5th Circuit Upholds "Shot Clock" Ruling: FCC's Time Limits for Processing Wireless Facility Siting Applications Remain in Force

Authored by:  Charles Maduell

In the first major challenge to the FCC’s November 18, 2009 Declaratory Ruling establishing timelines for state and local government to act on wireless facility siting applications, commonly known as the “Shot Clock” ruling, the 5th Circuit Court of Appeals has denied and dismissed petitions for review brought by two Texas cities, Arlington and San Antonio, seeking review of the Declaratory Ruling on jurisdictional and other grounds. In its January 23, 2012 opinion in City of Arlington v. Federal Communications Commission(Case No. 10-60039), the 5th Circuit Court of Appeals upheld the Declaratory Ruling, holding that the FCC had statutory authority to establish time frames for state and local governments to take action on wireless facility siting applications, and that the time frames established in the Ruling constitute reasonable and lawful interpretations of its statutory authority. Section 332(c)(7)(B)(ii) of the Federal Telecommunications Act of 1996 requires that state and local governments act on an application to site a wireless communication facility “within a reasonable period of time,” and Section 332(c)(7)(B)(v) creates a cause of action for an applicant to challenge any such failure to act. In its 2009 Declaratory Ruling, the FCC established time frames within which state and local governments must act on applications to site personal wireless service facilities, declaring that a “reasonable period of time” for purposes of the Act is presumptively 90 days for collocations and 150 days for all other applications. The FCC further determined that a lack of decision within these time frames would constitute a failure to act under Section 332(c)(7)(B)(v).

Strong Vital Signs for Health Care Real Estate

Authored by: John Hanley

As published in the Seattle Daily Journal of Commerce

Three years after the start of the Great Recession, the U.S. real estate markets remain sluggish at best. Businesses have not resumed hiring, resulting in stubbornly high unemployment and dismal rates of absorption of vacant office space. (The Seattle CBD is faring much better than most, however.)

Consumer debt loads, job worries and general anxiety have curbed consumer demand, hurting shopping centers and industrial space. The housing markets continue to fall; only in the multifamily sector are there signs of life.

Instead of a normal rebound from the 2008 crash in real estate values, the market cycle has flattened into an ongoing malaise, without any prospect of meaningful improvement in the near future. Businesses are surviving with less commercial space, homes are being given up for apartments, and the remaining homeowners cannot afford to move up. A leading real estate trade association, The Urban Land Institute, has pronounced this as “the era of less.”

However, one real estate market sector is showing vigor: health care.

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Important Considerations in Negotiating Radius Restrictions

Authored by: Karen Thiessen

As originally published in Daily Journal of Commerce

Folks in the hotel or restaurant industry are probably very familiar by now with “radius restrictions.” These requests are increasingly being included in contracts by landlords in commercial leases, owners in management agreements (such as for hotels, restaurants, theaters or other venues operated on behalf of the owner for a fee), and licensees in brand franchise agreements.

The restrictions typically limit the tenant, manager or licensor from opening, operating, permitting or otherwise engaging in their business in another location within a certain radius or area, known as the area of protection (or AOP).

When encountering a proposed radius restriction clause, negotiate carefully. While many radius restrictions are reasonable, they can easily become overbroad. A savvy “restricted party” will think beyond only present operations to how the radius restriction may impact other business opportunities.

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What's Green and Red All Over? An Angry Group of Green Professionals Suing the USGBC!

Authored by: Monique Hawthorne

Back in October of 2010, Henry Gifford filed a class action lawsuit against the US Green Building Counsel (USGBC), which is the non-profit responsible for administering LEED certification for buildings and homes. Mr. Gifford alleged several issues including that the USGBC fraudulently represented the performance of LEED buildings, that it participated in false advertising, and that it operated to monopolize green building standards. Somewhere buried in the complaint, he also let on that he was really mad at the USGBC because he lost clients and business opportunities because he was not LEED accredited. When I first heard about the lawsuit, my reaction was “oh brother, really?!” Doesn’t Mr. Gifford know how the USGBC revolutionized green building in the U.S.? Show a little respect! Can you really accuse the USGBC of fraud? Okay, you can accuse them, but can you prove it?

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Oregon adopts HB 3325, an Improved Authorization of Releases of Liability for Potential Brownfield Purchasers

Authored by: Larry Burke

House Bill 3325 provides a mechanism for potential purchasers to obtain a higher level of certainty regarding potential environmental liability. A “brownfield” is a vacant or underused property where actual or perceived environmental contamination complicates expansion or redevelopment. Prospective purchasers of brownfields may decline to buy or develop the land out of fear of the potentially high costs of investigating and cleaning up the property. This legislation clarifies DEQ’s authority to provide a prospective property owner with release from liability for existing spills or releases of oil and other hazardous substances and for prior entry of such substances into waters of the state. The DEQ release from liability may be accomplished by either an administrative order on consent or a judicial consent judgment. Of course, owners will remain liable for any spill or release of oil or hazardous substance, or release of oil into state waters, which occurs after they have become an owner or if they exacerbate or contribute to the release or are otherwise negligent or violate the law. The legislation also confirms that a purchaser of land or a facility already subject to administrative agreement may be released by DEQ if the purchaser adopts and agrees to be bound by agreement. 

4 Things Investors Must Do When Buying During This Recession

Authored by: Monique Hawthorne and Thomas Smith

Unless you have been living under a rock, you know that we are still in a recession. Unemployment is still up, debt is out of hand, and commercial real estate values have not bottomed out.

It is a difficult market because while values continue to decline, the availability and cost of financing is more challenging than ever. With that said, there are real opportunities in commercial real estate for investors with liquid assets available.

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Seattle Landlords' Energy Efficiency Reports Due Oct. 3, 2011 or April 1, 2012

Authored by:  Clayton Graham and Jim Greenfield

Many Seattle landlords and other building owners will soon need to begin reporting on the energy efficiency of their buildings. As reported in DWT’s Northwest Real Estate Blog last year, a Seattle ordinance passed in connection with the state’s Efficiency First! Act requires many Seattle building owners to provide “energy benchmarking reports” to the Director of the Department of Planning & Development using the federal Environmental Protection Agency’s Energy Star Portfolio Manager or a similar system. 

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WaterSense: Another Green Certification Program?

Authored by: Monique Hawthorne

It is quite possible that everyone has heard about WaterSense already, and I am simply late to the party. But, on the off chance that you haven’t heard, let me be the one to tell you about the Water House, which is the very first WaterSense certified home in Oregon. WaterSense is a new EPA certification program for new homes to increase water efficiency. Yes, it is true that the ubiquitous LEED certification includes water efficiency as a goal as well, but WaterSense dives deeper (sorry, I couldn’t help myself). The Water House is going to serve as a laboratory so that others can learn about different sustainable building practices, materials and systems. The Water House has been included on the Portland “Build it Green” tour, and its development was made possible through public and private partnerships with local green-building leaders donating over $150,000.00 of labor and materials.

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More Landlords Allowing Pets to Set Themselves Apart

Authored by: Jim Reinhart

As published in the Daily Journal of Commerce

How should a potential tenant decide which building to select for office space? Rental rate, incentives, class of space, location and tenant improvements make the usual list of important factors. In this competitive market, landlords are paying more attention to how they can differentiate their office space from the building down the street. One inventive way is to allow pets.

Portland has a few pet-friendly office buildings. Wieden + Kennedy, recognized for its originality, is known for the dogs in its building. Both its employees and its tenants can bring their dogs into the office. Despite a lack of policy, Portland’s EcoTrust Building has many dogs inside. Most buildings expressly do not allow pets, but that is changing around the country and in the Portland-metropolitan area.

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Washington Supreme Court: Statute Limiting Developer Charges Does Not Apply to Local Shoreline Master Programs

Authored by:  Clayton Graham

The Washington Supreme Court recently removed one vehicle for developers to challenge requirements imposed under local governments’ shoreline regulations. In Citizens for Rational Shoreline Planning (CRSP) v. Whatcom County, the Court considered whether regulations in the County’s Shoreline Master Program (“SMP”) could be challenged under a provision of RCW 82.02.020 which generally prohibits any local government from “impos[ing] any tax, fee, or charge, either direct or indirect, on . . . the development, subdivision, classification, or reclassification of land,” subject to certain exceptions. Since its enactment, the meaning of this provision has been litigated many times and has been found to limit local governments’ land use regulations. For example, the Division I Court of Appeals relied on this statute in striking down portions of a King County ordinance that limited the amount of clearing an owner could do on a rural lot, finding that these restrictions were “an in kind indirect ‘tax, fee, or charge’ on development.” See Citizens Alliance for Property Rights (CAPR) v. King County.

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Golden Star Comes to the Rose City

Authored by: Stephen Ledoux

As published in the Daily Journal of Commerce

China’s spectacular economic rise since being opened by Deng Xiaoping has largely been the result of indigenous industrial growth, alone or with foreign joint venture partners. It has become the world’s top manufacturer and exporter of goods, and amassed an enormous trade balance, with the United States in particular.

Since Beijing announced its “Going Global” initiative a decade ago, along with the pressure of China’s accumulating liquidity (cash) in state-owned and private enterprises, the country is looking abroad. Now, outbound direct investment (ODI) is the latest major economic trend in the world’s most populous nation.

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Recent Legislation Raises Stakes in Adverse Possession Litigation

Authored by:  Clayton Graham

As in many states, it has long been the law in Washington that a party in open, notorious, “hostile” possession of another’s land for a certain period of time (generally 10 years) might become the owner of that land, so long as the party can establish facts that meet the common-law test for adverse possession. In a development of interest to anyone who may become a party to such a suit, the Washington legislature recently amended provisions of the Revised Code of Washington (Chapter 7.28, RCW) containing procedural requirements for these lawsuits.

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Real Property Letters of Intent: Use and Purpose

Authored by: Tom Hillier

As published in the Daily Journal of Commerce

In many commercial transactions involving the lease or sale of real property, the first document drafted by the parties to evidence the agreement terms is a letter of intent. Generally speaking, the letter of intent is simply an expression of the parties’ intent to proceed with formal documentation of the transaction and is not intended to be binding. So, why use an LOI?

Commercial real estate transactions are usually complex matters with many terms to negotiate. Parties use the LOI for two basic purposes.

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Minimizing Tenant-in-Common Risks

Authored by: Tom Hillier and Stephen Ledoux

As published in Portland Business Journal

In the real estate boom years that ended in 2008, a cottage industry was born to sell tenant-in-common interests to real estate investors. However, with the collapse of the real estate markets, investors in TIC interests were exposed to certain risks previously ignored by such investors and their advisers.

Historically, the typical TIC project was owned by relatively few individuals, usually known to one another. Tax and equity-preservation considerations were normally behind investing in this structure as opposed to creating a partnership or limited liability company to own the property.

In the late 1990s, with the abundance of money generated...

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Proposed Oregon Real Estate Legislation

Authored by: Gene Grant

As published in the Daily Journal of Commerce

Hang onto your hat, because the legislative winds are blowing! Here is a brief summary and my personal opinions on some of the bills in the hopper that relate to real estate.

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FASB Sounds Retreat on New Accounting Standards for Leases

Authored by: John Hanley

Last year we reported in advisories directed to our health care (see advisory) and real estate (see advisory) readers that the Financial Accounting Standards Board (FASB) is considering new accounting rules for real estate and equipment leases, new rules that would dramatically change the way in which leases are reported in financial statements of public and private companies and nonprofit organizations. The proposed rules were published in an Exposure Draft (Topic 840-Leases) released by the FASB in August 2010.

It now appears that the FASB may be ready to reverse course, and perhaps even to adhere to its current rules, which draw a bright line between capital and operating leases. We believe that those who have been preparing for the new rules may want to hold tight until the FASB’s direction becomes more certain.

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Legal Implications of Vapor Intrusion for Owners, Developers

Authored by: Peter Sergienko

As published in the Daily Journal of Commerce

Vapor intrusion is defined in Oregon Department of Environmental Quality guidance as the migration of volatile organic compounds from the subsurface into buildings. Common examples of VOCs are gasoline, diesel and solvents used to clean metals, thin paint, and dry-clean clothing. VOCs are sources of carcinogens such as benzene and trichloroethylene. Semi-VOCs and other hazardous substances also can be sources of toxic chemicals that can migrate into buildings and compromise indoor air quality.

In recent years, the mechanisms for vapor intrusion and the potential chronic health risks from long-term exposure to carcinogens in indoor air have become identified. In response, the private sector and state and federal regulatory agencies tasked with environmental protection and worker health and safety have all taken steps to better understand and manage these risks.

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Portland Planning a Failure to Job Growth

Authored by: Gene Grant

As published in the Daily Journal of Commerce

The city of Portland is known for great restaurants, a beautiful environment, progressive land-use planning, bike friendliness, mass transit, etc. Lately, however, Portland is becoming known for negative job growth.

In an ECONorthwest study commissioned jointly by the Portland Business Alliance, the Oregon Business Association, the Oregon Business Council, Associated Oregon Industries, the Port of Portland and the Pacific Northwest International Trade Association, Multnomah County was found to be almost dead last in the western United States for private-sector job creation, among many other indicia of relative economic decline.

I chaired programs presented by the nonpartisan Urban Land Institute the last couple of years in connection with the ongoing Portland comprehensive land-use plan, which corroborates results of the study. The panelists reported that 30 years ago, two-thirds of the metropolitan jobs were in Portland; today, two-thirds of those jobs are in suburban counties.

In absolute terms, the number of Portland jobs has remained relatively flat over that entire period. While city staffers participated in these programs and acknowledged the long-term failure of Portland’s plan to achieve job growth, Mayor Sam Adams and all but one commissioner were conspicuously absent.

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Consider Water Needs Early to Avoid Development Pitfalls

Authored by:  Rick Glick

As published in the Daily Journal of Commerce

How does water law figure into development planning? In my 34 years as a water and environmental lawyer involved in developments large and small, in urban and rural settings, water supply concerns are often afterthoughts. However, the time to consider water supply issues is during the early planning stage, because lead times to work through potential water problems can be significant. If water rights are part of the deal and important to the development, they can be verified as valid and intact through a water rights audit.

For example, I have been involved in high-tech fabrication plant projects where unaddressed water questions derailed the project or caused a lot of last-minute and expensive scurrying. Golf course and resort developments obviously require water, but I have seen assumptions about potential sources proved false. No developer or lender likes surprises that slow the process or add cost, and such hurdles can be avoided with attention at the front end.

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Potential Legal Effects of LEED Lawsuit

Authored by:  Monique Hawthorne

As published in the Daily Journal of Commerce

Last month, Henry Gifford, a “building design and construction professional” and frequent critic of LEED certified buildings, filed a class action lawsuit in the United States District Court for the Southern District of New York against the U.S. Green Building Council, claiming $100 million in damages. The USGBC is a nonprofit organization that developed the Leadership in Energy and Environmental Design certification system for rating “green buildings.”

Gifford’s suit makes several allegations, but perhaps the most shocking is his claim that the council committed fraud by intentionally omitting information about the energy efficiency of LEED certified buildings. Gifford also alleges that the LEED rating system actually harms the environment, because it leads consumers away from proven methods of saving energy.

The USGBC and its LEED rating system have always had their critics. Fraud, however, is a serious allegation. But fraud also is a tough legal standard to meet.

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All Stimulus is Local

Authored by:  Steve Ledoux

As posted in the Daily Journal of Commerce

President Obama recently told the New York Times that one thing he has learned on the job is that there is no such thing as a “shovel ready” project. Hence, there is a long delay between stimulus budgeting and actual job creation.

Developers and those who represent them know better than anyone that local, participatory planning environmental review, rezoning, mapping, discretionary and ministerial approval - often lasts twice as long as construction. For example, a major hotel project on the Oregon Coast needed three years to secure approval, and only 18 months to be built.

The recent good news for those of us in the development industry is that more ground is being broken. After nearly two years of stagnation, capital is beginning to flow into new development and clients are building again.

New development has been paralyzed for several reasons.

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LEED vs. Passive House: What's the difference?

Authored by:  Monique Hawthorne

As published in the Daily Journal of Commerce

As a Leadership in Energy and Environmental Design Accredited Professional, I readily defend LEED’s standard and certification to critics who question its alleged greenness and whether it lives up to its hype.

"You get points for including bike parking spaces?" they protest. "C’mon!"

Nonetheless, I stand by the usefulness of LEED certification and believe it serves a useful purpose even if it only increases dialogue and awareness about sustainable building.

With that said, recent conversations have led me to explore other types of sustainable building standards and methods. I have been very impressed with Passive House (aka Passivhaus), a building standard from Germany that is an exciting option for builders, homeowners and developers.

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Seller financing - An Option That Requires Careful Review

Authored by:  Gene Grant and Monique Hawthorne

In such times, seller financing can be used to obtain a premium purchase price. Not only are the underwriting process and financing fees and costs avoided, but the seller often will finance a much higher percentage of the purchase price than would a typical mortgage lender. If and when interest rates increase, sellers can benefit by providing seller financing at a lower rate.

Seller financing has become something of a lost art. Following is a brief review of major issues that should be resolved carefully and that typically require the assistance of a real estate attorney.

 

 

As published in The Daily Journal of Commerce

Real estate prices today are historically low because there are far fewer buyers than sellers. Foreclosures continue to flood the market with bargains. But people seeking to buy real estate during a severe recession often are unable to qualify for financing even though interest rates are enticingly low.

 

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Washington Supreme Court Sharply Split on Equitable Exception in Encroachment Case: Robin Hood or Frankenstein?

 Authored by:  Alan Middleton

The Huntingtons unwittingly built their home, well, and garage entirely on property owned by their neighbor, Noel Proctor. When he learned of the true boundary between the properties, Proctor sued to eject the Huntingtons. The trial court refused to require the Huntingtons to remove their home. Instead, it required Proctor to deed to the Huntingtons the acre underlying the improvements (the acre represented approximately 3.3% of Proctor's parcel) and accept in return payment for the value of the land. A very sharply divided Washington Supreme Court affirmed in a 5-4 decision. Copies of the majority and dissenting opinions can be found here: [opinions]

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Washington Supreme Court Rejects Argument that Reduction in Lease Term Upon Assignment Violates Manufactured/Mobile Home Landlord-Tenant Act

Authored by:  Alan Middleton

In a 5-4 decision, the Washington Supreme Court held that a 25-year lease subject to the Manufactured/Mobile Home Landlord-Tenant Act (MHLTA), RCW 59.20, does not violate the MHLTA's prohibition against restrictions on assignment, RCW 59.20.060(2)(d), .073(1), if the lease provides that the lease term is shortened to one or two years in the event of assignment. The lease did not otherwise limit a tenant's right to assign. The owner had offered 25-year leases to initial tenants at a low rental to obtain full occupancy of a new development. Although the development was not viable if all owners held their leases for the full 25-year term, the owner calculated that most owners would assign their leases before the 25-year term expired. The Court did not address the tenants' alternative argument that such leases violated the Consumer Protection Act, RCW 19.86, as the Court of Appeals had remanded the CPA claim for further factual findings. The majority and dissenting opinions in case, Little Mountain Estates Tenants Ass'n v. Little Mountain Estates MHC LLC, Case No. 82574-2, can be found here: [www.dwtrealestatelawnw.com/uploads/file/Little Mountain Dissent.pdf ; and www.dwtrealestatelawnw.com/uploads/file/Little Mountain Majority.pdf]

Washington Supreme Court Holds that State Statutes of Limitations Do Not Apply in Arbitration

Authored by:  Jonathan Lloyd, Stephen M. Rummage, Daniel M. Waggoner, and Maya Yamazaki

Yesterday, in a 5-4 decision, the Washington Supreme Court ruled that Washington state statutes of limitations do not apply to claims brought in arbitration, absent specific contractual language to the contrary. In particular, the Court found those statutes, which specifically require that "actions" be commenced or parties "sue" within a certain time, do not apply in the context of arbitration proceedings, which are not "actions" or "suits," unless the parties expressly provide for such applicability in their arbitration agreement. Broom v. Morgan Stanley DW, Inc., No. 82311-1 (7/22/10).  Click here to read the full article.

 

 

Department of Ecology Releases Guidance on Climate Change and SEPA

Authored by:  Craig Gannett, Lauren Giles, and Clayton P. Graham

On May 27, the Washington Department of Ecology (“Ecology”) released draft Guidance regarding the analysis of climate change impacts under Washington’s State Environmental Policy Act ("SEPA"). The Guidance, which will be open for comment until June 25, proposes extensive analysis of both direct and indirect greenhouse gas ("GHG") emissions potentially resulting from government actions covered under SEPA. Among the government actions that are subject to SEPA’s requirements are local governments’ issuance of land use and construction permits for many types of projects, especially commercial, industrial, or larger residential developments. The Guidance also describes potential mitigation measures that project proponents may be required to undertake. Given the broad scope of the Guidance, it is essential that owners and developers of real estate, as well as any business or institution with expansion plans, become familiar with these proposed requirements.

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KOIN Center History: The Paul Principle

One of the largest commercial real estate transactions in Portland history was completed at the end of December 2009 when American Pacific International Capital purchased the office portion of KOIN Center. The KOIN Center is Portland’s ninth largest office building with 415,425 square feet and its largest mixed-use project in a single building. While terms of the deal have not been revealed, the Oregonian reported that the sale price was between $50 and $60 million. This is approximately half of the $109 million that the California Public Employees Pension System (CalPERS) paid for the same property in 2007, and less than the $70 million loan which encumbered it.

After CalPERS defaulted on the loan, the mortgage holder, New York Life Insurance Inc. sued to take control of the building and completed the transaction with APIC. Calpers and CommonWealth Partners LLC were joint owners of the office portion of the building and decided to submit a deed in lieu of foreclosure after Ater Wynne LLP vacated 50,000 square feet in the building, relocating to the Lovejoy Building, a mixed-use complex in the Pearl District that also houses a new Safeway and rental apartments. The story of the KOIN Center’s development and transitions, with its colorful cast of characters, makes instructive reading for students of Portland’s urban development history.

To read full article, click here.

Washington Supreme Court Raises the Bar for Establishing Boundary by Acquiescence

When a boundary line dispute arises between neighboring property owners, one claim that is commonly asserted—along with adverse possession, estoppel in pais, and a few other legal bases for boundary adjustment—is "mutual recognition and acquiescence" in a common boundary. A recent opinion from the Washington Supreme Court (Merriman v. Cokeley) has refined the standard that Washington courts will apply in determining whether a party can establish title under this doctrine.

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Legislation to affect lending

Authored by: John Benazzi

As published in The Daily Journal of Commerce

The 2010 special session of the Oregon Legislature resulted in two bills that will impact real estate lending in Oregon. Both came out of the Committee on Consumer Protection and Governmental Accountability and are intended to address consumer protection problems that have arisen during the mortgage crisis.

HB 3656, signed by Gov. Ted Kulongoski on March 10 and now in effect, is designed to protect borrowers of “80/20″ residential loans from deficiency judgments on their “20″ loan after foreclosure of the “80″ loan.

HB 3706, passed by the state House and Senate on Feb. 10, will extend the application of Oregon’s Unfair Trade Practices Act to mortgage banks and other institutions that extend credit and allow consumers and the state to sue lenders for unfair and deceptive dealings. HB 3706 is awaiting the governor’s signature. (read full DJC article)

Right To Rescind When Seller Fails To Provide Disclosure Statement

Authored by:  Alan Middleton

The buyer of a residence has an absolute right to rescind prior to closing if the seller fails to provide the disclosure statement mandated by RCW 64.06.020. That is the holding in Almanza v. Bowen, a recent Division I case. There, a buyer rescinded because the buyer's prior home had not sold. It was undisputed that the seller had not provided a disclosure statement. The Court rejected the seller's argument that the buyer could not rescind because the rescission had nothing to do with the condition of the residence and the failure to provide the disclosure statement. Although the statute does permit a buyer to waive the right to a disclosure statement, the Court held on the facts presented that no waiver occurred. The case can be found here.

Local Development Standards to Be Modified to Comply with Endangered Species Act

Authored by Clayton P. Graham and James A. Greenfield

In a development of great interest to owners of property in or near floodplains, many local jurisdictions in Washington state will soon begin updating their floodplain development regulations to comply with new federal requirements. As discussed in a post on Davis Wright Tremaine’s Real Estate Blog, the Federal Emergency Management Agency (FEMA) began developing its model ordinance after the National Marine Fisheries Service (NMFS) found that FEMA’s administration of the National Flood Insurance Program (NFIP) threatened the habitat of a number of species protected under the Endangered Species Act.

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LEED vs. Passive House: What's the difference?

Authored by: Monique Lee Hawthorne

As published in The Daily Journal of Commerce

As a Leadership in Energy and Environmental Design Accredited Professional, I readily defend LEED’s standard and certification to critics who question its alleged greenness and whether it lives up to its hype. “You get points for including bike parking spaces?” they protest. “C’mon!” Nonetheless, I stand by the usefulness of LEED certification and believe it serves a useful purpose even if it only increases dialogue and awareness about sustainable building.

With that said, recent conversations have led me to explore other types of sustainable building standards and methods. I have been very impressed with Passive House (aka Passivhaus), a building standard from Germany that is an exciting option for builders, homeowners and developers. (read full DJC article)

FEMA's Revised Flood Maps to Affect Development, Availability of Flood Insurance in Western Washington

Authored by:  Craig Gannett and Clayton P. Graham

Landowners and developers across Western Washington will be affected by floodplain map revisions that the Federal Emergency Management Agency (FEMA) plans to carry out in the coming months. These map updates are part of FEMA’s administration of the National Flood Insurance Program (NFIP), and changes in map designations can have far-reaching effects, including increases in flood insurance premiums and new floodplain development regulations under local codes. For these reasons, many landowners and local governments across Western Washington are expected to appeal these map revisions.

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I.C.C. Releases Green Construction Code

Authored by:  Alan Middleton

The International Code Council on Monday will release the International Green Construction Code, Public Version 1.0 (IGCC).  The IGCC incorporates ANSI/ASHRAE/USGBC/IES Standard 189.1, Standard for the Design of High Performance, Green Buildings Except Low-Rise Residential Buildings, as an alternate path of compliance. The IGCC is intended as an overlay to complement existing codes.  More information is available at www.iccsafe.org.  Release of the IGCC will likely accelerate adoption of relatively uniform green building codes nationwide.  DWT will be tracking developments in local jurisdictions.

The Creditors' Rights Endorsement, a Thing of the Past?

Authored by:  Elisabeth Woare

The creditors’ rights endorsement, an endorsement to a lender or owner’s title policy which provides coverage against challenges to a transfer of title as a result of a fraudulent conveyance, fraudulent transfer or preferential transfer, appears to have been essentially eliminated by the title insurance industry earlier this month. Citing the current economic climate, several recent bankruptcy court decisions and recent questioning by state regulators as to whether the coverage is within the “purview” of title insurance, Fidelity National Title Group of Underwriters (which includes Chicago Title, Fidelity National Title, Ticor Title, Lawyers Title, Commonwealth Land Title, Security Union Title and Alamo Title) and First American Title Insurance Company have announced that they will no longer issue the endorsement.  The American Land Title Association (ALTA) has also recently voted to officially de-certify the creditor’s rights endorsement (ALTA Form 21/21-06), effective March 8, 2010. According to the ALTA website, this de-certification of the ALTA form of creditor’s rights endorsement does not affect the ability of title insurers to separately decide what coverage or endorsement, if any, it is willing to provide, it just means that the insurers can no longer use the ALTA form after March 8. 

Prior to the past 18 months, creditors’ rights coverage was fairly common and easy to obtain. Recently, title insurers have been more and more reluctant to provide the coverage, and when they have agreed to provide it, it has come with additional risks and cost in the form of required indemnity agreements protecting the insurer and increased title premiums. Not all title insurers are eliminating the creditors’ rights endorsement out right. Old Republic National Title Insurance Company and Stewart Title Guaranty Company have indicated that they may still issue the endorsement upon review of the seller or mortgagor financials. 

Given the new insurer policies, real estate purchasers and lenders should be aware that they are likely going to have to bear some insolvency risks that were once covered by title insurance policies.

Climate Change to Receive More Attention under NEPA

Authored by:  Craig Gannett, Kerry Shea, Richard M. Glick and Lauren Giles

Climate change will receive more attention in the analysis of environmental impacts under the National Environmental Policy Act (NEPA), according to a Draft Guidance issued on Feb. 18 by the White House Council on Environmental Quality (CEQ). Charged with advising federal agencies on the implementation of NEPA, CEQ proposes that the environmental analysis of major projects consider the effect on climate change of greenhouse gases (GHGs) that would be emitted by the proposed project, as well as the potential impact of climate change on the project itself.

See entire article here

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Standard Lease Forms Aren't Always Best

Authored by:  Gene Grant

As published in The Daily Journal of Commerce

Vacancy rates for commercial space, already high, continue to increase. Traditional long-term tenants are in short supply. Out of necessity, landlords are inventing new occupancy arrangements. These creative solutions, however, often require special kinds of occupancy agreements. Common examples include pop-up stores, shared offices, government agencies, and donated space. For more information, see our recent article published in The Daily Journal of Commerce

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"My Landlord Wants Me to Sign a Personal Guaranty . . . Should I?"

 Authored by:  John Benazzi

"As published in Santé Magazine"

My brother, the chef, has been looking to open his own place for a number of years now. He tells me that when he finds the "perfect" space, he is going to jump on it. If that happens, I’m sure that I will get a call from my brother asking if I have time to review his lease. He will tell me that it’s the perfect space and that I only need to take a “quick look.” He will also probably tell me that because he’s taken my advice and set up his business as a limited liability entity, that the landlord wants him sign a personal guaranty. He will want to know what that means and whether he should sign it. Here’s what I’ll tell him:

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Supreme Court Holds Condo Defect Claims Subject to Arbitration

Authored by:  Alan Middleton

In an important decision, on December 24, 2009, the Washington Supreme Court held that claims under the Washington Condominium Act (WCA) are subject to arbitration despite provisions in the Act requiring judicial resolution of claims where condominium owners agree to arbitrate disputes in their purchase and sale agreements. The case is Satomi Owners Ass'n v. Satomi, LLC. 

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EPA to Regulate Greenhouse Gas Emissions

Authored by:  Lauren Giles, Kerry Shea, and Clayton Graham

Findings recently issued by the Environmental Protection Agency (EPA) could be the first step in national regulation of greenhouse gas (GHG) emissions under the Clean Air Act. Although the findings apply only to new motor vehicles and engines for the time being, they lay the groundwork for regulating GHGs emitted by power plants and manufacturing facilities.

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Central Portland Commercial Development Strategy

The Portland Business Alliance Development Committee, a subcommittee of the Central City Standing Committee, and the Urban Land Institute Commercial Development Committee convened a joint effort to craft recommendations and inform the Bureau of Planning and Sustainability as it begins the process of updating the 25-year Central Portland Plan. This is occurring because the Bureau of Planning and Sustainability has embarked on an update to the 1988 Central City Plan. The Central Portland Plan Update is a two-year, comprehensive effort that will set the stage for significant employment and residential growth for the next 25 years.

Summary of Findings

Presentation

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Keeping Costs Down On Land Survey

We recently met with some surveyors, who passed on the following tips for keeping costs down on land surveys:

 

  • In order for them to provide a realistic price quote, they need to see copies of the property title report, the prior survey (if you have it), and the lender's survey requirements (including the form of surveyor's certificate required by the lender).
  • Attached is a PDF of the 2005 minimum standards for an ALTA/ACSM survey.  The "Table A items" on pages 4 and 5 are the additional items that a surveyor can show on a survey.  Ask your surveyor to look at the list of Table A items required by your lender.  The following Table A items can significantly increase the cost of the survey:
    • Item #1:  Placing a monument (e.g., a marker or a pin) at every major corner on the property.  The surveyor must also file a record of survey with the County Recorder’s office at an additional cost of approximately $2000.
    • Item 5:  Showing the contours and the elevations of the property.  This is usually required only if development or construction on the land is involved.
    • Item 7(b)(2):  Calculating the gross floor area of all buildings on the property.  
    • Item 11(b):  Mapping the location of underground utilities.  See if your lender will accept Item 11(a) instead, in which the surveyor shows the location of utilities based on observed evidence on the surface.
  • Make sure the list of items your lender says it wants the surveyor to cover is consistent with the lender’s form of surveyor’s certificate.  The lender’s form of surveyor’s certificate often contains additional requirements, so the cost to you will increase if the surveyor has to go back and do additional work.
  • For projects with lots of acreage, one way to cut down on costs can be to have an aerial photogrammetry map done showing the location of interior buildings.  Traditional survey methods would then be used to establish the boundaries of the property and any features within 5 feet of the boundaries.  You should talk to your lender about whether this method is acceptable in lieu of a traditional ALTA/ACSM survey.

One other tip: surveyor contracts often contain a provision limiting their liability for any errors to the cost of the survey, which doesn’t provide much protection to you.  It’s worth asking the surveyor to delete that limitation before you sign the contract.

 

ALTA 2005 Standards (pdf)

U.S. Green Building Council Releases Details on New LEED Version

The U.S. Green Building Council (USGBC) recently announced the details of the much-anticipated Leadership in Energy and Environmental Design (LEED) Version 3 building certification program (LEED v3, also referred to as LEED 2009). LEED, a third-party certification program, is the nationally accepted benchmark for the design, construction and operation of high performance green buildings.

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Keeping Your Real Estate Lender Happy: How to Increase Your Chances of Passing Those Periodic Property Inspections

If you have a commercial real estate loan, the loan documents probably give the lender the right to conduct periodic property inspections. And in today’s economy, lenders are taking a hard look at the collateral securing their loans. Loan documents often give lenders certain remedies if there are concerns about the property, such as allowing the lender to require or increase repair reserve payments, to increase financial reporting requirements, to require rents to be paid into a lockbox, to impose a default interest rate, and in certain cases even to call a default on the loan.

So where should you spend your hard earned maintenance dollars? In 2008, the Mortgage Bankers Association (MBA) issued a new commercial/multifamily real estate property inspection form for a variety of property types, such as Office, Retail, Multifamily, Healthcare, Lodging and Industrial. The inspection form has received industry-wide adoption by funding sources, including Fannie Mae and Freddie Mac (although apparently not by the Federal Housing Administration).

Property owners and management companies should review the inspection form and the reference guide to see how lenders will be evaluating their properties. The guide also provides a helpful overview of the inspection process, so you’ll know how to prepare for the inspection and what kinds of information the inspector will want from you.

 

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Changes in Freddie Mac Credit Requirements for Multifamily Mortgage Loans

Freddie Mac is revising its credit requirements for its multifamily mortgage loan programs effective as of February 2, 2009. Although the term sheets have not yet been updated on the Freddie Mac website, we have been told that the changes will include increasing the minimum debt coverage ratios and decreasing the maximum loan to value ratios on various types of loans. The Freddie Mac website states that “Loans under quote or under application with Freddie Mac prior to February 2, 2009 may be subject to the new credit parameters effective immediately at the discretion of Freddie Mac or the Seller/Servicer.” One source, however, suggests that there is a grandfathering policy for loans that are under application by February 1, 2009 and that meet certain other standards (e.g., if the loan closes by May 1, 2009 for Targeted Affordable Housing loans, and if the borrower rate locks or closes prior to March 2, 2009 for Conventional Loans). If you have applied for or are considering a Freddie Mac loan, check with your Freddie Mac regional adviser or your mortgage broker now to see what loan terms and conditions will apply.

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Development Buffers under the Endangered Species Act?

A consultation under the federal Endangered Species Act (ESA) could potentially impact development on property near shorelines in Washington State. In response to a consultation by the Federal Emergency Management Agency (FEMA), the National Marine Fisheries Service (NMFS) issued a biological opinion concluding that FEMA's administration of the National Flood Insurance Program (NFIP) in the Puget Sound area violates the ESA because it jeopardizes a number of protected aquatic species. Specifically, NMFS concluded that FEMA’s decision to insure certain floodplain developments under the NFIP threatens the habitat of certain protected salmon, steelhead, and whales.

FEMA should now take steps to mitigate the effects of the NFIP on protected species. In administering the NFIP, FEMA already promulgates minimum land use controls, and municipalities must implement land use controls that are at least as restrictive in order to qualify for flood insurance. In its biological opinion, NMFS suggested FEMA promulgate a specific set of development standards in floodplain areas—including, notably, a 150-foot development buffer from certain shorelines. FEMA has not yet acted on the suggestions set forth in the biological opinion, but it may choose to require municipalities to impose these, or other, stricter development standards in floodplain areas.

The biological opinion (238 pages total), is available on NOAA’s webpage

 

Development Buffers under the Endangered Species Act?

Real Estate Securities

In the challenging real estate market that the entire country is facing, many developers and real estate purchasers are looking for less conventional ways to finance their projects. Please see the link below to an article that describes several ways to finance projects with what I call "Real Estate Securities."

www.dwtrealestatelawnw.com/Portland Bus Journal 8-31-07.pdf

Creative Structuring

If you are interested in learning creative ways to structure your transactions through the use of entities, you should read the article below:

www.dwtrealestatelawnw.com/Rathbone Article in PSBJ.pdf

2007 Oregon Condo/Homeowner Association Legislation

Legislation was passed in 2007 regarding Condo's and Homeowner Associations in Oregon. If you deal in those areas, you will find interesting the articles linked below:

www.dwtrealestatelawnw.com/DJC Reprint Legal Ease 5.24.07(2).pdf

www.dwtrealestatelawnw.com/DJC Reprint Legal Ease 5.25.07(1).pdf

Rainbarrels: New Regulations Coming Soon

Rain is free, right? And nobody cares about that rainbarrel I have out back, right?



Well, maybe. Washington State has a prior appropriation water code that provides that “all water above, upon, or beneath the surface of the earth” is public ground water subject to potential water right permit requirements. RCW 43.27A.020: Definitions

See also, http://apps.leg.wa.gov/RCW/default.aspx?cite=90.03.010.



An unanswered question has been whether the collection of rainwater in residential rainbarrels or in larger stormwater management systems, among other methods, requires a water rights permit from the Department of Ecology. A new initiative by Ecology seeks to answer these questions. The direction being pursued by Ecology makes most residential rainbarrels exempt from permit requirements. Larger catchment systems likely will be treated differently though, and probably will wind up needing some type of water right permit. Opportunities to shape the direction of the new rules through public comment are coming up soon, via public hearings to be held by Ecology in June. For hearing schedules and more information, visit here.

Real Estate Transactions Helpful Hints

Have you ever had the experience, when working on a real estate transaction, that you come to the brink of closing but end up with a failed transaction as a result of something that happened along the way? See the attached article, which outlines some of the events that commonly result in failed closings. Using this outline can help you achieve your end result -- a closed transaction.

www.dwtrealestatelawnw.com/DJC Rathbone 12 Obstacles.pdf

SEC Tenant-in-Common Exemption Article

Portland Business Journal article by Coni Rathbone:  The SEC is considering a request, proposed by the National Association of Realtors, to allow the payment of commissions to real estate brokers for their efforts in the sale of Tenant in Common securities. See the attached articles for more information.
www.dwtrealestatelawnw.com/Davis Wright Tremaine (E).pdf

www.dwtrealestatelawnw.com/DJC Reprint Legal Ease 02.28.08.pdf

 

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