Last week we discussed financing real estate. During the class lecture we learned about accelerated depreciation. Looking back it all seems very logical. Today buildings are built with cheaper materials that don't last as long. The buildings seem to depreciate quicker and aren't worth as much. The theory behind this seems to be that if you can accelerate the process then you can reinvest into a new building. The drawback is that we are now stuck with too many buildings and buildings just don't go away.

One solution, as we saw during our site visit to the Alley, is to renovate existing spaces. The idea has obviously taken off in downtown Montgomery. The new urban style is very appealing and has really helped to bring more people to an area of town that has been neglected for quite some time.

Happy Thanksgiving!

Possible Legal Issues in the Alley

This week we visited the Alley in downtown Montgomery. It is a nifty, revitalized area that has a lot to offer. However, this area is not without it's legal problems. For instance, our group discussed some legal issues that may affect a new restaurant that might move in.

1) What issues will there be if the lofts become housing? Not a lot of outside access, so will this lead to trespass issues?
2) Will we have the same trash issues? The corner building in no way faces the public roadway, so will it cost us like Dreamland?
3) If the children's museum goes in, will this effect the hours of operation, or alcohol policies? Could we be liable for nuisance?
4) If we too put tables outside, who is liable for personal injuries if it happens outside?
5) Suppose someone drinks a little at each restaurant or bar, what dram shop issues will come up if all the alcohol doesn't come up in the same place?

Certainly this is not going to be an exhaustive list of everything a potential owner will have deal with when starting a restaurant there, but it is helpful to get an idea of things your client may deal with in the future.

Going Green

The latest trend in America is to go Green. Some towns have passed laws requiring people to recycle cans or plastic. This trend has even reached the building industry. Towns are mandating that builders use a certain number of environmentally friendly materials, like partially recycled insulation. Others also limit the types of appliances that people are able to put in their home. As attorneys, it will be our job to keep ourselves up to date on the laws to ensure that our clients are in compliance. Further, we must also make sure that our builders are aware of the new standards, and adjust our contracts with them to limit any other possible liability for breaking these regulations. This just goes to show you how diverse development law can be, and how it is ever changing.

Real Estate Market

It seems these days that every other day the news is reporting more problems with our economy. As most of us know, the real estate market has been hit hard in the last several years. Since the tax incentive for first time home buyers, the residential market seems to be getting better; however, but most all accounts, we're not out of the woods yet. The market is covered with large numbers of foreclosures (even though this number does appear to be declining or at least not climbing as fast.) As we saw in a video this week, the commercial market is not doing well either. While many places have tried to renovate other parts of town, brand new buildings stand empty, with absolutely no revenue coming in. The "real estate guy" did make a good point, even though it seems like such a simple conclusion - everything has a buyer for the right price. Certainly, some sort of revenue coming in, even if it is not the optimum price. Every house on the market could be sold, if people (as many have) would drop the price.

Being Thorough

It is very important to be thorough when researching every legal issue. If you simply do some preliminary research, without continuing any further, you may find a loop hole that you never expected. Before any oral argument, any attorney would be foolish to not also research the opposing counsel's arguments. The same is true in the practical side of law. At first glance, one would assume that you should just comply with the historical district's rules for the property at Old Cloverdale. However, buried further down in the statutes, you would realize that the ARB, expressly, has no legal power over our client's property. Therefore, you would be doing so much more work that would be effectively pointless, and could put your client through a lot of expense and waste a lot of time. Originally, our group believed that you should just go ahead and comply to look better to the neighborhood, but in light of the negative factors, I believe we have changed our mind. Still, for certain decisions, we may still ask for advice from the board in making other decisions.

Not so Simple Tasks

Isn't it uncanny how even the simplest process can turn into a very complicated procedure. This week our group discovered just how complicated demolishing a building would be. It seems that knocking down a building would be easy; however, the agencies mandate that you must deal with at least four different agencies in order to accomplish this task. If the building (even if old and useless) is located in an historical district, the process gets even more complicated. Then, you must not only go through the same basic process, but also receive approval from the Architectural Review Board, and recommendations from the local historic districts. Naturally, no board would want you to simply knock down a building and leave an empty, barren lot. Therefore, before a building may even be flattened, complex and thorough plans for a new building (that also must be cleared by the ARB) must be presented.

Relocating a building is even more complicated. One must get approval from nine different agencies in order to receive just the building permit. Many of these approvals are based on inspections from variance agencies. Finally, if travelling on any state or federal road, you must also work in connection with the State Highway Department to protect the safety of all those involved. Personally, I never expected that this assignment could possibly have been this complicated; but it just goes to show that it is best to be knowledgeable about the task you are about to undertake before you get into it.

A&P Site Visit

We had the pleasure of visiting the A&P this week. Formerly a grocery store and warehouse, this area has turned into a quaint, beautiful mixed-use property. Strangely, special steps had to be taken to turn a large, plain building into some beautiful, high-end shops and very nice condos. This made for a wonderful addition to the neighborhood with the unique design of the buildings. This may have also been our most educational site visit. With one area, we could have learned about rezoning, variances, and historical regulations.

Historical and Design Regulations

These week our group has been researching the significance of historical and design regulations in land planning. These regulations generally are put into place to protect aesthetics, and apply to all sorts of developments. Design regulations can be either public or private; the distinction is important when dealing with the legal issues. Private regulations (a good example being homeowners' associations) deal particularly with contract law. Private groups may mandate that you contract away certain rights without much difficulty; after all, the buyer would have the choice. Public groups can pass design resignations much more difficulty. All aesthetic regulations must be tied into the police powers (i.e. health, safety, or welfare) before the government can establish jurisdiction over them. Since it is highly unlikely that mandating the color of a building will effect any one's health or safety, it is up to the government to prove that the regulation effects the general welfare so drastically that it effects not only property value, but effects it enough that it can effect the tax base. This is a pretty high burden to prove.

In addition to design regulations, governments may also mandate that certain historical things be preserved, regardless of the actual aesthetic value of the building. The theory is that certain buildings have such a historical value, that it effectively would harm the general welfare to get rid of them. These regulations are significant to us because the property is surrounded by a historical district. While the property itself is not part of the actual district, it may be important for public relations purposes to comply with the neighborhood's standards.

Lawyers as Timekeepers

As mentioned before, lawyers have a job that requires that they work as the middleman in certain relationships (between the owner and contractors, for example). This week's classes brought to light the importance of our role as timekeepers. To get a variance issued, there are certain procedural processes that one must do before the board accepts them. One of those procedures is to have the proposal published 15 days previous to the board's next meeting. If it is published even 14 days prior, the variance is no good. As the attorney for our client, it is up to us to not only fill out the paper work properly, but to also make sure that it is turned in by this deadline. Generally, this is the practice for all attorneys in all areas of the law, and is a lesson we should learn before making that mistake. Missing deadlines can lose cases, or variances, or even make a contract to buy a piece of property void. It is deemed so important that the ABA Rules of Professional Conduct 1.3 states "[A] lawyer shall act with reasonable diligence and promptness in representing a client." (Emphasis added) Reasonable diligence and promptness requires keeping up with such deadlines, and insuring that all are made. Overlooking such deadlines can lead not only to problems with our client and that relationship with the client, but also problems with the Bar, or potentially opening up yourself to a malpractice lawsuit. Thus, as lawyers, we always need to keep in mind our role as a time keeper in all situations, and take that role very seriously.

Variances

This week our group was assigned the task of determining what processes we would have to go through in order to receive a variance to build a cupola on top of our building. Fortunately for us (and our client), the property has recently been rezoned to b-1-a, which has no set back limit and no height requirement. Therefore, there will be no extra hoops to jump through, and we may go ahead and build the cupola. Basically, our client will be able to build on 100% of his property, and may legally build a skyscraper if he so chooses. We also learned the finicky nature of approved variances. Generally, the variance must be unique to the ground, and must give some sort of undue hardship on the party seeking the variance. However, many variances do not meet these standards, and are nevertheless granted. The question then becomes, should something more be done to abide by the letter of the law, or do we like the freedom that comes with allowing the elected board to act arbitrarily? In our scenario, (assuming that we actually did need a variance) the practice is a good thing; as it is highly unlikely that not having a cupola would cause any kind of undue hardship.

In reference to our sky scraper, there are many reasons why this might not be a good idea. One of these reasons may be that it is completely surrounded by an historic district, and something more appropriate to the neighborhood would be our recommendation. That being said, we look forward to discussing issues surrounding the historic district in our next couple of classes.

Rezoning Process

This week, The Real O.C. has been going learning the process for getting a parcel of property rezoned. Earlier in the week, we visited the Department of Planning and Development, where they helped us learn the process to apply for rezoning. The rezoning process takes approximately 3 1/2 to 4 months. In order to have the parcel rezoned, there must be a letter sent to the Planning Controls Division, and the letter should include the property address, the current zoning of the property, what you want to rezone the property to and what the intended use will be. If the person that is requesting the rezoning is not the owner, then the owner of the property must also write a letter giving persmission for the rezoning. In addition to the letter requesting the property be rezoned, the following items must be submitted: Legal Description of the property, Deed, Site Paln, and a fee. The fee is currently $200 for 10 acres or less, which includes the $75 rezoning fee, and $125 advertising fee. (If your request does not get to the City Council level due to being denied or no action taken, then the $125 advertising fee will be refunded).

Once you have submitted your request, there will be a public hearing before the Planning Commission. If the request is recommended for approval by the Planning Commission, it will be scheduled for a public hearing before the City Council, who has final authority on all rezoning requests. If the request is denied, you must appeal the decision to the City Council.

Stay tuned for more information!

Hampstead and the Smart Code

Hampstead falls under the city of Montgomery's smart code.  Normally, a neighborhood like this would violate several codes and regulations.  For example, Hampstead has wider sidewalks and more narrow streets.  Further, parking is encouraged on both sides of the street. Additionally, Hampstead has alley ways for its residents to use, bar within the neighborhood, a farm, and even a dog park!  Check out the Hampstead's website at www.townofhampstead.com!

Visiting Hampstead

Last Monday, we visited Hampstead.  Hampstead is a fairly new neighborhood located right off of Taylor Road.  The neighborhood combines different uses such as: commercial, agriculture,  and residential.  In addition to the current businesses, Hampstead is planning on building a temporary building for a coffee house by day and a pub by night to be done in 2010.  This was interesting to our group, because the building would normally be illegal since it violates height requirements.  However, the city is allowing it to be temporarily placed in the front of the neighborhood until it can be moved to the back on a lake after the area in the back is developed. 

Overall, Hampstead provides a unique experience for its homeowners and the general community.  The area is beautiful, appealing, and functional. 

Lawyers as Facilitators

In many ways, law and development can add a different role for a lawyer. Lawyers in this field of law in many ways act as facilitators between the many people that your client must work with to develop a piece of property. In any project, we must facilitate between our client and the governing bodies (whether it be ADEM, the federal government, or various commitees in charge of zoning or historical districts). As attorneys we would help our client to negotiating with these groups so that we can insure the most positive result for our client, grow or maintain a relationship with these governing bodies for future projects, and possibly furthering the valid interests of each agency.

Next, we must also facilitate between our client and the different laws. More than working with agencies, we must also work under the laws that the agencies must follow. This could include submiting the proper forms, noticing when our client wants something that will require extra formalities (and insuring that we do so), and insuring that the professionals that we hire to develop the land also abide by these rules.

Finally, we must facilitate between the professionals that we have hired to do a specific task and our client. In working with these professionals, we should negotiate to limit any potential liability of our client to these or other individuals. Moreover, we will also have to facilitate between the professionals in creating their contracts to ensure that each person can effectively work together to get the project finished. For instance, if we do not ensure that the architect or engineers draw up plans that are in compliance of the law in a reasonable amount of time, the builders cannot build the plans up to code or cannot finish the project in time to complete his or her own contract.

If, as attorneys, we do not facilitate between governing bodies, the law, and the professionals that we hire then there can never be a completed project, and this certainly does not help our client.

Development Professionals

Working with different professionals in developing a piece of property may be one of the biggest incentives to going into this field of law. Unlike other fields, there is a big opportunity to step out of the legal field and work with a very diverse and potentially interesting group of people. This week's lesson has been much more fun for our group to work on; it allowed us to think "outside of the box" and think in practical terms.

Working in a group was exceptionally helpful for this assignment. Each group member had their own good ideas, and suggestions for more professionals that you may need. These ranged from architects, engineers, bankers, real estate agents, and long list of subcontractors. Each professional group has its own legal issues to explore, ranging from agency law, contracts, torts, and other liability issues.

Document Drafting

After creating our original draft of the Letter of Intent and Purchase Agreement and reviewing work that the other groups did, we have discovered a few tips to make our drafts, and possibly future drafting assignments, better. For the letter, we will add a letterhead to make the document appear more professional. Also, following the advice of some of our colleagues, we will try to make the timing more clear, so there can be no confusion. However, I was pleased to find a website with a general listing of what should be in all letters of intent. One tip it gave was to leave a place for the other party to sign, which helps to make sure both parties are on the same page.

As far as our Purchase Agreement, overall we were very pleased with the way it turned out. It was attractive to the eye, and was to the point. However, we will try to fix some nit-picky formatting problems, like the page numbers. Also, in trying to make the contract less complicated, we might have forgotten that this contract is worth over a million dollars to our client, so we should be more specific in the remedies, and other clauses. We also found some good ideas after reviewing the other groups. For instance, we will add an indemnification clause for any trespasser's liability that may occur while performing our inspections, and a broker disclosure clause. I do think that we took proper care to draft the document to be more favorable to our client, without making the contract agreeable for the other party. In all, I was pleased with our work, but our group will certainly do all we can to make it better.

Due Diligence and Purchase Agreements

This week, The Real O.C. has been working towards drafting a letter of intent and a purchase agreement. Due diligence must be done in order to make informed decisions. Many times the letter of intent is drafted in order to show an interest in purchasing the property, as well as to announce your intentions of performing due diligence by conduct inspections and other research needed to be done. The purchase agreement is a legal agreement that details the sale of the property, and sets forth the price and terms. Different jurisdictions have varying requirements as to what exactly must be in a purchase agreement. Our group is working this week to ensure that our letter of intent and purchase agreement meets these requirements, as well as represents the true interest of our client.

USTs and Old Cloverdale Fishing Pond

After further contacting people with ADEM, it's been discovered that the parcel of land containing the underground storage tanks may be less of a concern as previously thought. Because the tanks that are currently still on the property were inactive before the laws were in place, nothing legally has to be done to the property. However, we are also aware of the possibility of other groups (banks giving loans, etc.) requiring tests to determine if contamination does exist from the UST. If contamination is significant enough, it may lead to other very costly alternatives and mandatory clean up of the existing situation.

Additionally, our group also looked into constructing a fishing pond in the Old Cloverdale area. This gives rise to more environmental concerns and possible issues over habitats of animals. We found that building a pond, even a small pond, could be very costly, and a long process of applying for permits on both the Federal (through the Corps of Engineers) and the State (through ADEM and NPDES) governments.

Next we plan on looking into the legal aspects of actually purchasing this land and getting prepared to make an offer.

Environmental Concerns

Over the past few days, we have been researching environmental issues that affect several properties in the Montgomery area. This past Wednesday, our class met at the Biscuits stadium. Prior to our class meeting, we did some research on our own to try and discover the history of Riverwalk Stadium. Amy spoke with Dave Davis at ADEM. Mr. Davis was very helpful in getting us the information that we needed. We were able to find out the previous uses of the site before it became the baseball field, how those previous uses left behind potentially hazardous toxins and contamination, and the different approaches that can be taken to mitigate and damage. Mr. Davis was also able to put us in touch with someone that works in the UST(Underground Storage Tanks Program) in order to help answer some of our questions about the Sinclairs site.

As most local residents know, Sinclairs restaurant in Old Cloverdale has not always been a restaurant. Before it became a restaurant, it was actually a gas station that was part of the Sinclairs Oil Corporation and Sinclairs Gas station chain. After speaking with the lady at the UST, we were able to get some valuable information about potential contamination at this site, and we were able to come up with different ways that our client might want to do from here. We should be finishing up our research in the next couple of days, and will present this information to the class on Monday.

Status Update

This week, The Real O.C. has been looking into various environmental factors that could affect the parcel of land our client is considering purchasing. Our group is also researching the property directly across the street, which is where Sinclair's Restaurant is located. Our group members will be calling and visiting several people who we believe may be able to help us find the information we are looking for. Right now, our main environmental concern is the possible pollution that could be left over due to the previous uses of the land before it became a restaurant. We will have more updates coming soon to let you know what we find out!

Old Cloverdale v. Atlanta Highway

Both areas are near to a religious university, shopping areas, residential areas, and have a lot of traffic; however, looking at these two areas it becomes obvious that they are fundamentally different. On one hand, Old Cloverdale is quaint and charming, and Atlanta Highway seems to be more commercialized and cold. Regardless of the appearance or one's preferential style of building, Old Cloverdale is a much more desirable area.

The most obvious difference between these two areas is the traffic. Atlanta Highway is one of the highest traveled roads in Montgomery, AL. As such, many chain stores have decided to place stores in this location, leaving the area convenient for the on-the-go shopper, but not necessarily a desirable area to spend time. However, it is unlikely (and quite unsafe) for anyone to be taking a stroll along along the median. Moreover, the stores are located on sections of strip malls, surrounded by large parking lots. This leaves the strip malls segregated, adding further for the need to drive from one location to the other. On the other hand, Old Cloverdale focuses more on the availability of foot traffic. Shady sidewalks stretching past a line of closely connected shops make the experience of shopping in Old Cloverdale an enjoyable activity. However, many of the specialty shops might not be the most convenient for many shoppers, as they may be higher priced or less functional.

Each of these locations are only a short distance away from a small, private, Christian university. However, Huntington University seems to be in the heart of Old Cloverdale. Much of the foot traffic comes from these students, and several times a year, Huntington sponsors events, open to the public, that draws people in to this quaint neighborhood. In fact, Huntington seems to be a staple of the area in Old Cloverdale. However, Faulkner University, located on Atlanta Highway, does not seem to be a cornerstone of the community. Instead, it appears to be a separate piece of land that is completely unlike anything surrounding it; just another building to take up the landscape.

Much like the neighboring universities, the near-by residential areas also help to show another difference in the two areas. Like the shops themselves, a vehicle of some sort must be taken to get from one place to another. Apartment buildings, and other lower cost housing, are more readily available from the Atlanta Highway. If the city planners had taken this into more consideration, maybe Atlanta Highway could be more preferable. In Old Cloverdale, many of the houses are within a short, leisurely stroll to the shops. The community as a whole seems more welcoming.

The most probable reason for all of these differences is the existence of the Old Cloverdale Association. This association, established to maintain the integrity of its architecture and its lifestyle. Areas in this district are subject to a much more strict set of ordinances (Montgomery City Ordinance #49-96), that mandate how new buildings and additions are to be created, how the old buildings are to be obtained, and even what kind of trees may be planted or removed. Clearly, Atlanta Highway is not subject to the same kind of ordinances, created to "maintain the charm, look and character" of the area. Perhaps if even a few more strict ordinances were created when Atlanta Highway had first began to blossom, it would have maintained some bit of charm that makes Old Cloverdale the more preferred location.

http://www.oldcloverdale.org/historicdesignationcompliance.html