Maryland Legislature Fixes Problems Left Over From 2012 IDOT Legislation

By Gregory Grigorian and Stephen Gilson

Prior to 2012, the Indemnity Deed of Trust ("IDOT") had long been the preferred structure for borrowers in Maryland looking to finance their property because it would allow deferment of recordation taxes that would otherwise be required at the time of the loan. In 2012, the Maryland Legislature passed a law that imposed the recordation tax on any instrument securing a guaranty for a loan of more than $1 million where the guarantor was not primarily liable, meaning that IDOTs and conventional deeds of trust securing loans over $1 million were treated the same. This created serious problems for commercial borrowers and lenders. In an effort to fix these problems, the Maryland Legislature revised the existing law in 2013 in order to:

  • Remove the bar on refinancing commercial loans;
  • Raise the exemption threshold for qualifying loans;
  • Clarify the rules for guarantees below the threshold; and
  • Impose the recordation tax on “new money” only.
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California Passes Landmark Green Chemical Laws

By Olivier Theard and Whitney Hodges 

On August 28, 2013 the California Office of Administrative Law (“OAL”) approved California Department of Toxic Substances Control’s (“DTSC”) Safer Products Regulations. These regulations will go into effect on October 1, 2013. These important regulations, also referred to as “Green Chemical” regulations, establish a process to identify and prioritize consumer products containing chemicals of concern, permit evaluation of safer alternatives and provide for the potential imposition of product or chemical restrictions by DTSC. The legislative purpose of the regulations is to implement California Assembly Bill 1978, or the “Green Chemistry” law, enacted in 2008. (Health and Safety Code §§ 25215-25257.1.) The regulations have been five years in the making, and are the result of several prior drafts and multiple public comment periods. The consequences of these unprecedented regulations are far reaching, and carry the potential to affect a wide range of consumer products placed into the national stream of commerce.

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Governor Brown Signs SB 4 Regulating Hydraulic Fracturing Well Stimulation Treatments

By Olivier Theard and Mercedes Cook 

Hydraulic fracturing continues to increase, but regulations have lagged behind the practice. Hydraulic fracturing (sometimes called well stimulation treatment) is used as means to extract and explore underground oil and gas. SB 4 is an attempt by California legislature to regulate and oversee the practice of hydraulic fracturing, or “fracking,” and other well stimulation treatments. SB 4 imposes requirements on oil and gas well operators and suppliers, and involves multiple regulatory state and district agencies such as the Department of Toxic Control Substances (“DTSC”), the State Air Resources Board, and the State Water Resources Control Board, the Division of Oil, Gas, and Geothermal Resources (the “Division”), and the Natural Resources Agency.

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Innovative Cornfield Arroyo Seco Specific Plan Seeks to Revitalize Neglected Los Angeles Neighborhood

By Alfred Fraijo Jr. and Tetlo Emmen

After years of work and input from local community groups, environmentalists, affordable housing advocates, transportation advocates, and the business community, the Cornfield Arroyo Seco Specific Plan (the “CASP”) cleared its final hurdle on June 28, 2013 when the Los Angeles City Council voted to approve it. The CASP aims to revitalize a more than 650 acre stretch of mostly industrial land along the Los Angeles River. The CASP includes several innovative strategies that aim to transform an area zoned and built according to development and land use patterns left over from the 1940’s. The goal is a mixed-use neighborhood that concentrates higher densities around transit, preserves and develops affordable housing and fosters economic growth and new technology, while providing sorely needed certainty to developers and investors interested in investing in the CASP area.

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California Energy Use Disclosure Rules Implementation Postponed Until January 1, 2014

By Pamela Westhoff and Lydia Lake

The long-awaited energy use disclosure requirements, first enacted as AB 1103 (Saldana) in 2007 (codified as California Public Resources Code, §25402.10), will now be implemented starting on January 1, 2014 for all buildings in excess of 10,000 square feet. This means that owners of buildings in excess of 50,000 square feet will now have until January 1, 2014 instead of July 1, 2013 to comply. Thereafter, the reporting requirements will extend to buildings in excess of 5,000 square feet on July 1, 2014. Other than the revision of the commencement date and corresponding elimination of the 6-month phase-in period for larger properties, the legislation’s requirements for commercial property owners remains unchanged. The postponement was necessary due to issues in the redesign of the Energy Star Website. We will continue to monitor the progress of this legislation and will issue updates as necessary.

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Adopting Thresholds of Significance Under CEQA Not Subject to CEQA Review

By Kyndra Joy Casper 

In California Building Industry Association v. Bay Area Air Quality Management District (CBIA) (Case No. A135335 (Cal. Ct. App. 1st, August 13, 2013)), the First District Court of Appeal overturned the trial court and held that the thresholds of significance adopted by the Bay Area Air Quality Management District (BAAQMD) were not subject to CEQA review for two reasons. First, “the CEQA Guidelines establish the required procedure for enacting generally applicable thresholds of significance such as those at issue in this case, and a prior CEQA review of the thresholds is not a part of this procedure.” CBIA, at pg. 11. Second, “the environmental change posited by CBIA as the basis for requiring CEQA review is speculative and not reasonably foreseeable,” thus adopting the thresholds is not considered a “project” pursuant to CEQA. Id.

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Assembly Bill 116, Extending Life of Subdivision Maps, Signed by the Governor

By Kyndra Joy Casper 

On July 11, 2013, Governor Brown signed Assembly Bill 116 (Bocanegra) automatically extending by 24 months the expiration date of any tentative map, vesting tentative map, or a parcel map which was approved on or after January 1, 2000, and that has not yet expired. It further specifies a process for the extension of tentative map, vesting tentative map, or a parcel map approved on or before December 31, 1999. Assembly Bill 116 (AB 116) amends Section 65961 of the Government Code.

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Unusual Circumstances: California Supreme Court Upholds Limited Use of Future Conditions Baseline Under CEQA

Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, et al. (August 5, 2013, S202828) ____ Cal.4th ____

By Kyndra Joy Casper

On August 5, 2013, the California Supreme Court issued a split decision in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, et al. The court held that a lead agency may choose to avoid using an existing conditions baseline only where (1) the departure is justified by “unusual aspects of the project or surrounding conditions”; and (2) where “an analysis based on existing conditions would be uninformative or because it would be misleading to decision makers and the public.” Neighbors for Smart Rail, at pg. 11 (lead opinion of Werdergar, J.). Thus, an agency may use a future conditions baseline for analyzing a project’s impacts in lieu of the conditions existing at the time a CEQA analysis is prepared, but only if it makes the specific determinations above and supports them with substantial evidence in the record.

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The Supreme Court Gets It Right On Takings - And Wrong - A View from "Inside the Curtilage": The Property Owner's Perspective

Koontz v. St. Johns River Water Management District, No. 11-1447 (U.S. Supreme Court, June 25, 2013)

By Deborah Rosenthal

In Koontz v. St. Johns River Water Management District, the Supreme Court cleared up two important, nagging issues with wide applicability and importance to property owners across the country. First, the 5-member majority, led by Justice Alito, held that a government cannot avoid Fifth Amendment takings liability by denying a permit unless the applicant agrees to a potentially unconstitutional condition. The Court saw this as a procedural ploy to circumvent the effect of Nollan-Dolan. According to Justice Alito, denial of a permit because an applicant will not accept an unconstitutional condition does not insulate the condition from constitutional review any more than when the condition is imposed over the applicant’s objection and the permit is granted. In California, state law already generally allows applicants to accept a permit and still challenge illegal conditions under Nollan-Dolan, but many states saw the granting of the permit as barring a later challenge. The majority’s second ruling was the one that caused sparks to fly with the dissent. Justice Alito held that monetary exactions are subject to the same scrutiny under the Nollan-Dolan “nexus” and “rough proportionality” tests as land dedication requirements. This has generally been the rule for many years in states like California and Texas.

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Farming Solar Rays: County Decision to Approve Industrial-Scale Solar on Williamson Act Lands OK'd

By Jeffrey Forrest and Kurt Siegal

In Save Panoche Valley et al. v. San Benito County, the Sixth District Court of Appeal held that San Benito County had not violated the Williamson Act or the California Environmental Quality Act when it approved construction of a 420-megawatt solar project on land designated as “agricultural rangeland.” The court sided with the County on both claims, holding that there was substantial evidence showing that cancellation of Williamson Act contracts was justified because other public concerns substantially outweighed the Williamson Act’s goals of preserving agricultural land. The court further held that the County adequately considered feasible project site alternatives and that the final environmental impact report properly analyzed the project’s impacts. The court’s holding on the adequacy of agricultural mitigation measures to mitigate agricultural impacts to below a level of significance may represent a departure from previous cases around the state.

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