projects. The NIC actively assists investors to identify potential projects and coordinates on behalf of investors with Iraq's ministries and government agencies. For investors seeking to do business in the country, the NIC has established a One-Stop Shop (OSS) for navigating Iraq's complex bureaucracy, including clarification of the rights and responsibilities of central and provincial agencies.

    Spring 2012
    Perspectives on Real Estate
    Authors: Noa L. Clark, Jeffrey R. Gans, Robert C. Herr, Eric A. Kremer, James S. Lloyd, Carmela D. Nicholas, Paul C. Levin
    The 21st edition of Pillsbury's Newsletter: Perspectives on Real Estate features articles on green leasing, mineral rights, avoiding construction project failures and California's post redevelopment agency landscape.

    Spring 2012
    "Green" Leasing: Landlord and Tenant Perspectives
    Source: Perspectives on Real Estate Newsletter - Spring 2012
    Authors: Eric A. Kremer, Carmela D. Nicholas
    As the global emphasis on carbon footprint reduction and sustainability measures continues to increase, so will the prevalence of "green" provisions in commercial leases. For both landlords and tenants, business, marketing and public relations reasons are as likely as environmental interests to drive the "green" lease trend. From the landlord's perspective, a building that achieves a certain sustainability rating may have a competitive marketing advantage over buildings that have not achieved "green" status, and the implementation of environmentally friendly measures such as installation of energy-efficient LED lights may serve to reduce operating expenses for a property. A recent study showed that buildings that are certified under the U.S. Green Building Council's Leadership in Energy and Environmental Design ("LEED") rating system command higher rents and have greater occupancy rates than non-LEED-certified buildings.1 Landlords are also faced with new federal, state and local regulations that may require compliance with "green" initiatives, such as the requirement to recycle construction waste from tenant improvement installations.

    Spring 2012
    Scratching the Surface: Understanding the Potential Impact of Minerals Rights on Your Texas Loan
    Source: Perspectives on Real Estate Newsletter - Spring 2012
    Authors: James S. Lloyd
    Texas oil and gas law presents unique issues for real estate secured lending. In Texas, the mineral estate can be severed from the surface estate, resulting in a separate fee estate with rights to use the surface for purposes of exploring and extracting minerals. Over the past decade, energy prices, combined with new technologies such as hydraulic fracturing, have resulted in increased exploration and development in urban areas, typified by the Barnett Shale play in North Texas. Lenders should be aware of the potential impact of such exploration and development on their real property collateral.

    Spring 2012
    Avoiding Construction Project Failures: 8,000 Romans, 3,000 Greeks, One Lesson
    Source: Perspectives on Real Estate Newsletter - Spring 2012
    Authors: Jeffrey R. Gans, John A. Fedun
    Over two days in 279 BC, Rome fought a bloody battle at Asculum against the Grecian-allied armies of Tarantine, Oscan, Samnite and Epirote. As with all important battles (ancient and modern), the Battle of Asculum was part of a war for control over an enormous parcel of prime real estate on the southern Italian coast known at the time as Magna Graecia. Those miles of waterfront property with no zoning restrictions and deepwater access were coveted by every developer from Macedonia to Gaul.

    Spring 2012
    California's Post Redevelopment Agency Landscape
    Source: Perspectives on Real Estate Newsletter - Spring 2012
    Authors: Noa L. Clark, Robert C. Herr, Paul C. Levin
    On December 29, 2011, the California Supreme Court upheld legislation that fundamentally changes redevelopment law in California. The court upheld Assembly Bill X1 26 (AB 26), eliminating all redevelopment agencies in California, while overturning Assembly Bill X1 27 (AB 27), which would have allowed redevelopment agencies to continue operations if the agencies made certain payments to the state. As a result, all of California's approximately 400 redevelopment agencies dissolved as of February 1, 2012, without the option to make payments to the state to continue operations.

    2012
    Real Estate Big Deal Brochure
    Every real estate deal is big for someone. We have done deals of all sizes, up to millions of square feet and several billion dollars in market value. But it's not the size that makes them big. We have worked on projects that spanned the entire country. But it's not the geographic scope that matters to us. We work regularly with some of the best-known buyers, sellers, developers, builders, lenders and investors in the country. But we aren't looking to ride on the reputations of others. What makes a big deal big for us is the difference it makes for you.

    1/4/2012
    State Supreme Court Upholds Dissolution of California Redevelopment Agencies
    Authors: Robert C. Herr, Noa L. Clark, Paul C. Levin
    On December 29, 2011, the California Supreme Court issued a ruling upholding sweeping changes to California redevelopment law. The court upheld Assembly Bill (AB) X1 26, which dissolves all redevelopment agencies in California, while invalidating ABX1 27, which would have allowed redevelopment agencies to continue by making required payments to the state’s education fund. This ruling means that, effective immediately, all redevelopment agencies in California must begin the dissolution and winding-up process as required by ABX1 26.
    10/19/2011
    Texas Seeks Private Development Partners
    Authors: Laura E. Hannusch, James S. Lloyd
    Effective September 1, 2011, the Texas Legislature enacted the Public and Private Facilities and Infrastructure Act (the Act) for the purpose of enabling private investment in public facilities and infrastructure. The Texas Facilities Commission (the Commission) recently adopted Public-Private Partnership Guidelines (the Guidelines) setting forth the application requirements for qualifying projects and the review criteria and processes by which applications will be evaluated. The Guidelines are intended to provide certainty to the process of proposing and negotiating public-private partnerships (PPPs), which in turn should result in additional development opportunities to private parties while better utilizing and developing the State of Texas’ (the State) real estate assets and providing the State with non-tax revenue sources.
    10/19/2011
    Shifting of Liability Nixed by New California Contractor's Law
    Authors: John R. Heisse, Robert A. James, Chris R. Rodriguez
    After January 1, 2013, under new California law, "Type I" indemnity provisions covering the indemnitee's concurrent active negligence will no longer be enforceable, and owners' and contractors' ability to shift the costs of defense to downstream subcontractors and suppliers will be limited.

    10/18/2011
    Prevailing Wage Law in California to Cover Certain Private Renewable and Energy Efficiency Projects on Public Land
    Authors: Robert A. James, Amy L. Pierce, Matt Hallinan
    New California law expands the definition of "public works," imposing prevailing wage obligations for construction, alteration, demolition, installation and repair work performed under certain private contracts in connection with renewable energy or energy efficiency improvements on public property. New California laws also stiffen the penalties for non-compliance and modify the enforcement mechanisms for prevailing wage obligations.

    10/10/2011
    LLCs Can Finally Become Licensed California Contractors
    Authors: Robert A. James, Amy L. Pierce
    California law directs the Contractors’ State License Board, no later than January 1, 2012, to begin processing applications by limited liability companies for contractors’ licenses. The Board has recently provided guidance on the licensing requirements for LLCs, which differ from those for other types of business organizations.
    10/4/2011
    California Commercial Property Owners Face Deadline for Energy Benchmarking Disclosures
    Authors: Laura E. Hannusch, Quinn A. Arntsen, Paul C. Levin
    The California Energy Commission (CEC) recently issued revised draft regulations setting the implementation schedule for its energy use disclosure program under AB 1103. Under the implementation schedule, commercial real estate owners must disclose energy benchmarking data starting on: July 1, 2012, for buildings with more than 50,000 square feet; January 1, 2013, for buildings with 10,001-49,999 square feet; and July 1, 2013, for buildings with 5,000-10,000 square feet.
    8/19/2011
    P3 Update for California Transportation Projects: Appellate Decision Helps Pave Way for Current and Future Projects
    Authors: Philip Jonathan Tendler, Paul C. Levin
    The Presidio Parkway Project, California’s first public-private partnership (“P3”) to move forward under legislation enacted in 2009, is expected to proceed after a California appellate court denied a request to enjoin the project. Filed on August 8, the decision upheld a lower court ruling dismissing a claim that the project did not meet the requirements of California’s P3 transportation authorization statute.1 This is significant not only for the Presidio Parkway Project, but also because the legislation applicable to this project is the blueprint for structuring eight other pending transportation projects with a total estimated cost of $25 billion.2
    Summer 2011
    Perspectives on Real Estate
    Authors: Glenn Q. Snyder, Kimberly C. Moore, Jeffrey A. Knight, Josephine S. Lo, Ignacio Barandiaran, H. Carl Moultrie III, William A. Wilcox Jr., Daniel S. Herzfeld
    Welcome to the Summer 2011 edition of Pillsbury’s Perspectives on Real Estate. We decided to focus this edition on public-private partnerships (PPPs) because so many of our clients are involved in these ventures. Typically, PPPs are partnerships between a governmental entity and one or more private parties, specially created to design, build, operate and maintain public projects—such as roads, power plants, hospitals or schools—or some combination of these activities. PPPs also may be viewed in a broader context, to include such things as affordable housing projects (where tax credits make the projects economically feasible) or urban infill projects made possible because of tax increment financing and other financial support from local redevelopment agencies.


    6/2/2011
    Texas Eminent Domain Laws Get a Makeover – A Primer on Senate Bill 18
    Authors: Laura E. Hannusch, Brad Raffle, Joseph R. Herbster
    The Texas Legislature has enacted Senate Bill 18, a law that substantially changes eminent domain practices for both public and private entities. The new rules will most certainly make condemnations more time-consuming and costly. Depending on how courts react to the new focus on takings being solely for a public use, condemning authorities may find themselves having to defend a taking more vigorously than ever before.

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