Monday, November 23, 2009

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!

Wednesday, November 18, 2009

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.

Sunday, November 15, 2009

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.

Wednesday, November 4, 2009

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.

Sunday, November 1, 2009

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.