By the adoption of CS/HB 7023, (Click Here for a copy of the pertinent section of the bill), the Florida Legislature has again authorized a new 2-year extension of permits issued by the Florida Department of Environmental Protection and water management districts and building permits, including local government-issued development orders or certificates of level of service.
The statutory extension applies to those enumerated permits with expiration dates between January 1, 2014, and January 1, 2016, provided that a) notice to the authorizing entity of the permittee’s intention to invoke the 2-year extension and estimated time-frame for acting under the permit is made by December 31, 2014, and b) the total duration of the extension is not more than 4 years, including this 2 -year period and any prior statutory permit extension. This statutory extension does not apply to permits that are non-compliant with a court order or the terms of the permit or to certain development -of -regional impact approvals that were previously extended.
Absent a veto by Governor Scott, which is not anticipated, the new legislation will become effective on July 1, 2014.
Redeveloping some or all of golf course land as residential or resort units often gives a golf course owner the opportunity to transform a failed golf course into a profitable venture. The oversupply of golf courses and the financial difficulty many courses face have been discussed in Hospitality Law Check-In (see “Growing the Game of Golf” and “Club Membership Deposits in Bankruptcy“) and golf industry publications. A golf course owner that cannot make a golf course profitable should investigate development opportunities for the golf course land. The golf course owner may even save the golf course by reconfiguring it to allow for limited development on a small portion, which may enhance the profitability of the golf course by generating new users such as new homeowners or resort guests.
However, changing land use from recreation/open space to residential, resort or commercial development often presents significant challenges, including:
- Prohibitions or restrictions in local government development approvals and zoning;
- Covenants and restrictions imposed on the property;
- Restrictions in agreements with property owners or a homeowners association;
- Possible claims from owners of residences on the golf course of rights to golf course views or open space;
- Political opposition from property owners, neighbors and golfers; and
- Club membership program that must be terminated if the golf course is closing or would be impacted by a golf course reconfiguration.
Golf course owners can take measures to win support for land use changes through:
- Land planning to replace golf course views with landscaping, parks or open space;
- Architecture and land plan that complement and add to the community;
- Review of traffic and other impact on the community with a plan to address any negative impacts;
- Communication with the community and local government as to current financial difficulties and negative consequences of golf course closure or alternatives to proposed development; and
- Analysis and communication of positive economic impact to the community and property values.
Redeveloping a golf course is extremely challenging, but may be result in a “white elephant” being transformed into a “pot of gold.”
On June 25th, the U.S. Supreme Court issued an important Takings Clause decision with far-reaching implications for real estate developers and others who rely on federal or state permits. In Koontz v. St. Johns River Water Management District, the Court extended the doctrine of “unconstitutional conditions” established in the Court’s Nollan and Dolan cases. By declaring that the Takings Clause in the U.S. Constitution requires permitting authorities nationwide to adhere to the “logical nexus” and “rough proportionality” requirements of Nollan and Dolan – regardless of whether a permit is ultimately granted or denied – Koontz promises to help level the playing field for property owners in a wide variety of permitting contexts by limiting the ability of government agencies to impose “extortionate” permit conditions.
A more in depth discussion of the Koontz decision and its implications will be offered in a webinar on July 17th at 2 p.m. EDT. Speakers will include Greenberg Traurig shareholders Jerry Stouck and Kerri Barsh as well as Paul Beard of the Pacific Legal Foundation, who argued for Mr. Koontz before the U.S. Supreme Court. For more information about the webinar and to register, click here.
The GT Alert – Supreme Court Decision Limits Ability of Government Agencies to Impose ‘Extortionate’ Permit Conditions on Landowners was prepared by Jerry Stouck and Kerri Barsh.
To view the GT Alert on www.gtlaw.com, please click here.
To view the GT Alert as a PDF, please click here.
While we are all starting to enjoy what is looking like a resurgence in condominium development and sales in South Florida, the courts are just getting to addressing issues that arose during the heart of the burst bubble, when unit owners were upside down, not paying their condominium associations’ assessments and not paying their mortgages.
For those of us that have not intentionally forgotten that time, there were many instances where condominium associations were running out of funds to cover even the basics as their owners stopped paying assessments and the owners’ lenders were in no hurry to foreclose. The associations were forced to a point of desperation as each month the bills rolled in, but the assessment dollars did not. There were some changes to the condominium act that provided help to the condominium associations – giving the associations the right to (i) suspend delinquent owners’ use of community recreational facilities, (ii) suspend delinquent owners’ voting rights, and (iii) collect from any tenant the rent that was being paid to the delinquent unit owner – but that was not always enough. In situations where the delinquency persisted, the unit was not rented, and the mortgage foreclosure was stalled or not otherwise moving quickly, the associations sought another way to improve their situations.
In two recent cases, the associations elected to foreclose on their condominium association liens and take title to the units while the mortgage foreclosure actions were still pending. By doing so, the association could get full control of the unit and could rent it out to try to get some cashflow from the unit while the mortgage foreclosure muddled through the legal process. Ultimately, when the mortgage foreclosure was completed, and the unit sold to satisfy the mortgage judgment, the associations sent an invoice to the new purchaser for all of the outstanding assessments owed by the delinquent unit owner/borrower under the foreclosed loan. That action seemed clear to the associations based on the language in 718.116(1)(a), which provides:
A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the owner may have to recover from the previous owner the amounts paid by the owner. [Emphasis Added]
The trial courts agreed with the associations and found that the new purchasers were liable for all delinquent assessments. But the new purchasers didn’t see things the same way that the associations did, and appealed. They focused on the fact that the prior owner of the unit was in fact the association, and not the delinquent unit owner/borrower under the foreclosed loan. If the new purchaser was liable for the delinquencies, then wasn’t the association as the prior owner also liable? The appellate courts agreed with the new purchasers and reversed the trial court decisions. The appellate opinions do not answer all of the questions, but they do certainly make an association think more carefully about whether it wants to take title to a delinquent unit.
See Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc., opinion issued January 23, 2013 (Fla 3rd DCA 2013) and Barnes v. Castle Beach Club Condominium Association, Inc., tentative opinion issued February 6, 2013 (Fla 3rd DCA 2013).
Authored by Tracy Lautenschlager
Empty storefronts and unused commercial buildings … Do you ever wonder as you drive by why some enterprising business owner doesn’t take advantage of these spaces, these little gems, that must be available at great prices? Or, if you are in the greenfield development business, can you recall how many times the neighbors opposing your development have cried out that your shopping center was just not needed when so many vacant storefronts were available? Why do those spaces sit empty? One big reason is parking.
Older developed sites are often “legally nonconforming” with regard to parking. “Legally nonconforming” is a zoning term that applies to sites that met code at the time of construction but no longer conform to the current code because the code has been amended. Legal nonconformity can occur because of changed regulations that, for example, reduce maximum height or increase setbacks, but it most often occurs because required parking ratios are increased. A site with a small vacant commercial building could be a great little reuse project, a classic example of urban redevelopment, clearing up a neighborhood blight, or it could sit idle because of one single issue: parking. Many city parking codes require compliance with current parking ratios for a new use or even re-establishment of the prior use after the site has been vacant for 6 months or a year. As you can imagine, the existing parcel can not accommodate both the square footage of the existing building and the parking to serve that building at current parking rates.
What’s a redeveloper to do? Construction of structured parking is prohibitively expensive and often objectionable to the neighbors So, in most cities, the only option is to seek a parking variance or reduction, a process that can cost a lot of time and money. Worse, it often triggers a public hearing process and all of the associated risk.
Is there a solution? The City of Fort Lauderdale has adopted amendments to its parking code to declare legally nonconforming parking to be “legal” in certain areas of the city in need of redevelopment. How does this help? A redeveloper would need to increase parking only if the project was adding square footage, and then, only the additional parking at the current rate required by the new square footage. It might help; if nothing else, it might position a small redevelopment project to be more attractive to cautious lenders and investors. Fort Lauderdale has also studied reducing its parking requirements for restaurants and certain other uses. The regulations are convoluted, not exactly a red-carpet for small business redevelopment, but they do show some attempt to remove regulatory barriers to redevelopment, new small business start-ups and job creation. Kudos to Fort Lauderdale for trying to be “open for business!”
Authored by Kerri Barsh
Miami-Dade County Water & Sewer Department (WASD) is proposing a special sanitary sewer construction connection charge for the expansion of the sewer facilities in the Biscayne Corridor Basin (depicted in the color attachment). The County will assess the new charge on property owners and developers who receive new or increased sewer service from the new facilities with the Biscayne Corridor Basin area. Under the proposed ordinance, unpaid charges will constitute a lien on the property.
We understand from WASD that the Department is preparing the ordinance based upon a similar ordinance previously adopted by the County. WASD estimates that this new ordinance will not go before the County Commission until November. If approved by the Commission, the ”estimated charge would not exceed the $4.24 per GPD.”
Until the ordinance takes effect, WASD has advised the development community that agreements/Verification Forms/Ordinance Letters within the impacted area will contain language that will allow the project to pay for the special connection charges for this Basin at the time of first meter set. Once the ordinance is approved, WASD intends to collect the special connection charges at the same time as the connection charges (at the stage when the Verification Form/Ordinance Letter are required).
Authored by Marvin Kirsner
The value of federal low income housing tax credits are included in the value of a project in order to determine whether a secured creditor’s claim is fully secured, held the Bankruptcy Appeals Panel for the 6th Circuit. This is the case even thought the credits have been specially allocated to individual partners of the debtor.
The tax code allows a tax credit to subsidize affordable housing under the low income housing tax credit (“LIHTC”) set out in Section 42 of the Internal Revenue Code. The LIHTC is allowed over a ten year period. This new case deals with a five separate LIHTC projects in Kentucky. The debtor limited partnerships executed and recorded a land use restriction agreement to comply with the terms of the LIHTC agreement administered by the states’ affordable housing agency. The tax credits were allocated to specific investors who became limited partners in the debtor partnerships.
The debtor partnerships claimed the the value of the projects were not adequate to satisfy the claims of the secured creditor who held the mortgages on the projects, and filed a motion to determine the value of the secured claims per Section 506(a). The secured creditor’s appraisal of the project included the value of the tax credits that still remained because the ten year period for the tax credit pay-out had not yet run. The debtors objected, arguing that the value of the remaining tax credits did not constitute property in which a security interest could be taken. The debtors also argued that because the tax credits had been specially allocated to particular investor/partners, the credits were not property of the debtor. The Bankruptcy Court overruled the objections of the debtors, and the debtors appealed to the Bankruptcy Appeals Panel.
Citing to the provisions of the LIHTC set out in Section 42 of the Internal Revenue Code, the Bankruptcy Appeals Panel found that the low income housing tax credits run with the land, and so become a property right that can be secured, and consequently, the value of the tax credits should be included in valuing the collateral held by the secured creditor. The Court further held that the allocation of the tax credits to the investor/partners did not act as a sale of the credits, but was merely a financing transaction; therefore, the remaining tax credits were the property of the debtor partnerships, and were not owned by the investor/partners to whom the credit were allocated. As a result, the Court held that the value of the remaining tax credits were properly included in the value of the projects.
I have this wonderful colleague, a super bright young man with great drafting skills, who says about any acceptable document written by someone else that “well, it’s not AWFUL.” That’s how I feel when I read news reports about the so-called economic recovery: it’s not AWFUL. But it isn’t great either. Perhaps the optimism is simply relief that things aren’t getting worse. I have learned some things in the last few years, lots of us have, and I can’t afford to forget them because this not-AWFUL economy may continue for awhile. Perhaps even when boom times rebound, I shouldn’t forget what I’ve picked up during the downturn.
I’ve learned that I must accomplish more for my clients with less, i.e. less time, less administrative support and less waste and duplication. But this lean approach does not mean that I should work in a silo and forego collaboration with colleagues. It is far more efficient for me to find someone who already knows what I need then to learn it from scratch myself. Note to clients: look for counselors who come with a great team behind them; it’s more efficient in the long run.
I’ve learned to get to the bottom line more quickly with government agency staff, opposing counsel and the entire project team. It’s part of accomplishing more with less. When I have long-standing relationships with these folks, I still have time to be friendly, but truly everyone is under this same pressure and seems to appreciate hearing the “ask” first.
Finally, I’ve learned not to fear discussing costs with my clients … well, to fear it less, at least. Ultimately, it improves our working relationship, mutual trust and shared sense of accomplishment when the matter is successfully concluded.
Here’s one last thing I’ve picked up in the downturn of a more personal nature: I’ve learned to shed the “bloat” in my life. Looking over the first half of my adulthood, my choices reveal a constant goal to acquire more things, and spend more time and money planning for my things, caring for my things and storing my things. Eventually, I had little choice about how to spend my time, energy or money, because it was committed to the upkeep of my things. Similar to the way I feel after a visit to an oriental buffet, I felt bloated and vaguely resentful about the situation in which I had put myself. I’ve learned to consider what I need rather than what I want. I’ve learned to picture the potential purchase in my garage in a few years, covered in … garage dirt, needing to be moved before I can reach the hurricane shutters as the winds are starting to pick up. This change to more deliberate spending habits has had one additional major effect: our charitable giving has increased significantly. My family was able to choose how to spend our money because our committed spending to support the “bloat” stopped. Choice feels good, and helping our neighbors feels even better.
What have you picked up in the downturn? Whatever you’ve learned, hold on to it. It’s valuable.
It has been two years since Miami 21 took effect and the City of Miami has not come to a halt, as suspected by some, the City has not been overtaken by larger than life skyscrapers, as complained by others, it is simply still Miami. Miami is similar to the legend of the Ibis, as it is the last sign of wildlife to take shelter before a hurricane hits and the first to reappear once the storm has passed. Development in Miami is moving again, however, this time under a completely new form based zoning ordinance.
Miami 21 has all new lingo (i.e. Transects, SAPs, TODs) but the basics are still the same, floor area ratio (FLR), density and parking are the big 3 questions everyone wants to know about a site. Problem is that even knowing the big 3, until you apply the design guidelines to each site, there is no way of knowing if you can get anywhere close to the reaching the thresholds. Some sites yes, some sites no. This has ultimately created more work and due diligence in the development of sites in Miami.
In addition Miami 21 can be a bit overwhelming at first for those used to the dynamic of the previous zoning ordinance, however once you’ve studied a few sites development capacity, you figure out it actually flows. The Transect Zone charts serve as a basic cheat-sheet to the development guidelines and the diagrams are user friendly and allow you to visualize the intent of a requirement. Not to say that Miami 21 has no kinks here and there, as no zoning ordinance ever is perfect; the City’s last zoning ordinance was in effect for 20 years and routinely required modifications and updates. Since 1935, when the City’s first zoning code was adopted, it has seen 5 major overhauls. Miami’s evolution into a major City has successfully survived each overhaul. So the sky has not fallen and Miami’s beautiful skyline will continue to grow as beautiful as ever under a form based code.