The New York State Consumer Protection Board has issued a business guide designed to reduce the risk of identity theft and security breaches.  The new guide is entitled "The Business Privacy Guide: How to Handle Personal Identifiable Information and Limit the Prospects of Identity Theft.”   Information on the guide can be found here.

In these tough economic times, subleases will become more common as existing tenants retract and leased space becomes vacant.  Landlords should be aware that the waiver of a jury trial contained in the primary lease will not automatically apply to a subtenant.  New York case law has held that in order to be valid against a subtenant, a waiver of jury trial in a primary lease must expressly state that it applies to subtenants.  Landlord’s should review their existing leases carefully with respect to such provisions, and always consult a qualified and experienced real estate attorney.

Whiteman Osterman & Hanna LLP has won the Business Review's 2008 Best Places to Work Award.  Whiteman was selected from a pool of 200 companies in Tech Valley.  As a partner in the firm, I am extremely proud of WOH and the other award recipients.  Having a workplace that fosters personal growth and development is critical to success of each business and their communities.

Scott Fein, a partner at Whiteman Osterman & Hanna, has been lecturing on not-for-profit and public authority board compliance for years.  Now,  Albany Law School’s Government Law Center will be recording the sessions and making them available on the Center’s website. Training for public authority boards of directors is required by law, and similar training is highly recommended for members of not-for-profit boards. 

Too often, well-intentioned, civic-minded people join boards unaware of the potential liabilities and fiduciary responsibilities that come with the role of director.  Board compliance training not only helps board members avoid costly mistakes, but also provides organizations with a well-trained board able to knowingly assume and execute its duties.

The State University at Albany’s College of Nanoscale Science and Engineering has declared next month NANOvember. Throughout November there will be a series of events and activities that will “showcase the exciting world of nanotechnology.” If you have not visited the NanoCollege, it is located on the $4.5 billion Albany NanoTech research site, and it is absolutely amazing.  The school is a testament to public/private and industry/academia partnerships, as it has more than 250 global corporate partners. Events scheduled during NANOvember include: an exhibit on display at Colonie Center, a national conference on the convergence of nanobioscience and medicine; educational programs such as “NanoCareer Day” for students and “Educating the Educators” for teachers; and a series of community lectures highlighting work at the nanocollege.  Well worth the trip down the Northway!

The leasing of rooftop space to cellular and other telecommunications companies is becoming increasingly popular.  Landlords should approach the standard rooftop lease agreement offered by service providers with a considerable degree of caution.  For example, all installations should be subject to the landlord’s approval, and detailed work plans should be obtained. Careful attention to the provisions regarding the maintenance, repair and removal of the telecommunications equipment is also necessary. 

Encouraging news on the Immigration front!  The U.S. Citizenship and Immigration Services (USCIS) has increased the maximum period of time a Trade-NAFTA (TN) professional worker from Canada (or Mexico) may remain in the United States before seeking readmission or obtaining an extension of stay.

This final rule changes the initial period of admission for TN workers from one to three years, making it equal to the initial period of admission given to H-1B professional workers. Therefore eligible TN non-immigrants may now be allowed to receive extensions of stay in increments of up to three years.

The Tech Valley Nonprofit Business Council named Whiteman Osterman & Hanna, LLP as the 2008 recipient of its "corporate partner" award.  Other awards and recipients include:

·     Nonprofit Board Service Award: Herbert Shultz Jr., board member of Capital Region Youth Tennis Foundation Inc., Proctors and Capital Region Sponsor-A-Scholar Inc.

·     Nonprofit Executive Leadership Award: Alan Krafchin, president/CEO, Center for Disability Services

·     Nonprofit Organization Award (1-74 employees): Capital Region Sponsor-A-Scholar Inc.

·     Nonprofit Organization Award (75+ employees): Wildwood Programs Inc.

The Tech Valley Nonprofit Business Council is a shared initiative of the Albany-Colonie Regional Chamber of Commerce and The Chamber of Schenectady County.

Last night I attended the first of two planning charetttes for the proposed Plattsburgh Brownfield Opportunity Area.  The BOA process includes conducting an inventory and analysis of potential brownfield, vacant and/or underutilized sites in the community, formulating a community vision, establishing viable reuse concepts, and outlining strategic recommendations.

There was a good solid group of citizens in attendance, many of the concerned faces one sees at most of the public forums in the area.  What were noticeably missing last night were the other stakeholders.  Where were the city business people?  Where were the developers and contractors?  Where were the other service providers?  Where were you?

We need to work to ensure that another plan is not created only to be shelved.  We need input from the business community.  We need input from developers, contractors and service providers.  This is another opportunity to come together and make a difference in the City of Plattsburgh, an economic development difference, and an investment in the future. 

The next meeting is October 28th at 6:30 in City Hall.  I hope that this time all of the stakeholders will make an effort to attend and participate.  Make an investment into the future of this community.

Advanced Micro Devices, Inc., ("AMD") announced a corporate restructuring today that will separate its chip design business from its manufacturing business, and that also committed the new manufacturing company to the chip fab project in Malta, New York.  This is major news for the Quebec-New York Corridor, and the impact of this decision will be felt up and down the Northway. The Malta site will employ approximately 1400 workers.

The first CO2 auction in the United States was held on September 25, 2008, and by all accounts was very successful.  All of the 12,565,387 allowances offered for sale by the Regional Greenhouse Gas Initiative (RGGI) at the auction were sold at a clearing price of $ 3.07 per allowance.  This resulted in $38,575,783 for the states that offered the allowances (Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont). 

The ten Northeast and Mid-Atlantic states participating in RGGI have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. The states have committed to cap and then reduce the amount of CO2 that power plants in their region are allowed to emit, limiting the region’s total contribution to atmospheric greenhouse gas levels.

Purchasers at the auctions included participants from the energy, environmental and financial sectors.

Beginning on December 3, 2008, landlords in New York State will be required to disclose the results of environmental tests to current and prospective tenants.  Specifically, the law requires landlords to disclose test results exceeding OSHA or the State Department of Health’s indoor air quality guidelines.  Failure to disclose can result in fines of $500 per violation and $500 for each day landlords remain in violation.  The target of this new legislation is vapor intrusion, an issue of increasing concern to New York regulators.  At this point, it is unclear whether or not the disclosure requirements apply retroactively.

Our firm works with several clients with respect to residential and retail developments throughout the United States.  It has come to our attention that the EPA is beginning to enforce storm water regulations in individual states, via its authority under the Clean Water Act.  Larges fines have been handed out by the EPA in several states. Owners and developers should be hyper-vigilant and take all necessary steps to ensure that their projects comply with the storm water regulations.

The New York State Energy Research & Development Authority voted to adopt regulations to implement the Regional Greenhouse Gas Initiative (RGGI) in New York State on Tuesday. The RGGI is the 10-state plan to reduce power plant pollution.  The adoption of the RGGI regulations permits New York State to participate in the first auction of carbon dioxide (CO2) permits as part of a cap-and-trade system that will hold the allowed level of CO2 emissions constant through 2014, and then gradually reduce those levels. Along with New York, RGGI states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island and Vermont. 

While this step is viewed by many environmental groups as a positive, some power industry representatives continue to be skeptical with respect to the cap and trade system.  Industrry representatives remain fearful of the banking of permits for profit and the potential purchase of permits by environmental groups which would eliminate the permits (and resulting emissions rights) from the marketplace.  The trading of permits and carbon units is increasing throughout the world, and will certainly (1) become commonplace in the United States, and (2) eventually affect all industries.

A disturbing new study has found that less than one third of the banks in the United States will be fully compliant with the Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Transactions Act of 2003 by the November 1, 2008 deadline. This act and the related rules and regulations were designed to protect against identity theft. Banks will be rushing to comply with these regulations this Fall.  Consumers beware.  

So-called “green mortgages” have been around since the Carter administration, but are becoming increasingly popular among home buyers/owners and their lenders. Also known as Energy Efficient Mortgages, these mortgages can provide borrowers with additional loan proceeds to be expended on residential energy efficient improvements. Green mortgages require an energy audit of the subject house, a step normally not required by conventional loans.  A portion of the loan proceeds is dedicated to making “green” improvements to the house that will make the home more energy efficient (resulting in utility cost savings) and, presumably, more valuable upon resale.  Green mortgages can also result in buyer’s being able to obtain larger loan amounts, as the lender will often include the projected savings from reduced energy consumption in its determination of the borrower’s income and ability to repay the loan.  Something to consider the next time you are looking for financing.

Last week, a downstate judge threw out a challenge by several environmental groups to the Belleayre Resort deal that was brokered by former Governor Spitzer. That deal involved the scaling back of Crossroads Ventures LLC’s plans to develop a large, upscale resort near the state-owned Belleayre Mountain Ski resort. Daniel Ruzow, a name familiar to many in the North Country, of our firm represents Crossroads with respect to this project.  Dan literally wrote the book on the State Environmental Quality Review Act (SEQRA), and is a nationally recognized expert on environmental impact in New York.  It is much to Dan’s credit that the Belleayre Resort project is moving forward. 

The scaled back resort project includes development of two hotels, a golf course, condominiums and a spa. The project will infuse millions of dollars into the local economy, which, like many areas in the North Country, has been suffering in recent years. The compromise reached through the work of Dan Ruzow and the Governor’s office, addressed many of the concerns of the mainstream environmental groups, and is the type of compromise that may need to be achieved with respect future economic development projects in the Adirondacks and elsewhere in the North Country. 

The limited liability company (or LLC) is often the entity used by real estate developers to shield themselves from liability stemming from property development and ownership.  To maximize liability protection, many developers/owners will use one LLC for each individual property or project.  In the mid-1990s, Delaware adopted legislation providing for the creation of series limited liability companies.  Series LLCs allow for the creation of different series of members, managers and/or assets within the structure of one LLC.  In this way, multiple properties could be held by different series within a LLC, providing the liability protection for each property while avoiding the need and cost of creating multiple limited liability companies.  One drawback to the use of series LLCs in real estate transactions has been the question of how the IRS would treat a series LLC; in effect, whether the IRS would view a series LLC as one entity or several.  Though not definitive, the IRS recently indicated in a private letter ruling that it would treat a series LLC as several entities (one entity for each series).  This ruling provides some insight as to the IRS’s intentions with respect to series LLC, but, unfortunately can not be relied upon as precedent.  The IRS needs to provide more guidance with respect to this issue. As always, before you consider or act upon any of these issues or opportunities you must consult quailed legal counsel.

With the credit crunch still clamping down on many existing and would-be commercial real estate developers, so-called hard money lenders are stepping up to finance deals.  Hard money lenders charge high interest rates for short-term financing of commercial real estate transactions.  Hedge funds are becoming a major player in this market.  Transactions involving hard money financing have included those centered around office buildings, hotels, retail stores and other commercial developments.  The interest rates are high (12% or more) but the financing tends to be more flexible.   

There is a common misunderstanding that money judgments obtained from courts outside of the United States can not be enforced against assets in the United States.  This misunderstanding stems from the fact that the United States is not a party to an international treaty regarding money judgments.  This fact, however, does not prevent individual states from adopting laws allowing for the recognition of foreign money judgments.  New York State has had a long practice of recognizing such judgments.  So long as the judgment meets certain reasonable criteria, an action to enforce a foreign money judgment can be successfully brought in state court.  Something to keep in mind as our economy becomes increasingly global.

The virtues of mixed-use buildings (i.e., buildings with both residential and retail/commercial uses), particularly in a downtown or village setting are highly touted, and rightly so.  Before you consider purchasing a mixed-use building, or refiguring an existing building to mixed-use, there are many factors that should be considered.  These factors include, but are certainly not limited to: building costs allocation between uses, utility/service costs, access, noise and odor controls, parking, hours of operation, and security.  All of these issues can be resolved in a well-crafted lease, but need to be thought of and discussed with counsel in advance.

For many purchasers of real property, existing owners and, sometimes, their legal advisors, title insurance remains something that they are either required (by their lender) or feel they have to purchase, but that remains a mystery.  A complete discussion of title insurance, its purposes, usefulness and failings, is well beyond the scope of a blog entry.  Suffice it to say, if you are purchasing, leasing or financing real property and facing the need for title insurance, don’t be afraid to ask questions of your title insurance agent or your attorney.  If you don’t get answers that you are comfortable with, find someone who can give adequate answers to your questions.  You should understand what you are purchasing and how the title policy will and will not protect you.

On a more advanced note, partnerships and limited liability companies that purchase real property should consider requesting a Fairway Endorsement and/or a Non-Imputation Endorsement to their title insurance policies.  Both of these endorsements will cost you a bit more money, but, depending on your situation, could provide valuable protection down the road.  Consult your legal advisor and discuss these options.

Green Leases are instruments that every landlord and tenant needs to understand and be prepared to negotiate. Today many landlords are building LEED-certified green buildings or remodeling existing buildings to meet LEED standards. For these landlords, the traditional lease will not address the necessary “green” issues.  Similarly, traditional lease provisions will not address the concerns and needs of tenants seeking to reduce their carbon footprints and meet their own sustainability objectives.  

 The answer for both landlords and tenants is the Green Lease.  Green Leases contain the provisions designed to increase energy conservation and promote sustainability that traditional leases lack.  For example, it is quite common for tenants to pay a pro-rata share of a building’s energy costs, eliminating much of the incentive for a tenant to reduce its individual energy consumption.  In a traditional triple net lease, what incentive does a landlord have to invest in energy efficient fixtures if the tenant is paying all of the energy costs?  Green Leases address issues such as these. 

As demands for green buildings and green rental space increase along with tenants’ sustainability objectives, it is critical for landlords and tenants to understand and negotiate green leases, and to work with professionals that have experience with and fully understand Green Leasing, LEEDs, and sustainability.   

A recent survey conducted by the Real Estate Roundtable shows a continuing decline in commercial real estate transactions across the United States.  One of the major causes of this decline is the unavailability of credit.  Unlike the residential sector, there has not been a rash of foreclosures in the commercial property world.  Instead, the scarcity of credit has resulted in a decline in property values and stopped many projects in their tracks.

In the residential world, it seems that Donald Trump will be bailing out former Tonight Show co-host, Ed McMahon, from the foreclosure mess he has found himself in lately.  Trump will reportedly purchase McMahon's home and lease it back to him.  While most people do not have Uncle Donald to help them out, there are alternatives to foreclosure.  The most important things to remember are (1) seek qualified counsel as soon as you feel yourself slipping under and (2) banks typically do not want to become property owners, and, therefore, there is usually some room to negotiate. 

Over 1,000 building professionals have earned the Certified Green Professional designation so far this year.  Building professionals include builders, remodelers and other service providers.  You can find a list of Certified Green Professionals by clicking the link below.

 http://www.nahb.org/builderremodelerdirectory

During the past several months, talk of taxing "windfall profits" enjoyed by the big oil companies has been quite popular among candidates for office as well as elected officials.  The editorial in today's Wall Street Journal takes this talk to task.  No need for me to write more, when the WSJ has so eloquently stated the problem.  Please read...

http://online.wsj.com/article/SB121780636275808495.html?mod=opinion_main_review_and_outlooks

President Bush signed the housing relief bill today, a bill he had previously threatened to veto.  This new law is designed to provide relief to qualified homeowners (perhaps as many as 500,000 nationwide) who are teetering on the edge of foreclosure.  The bill also contains provisions designed to bolster confidence in the Fannie Mae and Freddie Mac mortgage companies.  The Federal Housing Finance Agency, a new, independent agency created under the new law, will have jurisdiction over Fannie Mae and Freddie Mac, as well as the Federal Home Loans.

All of these provisions are intended to rescue qualified homeowners, lenders, and investors, from the perils each group faces after the collapse of the housing market. Whether or not this new law actually provides the relief intended remains to be seen.  What is known now, though, is that even if completely successful, the relief act will leave some 1.5 million homeowners out in the foreclosure storm. These owners do have choices beyond foreclosure.  Negotiating a deed in lieu of foreclosure with the lender, or short selling are two outs that troubled owners may be able to turn to.  Each has its pros and cons, and neither shields owners from FICO score damage, but these alternatives to foreclosure are worth exploring. 

Great news for upstate New York today.  IBM has announced that it will invest approximately $1.5 billion and create an additional 1,000 jobs in upstate New York.   The new investment will come in the form of an increased research presence and additional manufacturing operations.  New York State has pledged $140 million in support of IBM's endeavors. 

This investment is a major boost to upstate New York and the Tech Valley initiative.  Of particular importance is IBM's commitment to expand research and development initiatives in upstate New York.  R&D is a critical component to sustained economic development and must be sought after throughout upstate. 

The news regarding commercial real property from today's Wall Street Journal is disappointing, though far from shocking.  According to the report, companies are taking less office space driving office rent down in most markets nationwide.  The second quarter of 2008 saw the slowest growth in rental rates for commercial offices since the second quarter of 2005.  What little growth there was in rental rates has been wiped out by the increase in inflation (about 1% per quarter).  As businesses retract, properties available through the sublease market have naturally increased, further hurting office property landlords.

In other news, the WSJ reported steadily rising vacancies for retail properties, with the big box and grocery store anchored open air plazas being hit the hardest.  This is attributed to consumers spending less and the weak housing market.

Not good news, but not surprising.

Just before it left town this week, the New York State Legislature passed a bill that overhauls the current State brownfield redevelopment legislation. In a nutshell, the new legislation provides for a cap on the tax credits that are given to redevelopers that clean up brownfield sites.  This is in reaction to several large developments in the state that have realized close to $100 million in tax credits.  The legislation limits credits for manufacturing projects to the lesser of $45 million or six times the cost of cleanup, and caps credits for non-manufacturing projects at the lesser of $35 million of three times the cost of cleanup.  In addition to these caps, the legislation also increases the overall tax credits/incentives available for a project to up to half of the cleanup costs (the previous limit was 22%).

The rationale behind these changes is to protect the floundering State budget from tax credit abuses, and encourage true brownfield development upstate.  North Country developers need to take a careful look at the brownfield opportunities, engage competent attorneys and consultants, and take advantage of this legislation. 

State Comptroller Thomas DiNapoli recently issued an "Overview of the New York State Brownfields Cleanup Program."  After four and one-half years, implementation of the New York State Brownfields Cleanup Program has resulted in the cleanup of 44 sites across the state.  This "success" of the program has triggered some concern within the New York State Division of the Budget as several of the subject projects have accrued tax credits of over $100 million.  Many more sites are eligible, with 394 sites having applied to the program and 260 having been admitted.  Three of the sites enrolled in the Brownfields program are located in the North Country.

The Brownfields program is of concern to the Comptroller as the State faces a potential estimated liability of $3.1 billion for cleanup and redevelopment of brownfield sites.  The Comptroller has called for tax credit reform and the targeting of brownfield tax credits.

The Brownfields program should certainly be tweaked and adjusted, but it is a very useful program when it comes to economic development.  Many, if not most, of the properties included in the program simply will not be redeveloped if the program its economic incentives are eliminated.  

As for brownfields in the North Country, owners and developers should take a careful look at the benefits of the program and perhaps rethink the potential of their brownfield sites.  The benefits of redeveloping and reusing a brownfield over greenfield development are numerous.

A recent study conducted by Bizjournals, a division of American City Business Journals, provides further evidence of the link between strong economies and the presence of young professionals.  The study focused on the nation’s 67 largest metropolitan regions and confirmed a connection between a large young professional population and higher economic vitality.  In New York State, Albany ranked highest outside of New York City for young professionals.  Not surprising though, 15 out of the 20 top labor markets for young professionals were located in the southern and western portions of the country.  Despite its ranking, Albany’s deficit of young professionals between 1990 and 2005, resulted in an estimated annual loss of $82.3 million of disposal income for the area.

Perhaps even more disturbing, a recent study by the Federal Reserve Bank of New York revealed that the number of educated workers moving into the upstate region is lower than any other state in the country (New York State, as a whole, has the second-lowest rate of educated worker gain in the country – only Louisiana is worse).

All of this should tell us that we are doing something wrong, both as a region and as a state.  As a region, we in the North Country need to focus on creating a community that attracts and retains young professionals.  This is not an impossible dream.  Young professionals today place great emphasis on quality of life – something the North Country has in abundance.  The recreational opportunities here alone are extremely attractive to the younger set.  For years, our firm has benefited from young attorneys moving from Boston, Washington D.C., and New York City seeking a better quality of life.  Of the nearly 80 attorneys in our firm, many have either returned or relocated to this region for that very reason. 

The natural resources and recreational opportunities offered by the North Country provide a good start, but will not be enough if we are to successfully attract and retain young professionals.  Issues such as the revitalization of downtown and our waterfront, and the attraction of high tech employers must be put in the forefront.  Groups such as the Adirondack Young Professionals (ADKYP) must be supported by local businesses.  ADKYP is becoming a critical resource to young professionals in the region, offering both educational and social opportunities.  As a start up organization, community support of ADKYP is necessary.  As a business leader, have you talked to the leaders of this group and asked how you can help? The business community should embrace ADKYP (and similar organizations), step up to the plate and make an investment (monetary and other) in the future. 

We have the potential, but we also have a lot of work to do.

The New York State Labor Department has attempted to require farmers who depend on seasonal workers (many from Mexico and Jamaica) to harvest their crops, to first look to Puerto Rico to fill the seasonal jobs.  Apparently, the “logic” behind this initiative is that Puerto Rico’s unemployment stands at 9% and, as U.S. citizens, the workers would not require H-2A visas.  New York farmers, however, are not in favor of this initiative as they prefer to hire the seasonal workers that they have depended upon for years, and that have experience with particular crops.

The Times Union article, featuring Leonard J. D'Arrigo,one of Whiteman Osterman & Hanna LLP’s four full-time immigration law attorneys, can be accessed by clicking on the link below.

http://timesunion.com/AspStories/story.asp?storyID=692632&category=BUSINESS&newsdate=6/1/2008

The Times Union reported on Friday that the Paterson administration is putting a major economic deal together for IBM that will expand the company’s Fishkill chip fab facility as well as increase research activity at Albany Nanotech.  Together, the State and IBM will reportedly invest over $1 billion in this newest initiative.

In Saratoga County, our client, Advanced Micro Devices, Inc (AMD), is working with the Town of Malta to finalize the ground rules for the development of AMD’s $3.2 billion chip fab facility at the Luther Forest Technology Campus. AMD’s plans for the site allow for up to three chip fab facilities comprised of nearly 1 million square feet each.

These projects will have a significant economic impact on Tech Valley, and further cement Tech Valley (comprised of 19 counties, including Clinton, Essex and Franklin Counties) as a leading global competitor for technology-related development.

Just back from the gym where I read a Wall Street Journal briefing entitled “Credit Crunch Smolders North of U.S. Border”.

The Journal reports that increasing provisions for bad debt has resulted in falling income for several Canadian Banks including Bank of Nova Scotia and Bank of Montreal. Net income is also expected to decrease when Toronto-Dominion Bank issues its report today.   The Journal reporter concludes her article with a prediction that the news to our North is likely to be neither “good nor dismal.”  Let’s hope she is right.

This is reminder that as “Montreal’s U.S. Suburb” we have the potential to share in both the prosperity and the down-turns of our northern neighbors, and that we must always remember to keep one eye on Wall Street and one to the North.

The United States Supreme Court yesterday broadly interpreted two federal civil rights laws and held that employees are protected from retaliation resulting from complaints of discrimination.  In Gomez-Perez v. Potter, and CBOCS West Inc. v. Humphries a majority of the Justices ruled that while the federal laws in question did not explicitly provide for protection against retaliation, Congress presumably intended such protective measures when drafting the legislation. The two laws in question were the portion of the Age Discrimination in Employment Act applicable to Federal workers, and the Civil Rights Act of 1866 commonly known as Section 1981.  While the holding in Gomez-Perez affects only federal employees, private employers should take note of the CBOCS West case as CBOCS West Inc., is the company that operates the Cracker Barrel restaurant chain, and Section 1981 is applicable to private employers.  Both rulings expand and clarify the rights of employees in the workplace.