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ISSUE HIGHLIGHTS Volume 30, Issue 23 December 14 - 27, 2018
Partners with Cybul Cybul Wilhelm on the design of expansion DresdnerRobincompletesworkon$25M Baldor Specialty Foods HQ expansion
H
sion is complete and is fully operational. Construction is nearing completion on the sec- ond phase, with 30 additional loading docks being added to the facility. Dresdner Robin was cho- sen for the expansion project because of its history and ex- pertise in land-use consulting and design. Beginning work in 2015, the firm created a multi-phase plan for design and construction at the site. The parcel of land is owned by the New York Economic De- velopment Corp., so Dresdner Robin worked with the city to gain approvals and permits on all construction and engineer- ing services on the site. Dresdner Robin partnered with the architectural firm, Cybul Cybul Wi lhelm (CCW) , on the design of the expansion. Prince William Board of Coun- ty Supervisors. “By providing a designated Data Center Opportunity Zone and posi- tive business climate for high- caliber enterprise, the County provides an ideal environment that stimulates commercial growth which benefits busi- nesses and residents alike.” Northern Virginia remains the largest data center mar- ket in North America, with Prince WilliamCounty having a significant share. In terms of total volume, Northern Virginia still stands out as a leader in demand, notably in cloud activity, said JLL . To date, Prince William County has logged 34 data center projects amounting to $6.9 billion in capital invest- ment and 967 new jobs, as well as hundreds of tech and con- struction jobs. The County’s expansive data center market exists in tandem with many other technology-orientated assets, including George Ma- son University, which has a prominent science and tech- nology campus in Innovation Park.
UNTS POINT, NY — Dresdner Robin announced the com-
SPOTLIGHTS
pletion of its engineering and general design work on a $25 million, 110,000 s/f expansion of the Baldor Specialty Foods headquarters, storage and distribution facility in Hunts Point. The design increased floor space to 270,000 s/f, cre- ating 300 new jobs and adding over 50 new delivery trucks to accommodate increased production. “Dresdner Robin’s incred- ible design added 42 loading docks and 300 parking spaces to the facility and they worked diligently to ensure construc- tion did not interrupt our 24/7 operation,” said Michael Muzyk, president, Baldor Specialty Foods. “We are very happy that our innovative design will P R I N C E W I L L I AM COUNTY, VA — The Prince William Board of Coun- ty Supervisors a nnounced that a division of Corporate Office Properties Trust (COPT) plans to construct two new data center facilities in the Data Center Opportunity Zone Overlay District in In- novation Park, Prince William County. Construction of the first building has begun. Prince William County’s
CRE LAW 7-11A
NORTHERN NEW JERSEY 5-12B
Baldor Specialty Foods headquarters
help Baldor better serve its diverse set of customers,” said JosephMele , director of engineering, Dresdner Robin. “Baldor has some of the best food in the world going out to prime restaurants across the country. Our expert team worked hard to minimize disruptions to the facility. We
created an engineering time- line that allowed Baldor to remain open 24 hours per day, seven days per week during the design and construction process.” The construction and en- gineering of this project is being done in two phases. The first phase of the expan-
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Corporate Office Properties Trust to build Two Data Centers in Innovation Park, PrinceWilliamCounty, VA
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2019 MAREJ EVENTS For speaking and sponsorship information, please contact: Lea at 781-740-2900 or lea@marejournal.com
© Roger Snyder
Innovation Park, Prince William County aerial
location puts it amongst the densest concentration of fiber networks in the world, the fed- eral government, commercial enterprise, and consumers. The County’s Data Center Opportunity Zone Overlay District offers over 10,000 acres designated to support data centers and provides the lowest computer tax rates in the region. “We are delighted to help facilitate COPT’s expansion in PrinceWilliamCounty and one of the industry’s top markets in North America,” said Corey Stewart , Chairman, Prince
William Board of County Su- pervisors. “Prince William County is a good choice for COPT to ex- pand because of the abundant availability of land, power and low latency fiber connectiv- ity found within Innovation Park,” said COPT CEO, Steve Budorick . “The County is a good partner in supporting our service delivery to our customers.” “We are pleased to sup- port COPT’s growth in the County and within Innovation Park,” said Jeanine Lawson , Brentsville District Supervisor,
Directory DelMarVa.......................................................... 3-6A Financial Digest..............................................17-19A Organization Events. ...........................................20A Business Card/Billboard Directory.................... IBC-A New Jersey................................................. Section B Northern New Jersey. ......................................5-12B Pennsylvania.............................................. Section C www.marejournal.com
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NEW TO MARKET - FOR SALE Centrally Located in Allentown’s NIZ & Opportunity Zone Call for Offers – January 16, 2019
Feinberg Real Estate Advisors, LLC is pleased to offer for sale 546-548 Hamilton Street, Allentown, Lehigh County, PA. This stately five-story property is in the heart of Allentown's revitalized core. This is a great opportunity to participate in the revitalization of the City of Allentown. · Located in Allentown’s Neighborhood Improvement Zone · Located in the newly created Qualified Opportunity Zone · Adjacent to a parking deck and new residential properties · Located one block from the federal & county courthouses · Restaurants & retail shopping within steps of the property · One-of-a-kind tax advantages · One block to PPL Center, a sports & entertainment complex · One of a few of the county’s dual tax advantage zones · The property offers an excellent redevelopment opportunity
For additional information please contact: Cindy McDonnell Feinberg at 610-709-6231 or Gregg Feinberg at 610-709-6233.
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Additional Tours on Request Cindy McDonnell Feinberg, CCIM – 610-360-9733 or cfeinberg@feinbergrea.com Gregg M. Feinberg, Esq. – 484-201-6645 or gfeinberg@feinbergrea.com www.feinbergrea.com
1390 Ridgeview Drive, Suite 301, Allentown, PA 18104 610-709-6233
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Mid Atlantic Real Estate Journal
Mid Atlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Account Executive ........................................... Steve Kelley Account Executive ............................................. Kim Brunet Account Executive ........................................ Marisol Chase Account Executive .........................................Alyson Parker Senior Editor/Graphic Artist ..........................Karen Vachon Office Manager ...............................................Kerrin Devine Contributing Columnists ................................Riggs Kubiak Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 350 Lincoln St., Suite 1105 Hingham, MA 02043 USPS #22-358 | Vol. 30, Issue 23 Subscription rates: $99 - one year, $148 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion 781-740-2900 | Fax: 781-740-2929 www.marejournal.com
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Riggs Kubiak
PropTech in 2018, Looking Back and Looking Ahead
$4,200,000 $3,650,000 $22,000,000 Permanent Office Refinance Permanent Office Refinance Student Housing Construction Financing Moorestown, NJ Blue Bell, PA Kutztown, PA Non-Recourse,75%, 10/25, 4.25% 75% LTV,5/25,5.0% 90% + LTC, 75% LTV, 24 Months, I/O, 12%
A s we begin to close out the year and plan for 2019, we thought it might be interesting to look back and then, look forward. What is the impact of technol- ogy developed specifically for commercial real estate on our industry, and where will it go from here? CREtech, whose mission is “to connect the commercial real estate and tech sec- tors, bringing a new age of innovation and growth to the industry, collected and shared a mid-year outlook; their assessments describe a landscape that didn’t exist a decade ago. Given rapid de- velopment cycles along with the rate at which commercial real estate and technology continue to evolve, who can imagine what this industry will look like in the next 3-5 years’ time? 2017: Investment in CRE Technology, aka Prop- Tech • In its 2017 annual report, RE:Tech reported that VC
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The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
infusion of capital in the real estate technology was a total of nearly $12.6 billion, “rep- resenting a 92% increase in global investments, the larg- est fiscal year in real estate tech history.” 2018: The Year of Adoption, Right? • In 2018, investments in proptech continued to grow, and those investments are beginning to show dividends. But while many understand the importance of PropTech, less understand how to imple- ment it. • According to KPMG’s Global PropTech Survey, 93% of respondents say they should be engaging with PropTech, but 1/3 of all par- ticipants had a plan in place
for how to do so. 2019:
Identifying What Matters • Essentially, decisionmak- ers will have the final say regarding which technologies are need-to-have versus those which ones are nice-to-have. • Technology experts will determine how to integrate their tech stack to include a robust set of technologies and technology innovators will continue leading the way by solving problems they know are on the horizon because they understand their mar- kets and actively collaborate with partners. Riggs Kubiak is the CEO & co-founder of Honest Build- ings, a project management platform built for real estate owners. spent five years with Winick Realty Group, specializing in retail brokerage and advisory services. Fabrikant is a member of the Real Estate Board of New York (REBNY), and brings his well-earned reputation for honest and integrity to Breslin Realty, where he will continue to focus on landlord and tenant representation. financier of transitional proper- ties; a purchaser of performing, sub- and non-performing debt; and a mezzanine and equity investor. Notable transactions have included a bridge loan se- cured by a mixed-use land site in Bonita Springs, FL and a first mortgage bridge loan to facilitate the acquisition of a Woodbridge. site approved for construction of 355 residential units. In addition, Case final- ized a direct property acquisi- tion of a 16-unit rental building on the Bushwick/Bed-Stuyves- ant border in Brooklyn, NY.
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Case Real Estate Capital celebrates Five-Year Anniversary
See brochure for details! pal. “Those core competencies enable us to continue providing situational capital to property owners and developers, even as many investors pull back due to questions on the economy and pace of interest rate hikes as well as vulnerabilities within the retail and office sectors. We remain focused on solving prob- lems and creating opportunities for our clients.” Since its establishment in 2013, Case has steadily ex- panded to meet the middle market’s need for situational capital. The company is active as a high-yield private lender; a
ROCHELLE PARK, NJ/ MIAMI, FL — Case Real Es- tate Capital, LLC (Case) is marking its five-year anniver- sary with plans for further stra- tegic growth. The northern NJ- based company concentrates on deals in the $2.5 million to $40 million range for transitional assets located in the NY metro area and south Florida as well as in the Northeast and Mid- Atlantic regions. “At Case, we have a disci- plined approach, industry ex- pertise and access to funding,” said Sanford Herrick , Case’s founder and managing princi-
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St. John Properties completes leases totaling 35,000+ s/f
Acquired in a joint venture with Blackfin RE Investors DivcoWest opens DC office; acquires 392-unit apartment W ASHINGTON, DC — DivcoWest Real Estate Services,
LLC, (DivcoWest) , a real estate investment firm has opened an office inWashington, DC at 1620 L St., NW. San Francisco-headquar- tered DivcoWest also has offices in Boston, Los Angeles and New York. The Washington, DC office will be led by managing direc- tor Ryan Friend . The office will focus on sourcing regional acquisition opportunities and management of the firm’s exist- ing portfolio. “This new office demonstrates our commitment to the Wash- ington, DC market, which we believe to be one of the most at- tractive growth markets for the innovation economy,” said chief executive officer, Stuart Shiff. “We look forward to leverag- ing DivcoWest’s relationships throughout the country to continue the growth of our platform and portfolio in the region,” Friend added. Since March of 2017 Div- HAGERSTOWN, MD — Pessin Katz Law, P.A. (PK Law) represented K&S Capital in the $9.25 million acquisition of 19224 Longmeadow Rd., a nearly 297,000 s/f industrial/ warehouse building located in Hagerstown. H erbert Bur- gunder III , member, PK Law represented K&S Capital and the transaction was brokered by DerekHeckman of ReMax Commercial who represented the seller. Financing was ar- ranged by Brendan Harman at MacKenzie Capital and the lender was ACNB Bank . The building is 100% leased by Blind Industries and Services of Maryland. Contained on 20 acres of land, the single-story building features 30 ft. clear ceiling heights throughout one-half of the structure, and twen- ty foot clear ceiling heights throughout the balance. The project, which has rail access and fifteen loading docks, is
11155 Dolfield Rd. in Owings Mills
BALTIMORE, MD — St. John Properties, Inc. , a full-service commercial real estate development and in- vestment company, has re- cently completed three leases totaling more than 35,000 s/f of space in Baltimore County. American Pool Enterprises is expanding and relocating to 11155 Dolfield Rd. in Owings Mills and will now lease 15,000 s/f of space; USA Marble and Granite, LLC leased 12,000 s/f of space within the Timonium Business Center in Timonium and Erickson Living signed a lease for 8,100 s/f of space at the Beltway West Corporate Center in the Catonsville sec- tion of Baltimore County. American Pool Enterprises provides pool management services to apartment and active adult communities, as well as country, swim and golf
clubs and military bases. USA Marble and Granite provides a wide range of marble, gran- ite and quartz countertops for kitchens and bathrooms. Erickson Living, which owns and operates a number of senior living communities throughout ten states, will utilizing the space at Beltway Corporate Center to house administrative functions. “Leasing momentum re- mained brisk throughout the summer, with our Baltimore County portfolio the ben- eficiary of significant leasing activity,” said Richard Wil- liamson , senior vice presi- dent, leasing and marketing for St. John Properties. “These recent leases demonstrate the diversity of companies that are choosing St. John Proper- ties to satisfy their real estate requirements.”
Avalon Woodland Park
coWest has completed four ac- quisitions in the Washington, DC area on behalf of multiple investment partners. These investments include 1620 L St., NW, a 171,000 s/f office building in the CBD sub- market, 1133 15th St., NW, a 213,000 s/f office building on the border of the CBD and East End submarkets and 1255 23rd St., NW, a 350,000 s/f office building in the West End submarket. Since acquisi-
tion, DivcoWest has focused on enhancing the assets through capital improvements and leasing. More recently, DivcoWest completed the acquisition of Avalon Woodland Park, a 392- unit apartment community in Herndon, VA. Acquired in a joint venture with Arlington, VA-based Blackfin Real Es- tate Investors , the partner- ship has renamed the commu- nity Adara Herndon.
PKLaw represents K&SCapital in acquisition of 290,000 s/f warehouse building for $9.25 million
CREGachieves 100%occupancy at Baltimore Crossroads @95
Urban Air Trampoline Park
19224 Longmeadow Rd.
BALTIMORE, MD — Ches- apeake Real Estate Group, LLC (CREG) has achieved 100% occupancy at Baltimore Crossroads @95 with the 22,700 s/f expansion of Urban Air Trampoline Park within 11501 Pocomoke Court. Since initiat- ing development activities at the mixed-use business commu- nity in the White Marsh section of Baltimore County in 2006,
CREG has constructed eight buildings comprising nearly 1.4 million s/f of space on 239 acres. In 2016, Urban Air Tram- poline Park signed a lease for 30,000 s/f of space within Bal- timore Crossroads @95 to house its entertainment concept. The company is nearly doubling its size within the 100,900 s/f building to satisfy customer demand.
within close proximity to I-81. The central business district of downtown Hagerstown is located five miles away. Blind Industries utilizes the building for the manufac- ture and distribution of paper products including napkins, facial tissue, paper towels and toilet paper. Established by the Maryland General Assembly
in 1908, Blind Industries and Services of Maryland provides diverse employment opportu- nities for over 600 associates, many of whom are blind or visually impaired, and manu- factures more than 700 prod- ucts at locations in Baltimore, Cumberland, Federalsburg, Hagerstown, Salisbury and Raleigh, North Carolina.
4A — December 14 - 27, 2018 — M id A tlantic
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The Residences at Lighthouse Cove in Dewey Beach, DE Lighthouse Cove Development Co. announces record sales season
D
EWEY BEACH, DE — The Lighthouse Cove Development
Company announced a record- setting sales season for the pop- ular condominium community known as The Residences at Lighthouse Cove. Over the last six months, the community has sold 16 homes, with only five of the 27 units constructed during the current phase still avail- able. The recent sales activity marks the best sales season since the resort development hit the market in 2012. The remaining four homes consist of three two-bedroom homes, as well as a one-bed- room, with prices ranging from $439,900 to $559,000 while offering direct access to the third-floor rooftop pool, private balconies and terraces, on-site garage parking and other popu- lar Lighthouse Cove amenities. “When we began planning the redevelopment of the cur- rent Lighthouse Cove property nearly a decade ago, we were driven by the immense poten- tial we saw in Dewey Beach as a destination for tourists, families, retirees and other visi- tors alike,” said redevelopment partner, Harvey Hanna &
The Residences at Lighthouse Cove rendering
Associates president Thomas Hanna . “The incredible sale pace we have experienced over the last six months is a testa- ment to that vision, and we look forward to maintaining that momentum as we move closer to the final phase of our plans at this site.” Construction on the final phase of The Residences at Lighthouse Cove began in No- vember 2017, and will include 30 additional bay-front condos, the brand new Lighthouse Cove Event Center, a fully re- designed and remodeled Light- house Restaurant, additional parking in the interior garage and a first-ever recreational bay walk. The redevelopment also includes Delaware’s first- ever Hyatt Place Hotel, which
opened in October 2013. The full project is expected to be completed in 2019. “The consistently robust sales at The Residences are setting a new market pace in Dewey Beach, as demand is increasingly comparable to neighboring Rehoboth Beach. Thanks to recent upgrades in accommodations, a growing list of new restaurants and gastro- pubs, and the Dewey Business Partnership’s popular public events have all contributed to its continuously rising appeal among homebuyers,” said Joe Maggio , Owner of JoeMaggio Realty . “We expect that trend to continue as the next phase of the Lighthouse Cove develop- ment is delivered in the coming months.”
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KWCommercial completes sale of 8 Nebraska Road
Virginia Beach Economic Dev. Authority approves grant BMZ Group selects Virginia Beach to expand U.S. mfg. HQ
“The mobile home community remains hot. This offering pro- vides the new owners stable and continuous cash flow for years to come.” As a specialist in the manu- factured housing industry, Martin completed the transac- tion for this mobile home park with the best interest of the owners in mind. promote and enhance the im- age of the rental housing in- dustry, MMHA and its owner manager members through government relations and stra- tegic marketing and communi- cations programs.
WILMINGTON, DE — Park Place Mobile Home Park is a multi-family property located at 8 Nebraska Rd., Wilmington. The property con- sists of 179 sites on 18 acres and is serviced by both mu- nicipal water and sewer. On October 5th, 2018, Buddy Martin completed the sale for $13.1 million. Martin stated OWINGS MILLS, MD — The Maryland Multi-Hous- ing Association (MMHA) an- nounced that Jessie Keller has joined its team as government and community affairs manager. In this role, Keller will help
V
IRGINIA BEACH, VA — BMZ Group , that opened its U.S.
headquarters in Virginia Beach in 2011. The company has selected a new location in Virginia Beach at 1429 Miller Store Rd. to expand its manu- facturing operations. BMZ will retain 21 full-time jobs in Virginia Beach and create 30 new jobs with annual salaries of $42,179. The Virginia Beach Eco- nomic Development Au- thority approved an Economic Development Investment Pro- gram grant in the amount of $170,000 based on the capital investment and the number of new jobs created with the expansion. BMZ will invest $2,806,000 in Virginia Beach with real estate, construction, machinery and tools. “BMZ has grown significantly in the past two years,” said Vir- ginia Beach Economic Devel- opment Business Coordinator Michelle Chapleau . “BMZ’s relationships with the quality vendors like STIHL and the availability of a highly skilled workforce helped us compete successfully for this expan- sion project. This is the second EDIP grant we’ve awarded, and it’s clear this investment has paid off in keeping a major international manufacturing headquarters here in addition to creating more jobs.” BMZ’s current location at 2656 Lishelle Road comprises 16,500 s/f and has increased sales volume from less than $4 million in 2016 to approximate- ly $10 million in 2018. The new location offers 24,000 s/f of class B industrial warehouse space, and the expansion will accom- modate new customers and increased production needs. Additionally, BMZ plans to pur- chase new highly automated manufacturing equipment. Vir- ginia Beach competed against BMZ’s facilities in China and Poland for this project. BMZ’s U.S. facility handles North American sales, as- sembly, distribution, research and development of primar- ily lithium ion battery units for a variety of industry sec- tors. The batteries are used in power tools, outdoor power equipment, material handling, medical devices, wind and solar energy, household items and e-bikes. BMZ also imports lithium ion battery cells from its manufacturing facilities in Asia and Europe.
Keller joinsMMHAasGovernment and community affairs manager
1429 Miller Store Rd.
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By Brenda Muller, Asset Preservation “Fix-up” costs before sale & 1031 Exchanges
I
pense which must be depre- ciated: • Improvements: A tax- payer must capitalize any expense made to improve an investment property. An ex- pense is for an improvement if it results in a betterment to the property, restores the property or adapts the prop- erty to a new or different use. • Betterments: Expenses that may result in a better- ment to a property include expenses for fixing a pre- existing defect or condition, enlarging or expanding the property or increasing the capacity, strength or quality of the property. • Restoration: Expenses that may be for restoration include expenses for replac- ing a substantial structural part of a property, repairing damage to a property as a result of a casualty loss or rebuilding the property to a like-new condition. • Adaptation: Expenses that may be for adaptation include expenses for alter- ing the property to a use that is not consistent with the intended ordinary use of the property when initially purchased or held for invest- ment. Costs that can be deduct- ed as current expenses are amounts paid for incidental repairs and routine mainte- nance which are not added to the cost basis. Repairs are usually one-off fixes that help keep the property in good working condition and habitable. A real estate in- vestor can deduct the cost of minor repairs from the cur- rent year’s tax liability, but not from their capital gain tax liability. The IRS clari- fies in the 1040 Schedule E Instructions that “repairs in most cases do not add signifi- cant value to the property or extend its life.” For more information on basis and adjusted cost basis, read IRS Publication 551, Basis of Assets. For more informat ion about 1031 exchanges and how they can help Mid-At- lantic investors acquiring better performing real estate investment properties defer capital gain taxes, contact the author. Brenda Muller is the Mid-Atlantic division manager at Asset Preser- vation, Inc.
t is common for many Maryland and Virginia real estate investors
the 1031 exchange for the costs associated with im- proving or repairing the property immediately before the sale?” The answer is “no, not without generating a tax consequence”. The reason for this is that any exchange proceeds an investor re- ceives from a 1031 exchange are considered “boot” and are generally taxable to the extent the investor has a capital gain tax consequence. However, improvements an investor makes to improve a relinquished property can be added to the “cost basis”
of the property. In the most simplistic terms, cost basis is the amount a property is worth for tax purposes. The cost basis changes over time and becomes known as the “adjusted basis.” The ad- justed basis can be increased by capital improvements made to the property, and is reduced by depreciation deductions taken during the ownership period and other factors. Generally, the cost of add- ing capital improvements having a useful life of more than one year is added to
the adjusted cost basis and are referred to as a “capital expense” and must be capi- talized and depreciated over multiple years. An improve- ment includes enhancements that add value to the prop- erty, increases its useful life or adapts the property to a new use. Capital improve- ments can include room ad- ditions, new bathrooms, new roofs, decks, fencing, wiring upgrades, driveways, walk- ways, plumbing upgrades, and kitchen upgrades. The IRS uses the categories be- low to define a capital ex-
to make re- pa i r s , up - dates, and i m p r o v e - ments to en- hance a re- l inqui shed property in preparation f or l i st ing
Brenda Muller
with a real estate agent or broker. A commonly asked question by investors in the Mid-Atlantic region is, “Can I be reimbursed from
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Real Estate Journal — Commercial Real Estate Law — December 14 - 27, 2018 — 7A
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C ommercial R eal E state L aw By Thomas M. Letizia & Kahn R. Wiedis of Pepper Hamilton LLP NJ Court Rules Incomplete Development Application Not Protected by Time of Application Rule
T
he New Jersey Legis- lature amended the Municipal Land Use
approval and a deviation from a conditional use standard (or “d(3)”) variance. On May 23, 2013, the mu- nicipality introduced an ordi- nance that eliminated garden apartments as a permitted conditional use in the GB- Zone. The ordinance was adopted on July 16, 2013, and became effective on August 5, 2013. One day before the new ordinance was adopted, Dun- bar submitted an application for site plan approval and a (d)(3) variance. On August 7, 2013, two days after the ordinance went into effect, the zoning officer notified Dunbar that its application was in- complete pursuant to the new ordinance and provided a list of items needed for complete- ness. In addition, Dunbar was told it had to apply for a use variance because garden apartments were no longer permitted in the GB-Zone. On appeal to the zoning board, Dunbar argued that its application was complete upon submission and was therefore protected under the TOA Rule. Dunbar prof- fered expert testimony that, while the application lacked some items in the checklist ordinance, the application was still sufficient to receive the benefit of the TOA Rule. The zoning board denied the appeal. Dunbar filed suit, and the trial court reversed the board’s decision, finding that Dunbar submitted enough information to provide for a meaningful review of the application and therefore was protected by the TOA Rule. The municipality appealed the lower court’s decision, and the Appellate Division reversed. The New Jersey Supreme Court ulti- mately took up the question of whether an incomplete
application triggers the TOA Rule’s protections. New Jersey Supreme Court Ruling Before the adoption of the TOA Rule, the time of decision rule was the governing law in New Jersey. That rule required zoning boards and reviewing courts to apply the ordinance in effect at the time of their de- cision. Under the old rule, mu- nicipalities were free to block a proposed development by amending zoning ordinances after an application had been filed, even in direct response to the application. In order to prevent municipalities from responding to development applications by changing their ordinances to frustrate a proj- ect, the TOA Rule was enacted. In Dunbar, however, the court held that an application for development must contain the required information and documents listed in the mu- nicipal ordinance to benefit from the TOA Rule’s protec- tions. This means that an ap- plication is incomplete upon submission if it lacks any of the documentation required by the ordinance. The court reasoned that the terms used in the TOA Rule are to be construed in ac- cordance with the definitions of the MLUL. Therefore, the term “application for develop- ment” in the TOA Rule must be interpreted to mean “the ap- plication formand all accompa- nying documents required by ordinance.” N.J.S.A. 40:55D-3. In the court’s view, this defini- tion provides a clear and objec- tive standard for advancing the MLUL’s goal of statewide consistency and uniformity in land use decisions. The court went on to indicate that municipalities must be given discretion in making de- terminations as to the precise contents of an application for
development. However, the court did indicate the need for some practical limitations on these determinations based on an application’s failure to include all of the required materials. First, an application is not “incomplete” based on a mu- nicipality’s requiring a “correc- tion of any information found to be in error and submission of additional information”. N.J.S.A. 40:55D-3. Second, if the information that is re- quired by the ordinance is not pertinent, the applicant may request a waiver. Id. Submis- sion of an application will provisionally trigger the TOA Rule if a waiver request for one or more items accompanies all other required materials. If the board grants the waiver, the application will be deemed complete (in which case the TOA Rule would be triggered). On the other hand, if the board denies the waiver, its decision will be subject to review (and presumably the application would not have the protection of the TOA Rule). In applying the above analy- sis to Dunbar’s application, the court explained that the municipal ordinance contained a list of the information and materials required for site plan and variance applications. Dunbar was notified that its application did not include “all accompanying documents re- quired by ordinance” and was thus “incomplete.” The court further noted that, because the application was incomplete and no waiver was sought by Dunbar, the application could not benefit from the TOA Rule. The court concluded that Dun- bar’s application was properly subjected to the new zoning ordinance that prohibited the proposed garden apartment use.
Implications While the court’s opinion relies on the legislative intent of the MLUL to promote state- wide consistency and unifor- mity, it essentially ignores the TOA Rule’s legislative history, which included removing the word “complete” from the fi- nal text of the 2011 bill so as not to make the triggering of the TOA Rule contingent on the filing of a “complete” ap- plication for development. A legislative remedy is clearly needed to carry out the origi- nal intent of the TOA Rule. Until that happens, in light of Dunbar, developers will be faced with the ongoing struggle with municipalities over whether or not their filed applications are complete and can receive the benefits of the TOA Rule. Accordingly, extra diligence is required to ensure all the information set forth on the adopted municipal checklist is provided or that specific submission waivers are sought for any items not included. However, even then, a municipality can deny the waiver request, making the application “incomplete” and subject to any new zoning regulations. A developer’s only recourse is to appeal the waiver denial in hopes of eventually gaining the protec- tions of the TOA Rule. Given the uncertainty that now surrounds the application of the TOA Rule, developers are advised to consult with their legal counsel. Thomas M. Letizia is Partner at Pepper Hamil- ton LLP. Kahn R. Wiedis, 2018 Summer Associate, Pepper Hamilton LLP (Mr. Wiedis was a 2018 summer associ- ate in Pepper’s Philadel- phia office and is not yet admitted to practice.)
Law (MLUL) in 2011 to replace the former “time of decision ru l e ” wi th what is com- mo n l y r e - ferred to as the “time of application
Thomas M. Letizia
rule” (the TOA Rule). N.J.S.A. 40:55D-10.5. The TOA Rule provides that development regulations in effect on the date of submission of an ap- plication shall govern the review of the application, not- withstanding the subsequent adoption of a new zoning or- dinance by the municipality. But must the application be “complete” upon submission to trigger the protections of the TOA Rule? On June 20, the New Jersey Supreme Court in Dunbar Homes, Inc. v. Zon- ing Board of Adjustment of Franklin Township ruled that the answer is “yes.” The effect of the Dunbar decision is that the determination of whether a submitted development ap- plication receives the benefit of the TOA Rule is now left to the discretion of municipal officials and boards — an outcome the TOA Rule was intended to avoid. Background Dunbar involved a 276-unit garden apartment complex owned by Dunbar Homes, Inc. in the general business zone (GB-Zone) of Franklin Town- ship. Dunbar sought approval to develop an additional 55 apartments, which at the time was a permitted conditional use in the GB-Zone. As such, construction of the apart- ments required submitting an application for site plan
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SarahYocum Rider, Barley Snyder....................................................................................................................................................... 8C
JessicaT. Zolotorofe,Ansell Grimm &Aaron, PC............................................................................................................................... 9C
Scott C. Butler, Esquire, Kaplin Stewart....................................................................................................................................... 10-11C
8A — December 14 - 27, 2018 — Commercial Real Estate Law — M id A tlantic
Real Estate Journal
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C ommercial R eal E state L aw By Sarah Yocum Rider, Barley Snyder Letters of Intent - Are they Worth the Time and Risk?
etters of intent are of- ten considered a nec- essary first step in a commercial real estate transaction, such as an acquisition, sale or lease. Parties, how- ever, should carefully con- sider wheth- er entering into a letter of intent is worth the time and risk. Agreement on the basic terms of a transaction in a let- ter of intent tends to facilitate L Sarah Yocum Rider
agreement on the remaining terms and typically makes the parties more committed to finalizing a deal. However, a poorly drafted letter of intent, particularly one with ambigu- ous terms – or lack of clear, non-binding language – will often impede a transaction or cause the parties to waste time and money. Letters of intent are, when drafted correctly, non-binding documents that outline key terms of a business deal, while leaving the remaining issues (and the details of the agreed upon terms) to future negotia- tion and drafting. Many letters
of intent include a defined length of time during which the parties will negotiate the comprehensive agreement, whether it be a purchase agreement or lease. The letter of intent should state that it will automatically terminate after that time period expires or, that either party may ter- minate the letter of intent at any time thereafter by provid- ing written notice. To avoid a letter of intent from legally binding the par- ties, it is important to include a separate provision clearly stating that the provisions contained in the letter are
not legally binding. Although a letter of intent is typically non-binding, it is very com- mon for certain provisions in the letter to bind the parties, such as confidentiality, exclu- sivity/no shop and brokerage payment provisions. In the case of confidentiality, make sure this provision does not preclude seeking professional assistance from advisers, such as attorneys, accountants or prospective lenders. These binding provisions should be carefully drafted so it is completely clear that they are independent, legally binding obligations and are enforce-
able. Another common provision in a letter of intent is an ob- ligation to negotiate in good faith. It is imperative, how- ever, that this obligation to negotiate in good faith not be included as a binding provi- sion. If it were, one party could claim that by not following through with the transaction, the other party breached the good faith obligation and could be subject to legal action. Although letters of intent are often useful in establishing business terms of a purchase agreement or lease, parties should consider creating a simple term sheet and pro- ceeding directly to a compre- hensive agreement. If you do decide to enter into a letter of intent, it is important to have the letter of intent reviewed by legal counsel to make sure you are adequately protected. If you have any questions re- garding letters of intent, feel free to call us. Sarah Yocum Rider is an attorney at Barley Sny- der in central Pennsylva- nia and a member of the firm’s Real Estate Practice Group. AJC NJ honors Hammer of Brach Eichler LLC MILLBURN, NJ — The New Jersey Region of AJC will honor Alan R. Hammer , tory award dinner on Monday evening, December 10th at the Hilton Short Hills in Short Hills, New Jersey. The National Judge Learned Hand Award was established by AJC in 1964 to honor the memory of Judge Learned Hand for his extensive range of decisions which he ten- dered in more than 2,000 cases throughout his lifetime, especially those centering on questions of constitutional rights and anti-trust legisla- tion. The annual award was created to cite leaders in the legal profession for excellence and for their contributions to the legal community. Alan R. Hammer a memb e r o f B r a c h E i c h l e r LLC , wi th i t s p r e s t i - g i o u s Na - tional Judge L e a r n e d Hand Award at a celebra-
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Real Estate Journal — Commercial Real Estate Law — December 14 - 27, 2018 — 9A
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M id A tlantic
C ommercial R eal E state L aw By Jessica T. Zolotorofe, Ansell Grimm & Aaron, PC Urgent Care Use
T
he popularity of ur- gent care walk-in clin- ics is on the rise, now
their local communities,” said Elizabeth Corey, GoHealth Associate General Counsel of Real Estate. As their demand grows, ur- gent care facilities have become desirable tenants for landlords all over the Country. Benefits to landlords In order to be competitive in the market, urgent care centers are expending significant funds to offer cutting edge, progres- sive software and equipment, which makes for a large initial investment in addition to stan- dard build-out costs that might be incurred by another retail tenant. Sometimes structural
upgrades are necessary to re- inforce floors for weight of files and equipment; x-ray shielding may be required; tenants may have to upgrade the electrical load or ventilation systems for their use; and privacy compli- ance is an additional cost. As such, urgent care centers often look for longer lease terms to make their investments worth- while, a substantial benefit to landlords. “Medical tenants are what we call “internet-resistant” ten- ants,” said Michael Ambrosi, Chief Operating Officer for ARCTrust III, a private Real Estate Investment Trust. For a
landlord, there is comfort in the fact that online sales impacting other retail uses does not affect medical use. While market fluctuation causes some retail tenants to suffer during reces- sions, there is always a need for medical. Another attractive feature is that the nature of the use and hours of operation invite con- siderable foot traffic. Patients who are not feeling well or have sustained an injury are often accompanied by at least one other adult, who may want to do some shopping or grab a cup of coffee while waiting. Accord- ing to Urgent Care Association
of America, urgent care centers report an average of fifty pa- tient care visits per day. National tenants help any retail center by providing rec- ognizable names, and “there is further value in these deals when the tenants have an asso- ciation with a hospital or larger group,” said Ambrosi. As with any tenant, though, urgent care does not come with- out its obstacles. Considerations for landlords Because they cater to ill and elderly patients, parking near the facilities is always continued on page 16A
offering ki- osk or online registration, sho r t wa i t times, quick in-office test results, and e l e c t r o n i c transmission of health re-
Jessica Zolotorofe
cords and scripts. There are over seven thousand six hun- dred urgent care centers oper- ating in the United States, and according to Markets Insider, the profitability of urgent care clinics has increased substan- tially from $11.8 billion in revenue in 2011 to more than $15 billion in 2017. Given society’s appreciation for efficiency and convenience, urgent care centers provide a valuable healthcare alterna- tive to primary care physicians and emergency rooms. In ad- dition to speed of service, the evening and weekend hours offered by most urgent care fa- cilities are invaluable to many patients. “Having young boys, we are not strangers to bumps and bruises. When my son fell off the playground and badly scraped the side of his face on a weekend, the only other choice would have been an all-day trip to the E.R., so we were grateful for the urgent care option,” said Allison Muser, mother of two. Urgent care’s appeal is not just to the younger population. According to the U.S. Census Bureau, in the next few de- cades, all baby boomers will be over the age of sixty-five, which will expand the size of the older population so that one in every five United States residents will be retirement age. With age often comes the increased need for medical attention and urgent care facilities are now staking their claim to loca- tions near residential areas to account for the rising elderly population. One of the Country’s fastest- growing and largest urgent care companies, operating approximately 100 locations throughout the U.S., takes extra care to ensure conve- nient locations for its patients. “GoHealth Urgent Care and its health system partners conveniently place centers in retail locations where people work, live and play. We want to ensure that our centers are easily accessible to patients in
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