Is Your Development Complying with the Interstate Land Sales Full Disclosure Act ?

As the development market slows contract purchasers will look for creative ways to get out of purchase contracts. Did you consider the Interstate Land Sales Full Disclosure Act (”ILSA”) 15 U.S.C. 1702 (a) when programming your development project ?

The ILSA is a federal consumer protection statute which the U. S. Department of Housing and Urban Development administers which requires disclosures and contract provisions relating to the sale of land, including commercial, industrial and residential subdivisions, townhome developments and condominium projects.

Compliance is time consuming and costly. So developers will want determine if their projects qualify for one of the several full or partial exemptions to compliance with the ILSA provisions. There are two (2) popular exemptions: (i) “Improved Lot exemption” which is a promise of the developer to complete the project within 2 years of the date of the contract to sell a unit to a consumer; and (ii)"fewer than 100 units" exemption.

Failure to comply can be costly. The ILSA provides statutory remedies to contract purchasers of return of earnest money deposits, monetary damages and specific performance. Much of the reported case law emanates from Florida. However, there is a line of cases from the 6th Circuit. Avoid the headaches and plan accordingly. Discuss the ILSA and its application to your project with your real estate counsel.

Ohio H.B 554 Signed into Law

On June 12, 2008 Governor Ted Strickland signed into law Ohio H.B. 554 making changes to the Ohio Historic Rehabilitation Tax Credit ("OHRTC"). The OHRTC is a credit against the Ohio income tax, corporate franchise tax and some intangibles taxes. One of the changes that H.B. 554 is responsible for will enable each party awarded with the OHRTC up to $5 million per year in tax credits against qualified expenditures. The prior limitations of $60 million per year in OHRTC awards and the cap on the number of applications which can be submitted have been eliminated. H.B. 554 requires the Director of Development to "consider the potential economic impact and regional distributive balance of the credits throughout the state" when reviewing applications. It is hoped that this will allow for more even distribution of the tax credits throughout Ohio. For more information on the OHRTC program and its availability you should speak with your tax professional or an attorney who has tax credit development experience.

The Perfect Storm

As real estate professionals it is no secret to us that the metropolitan areas in which we practice our trade have been designed around an automobile/cheap gas model. Today, as we face the consequences of global warming, record high oil prices, increasing corn prices and the resulting and cumulative affects from each of these issues we need to rethink where and how we live, work and play.

In a recent Brooking's Institute study the Cincinnati metropolitan area is cited as one of the highest carbon emitting areas in the United States. The report also cites that transportation related carbon emissions accounts for 39% of carbon pollution, the balance of which is caused primarily by residential and commercial building operation and use.

The cumulative affect of unbridled growth, road congestion, limited public transportation options and buildings and homes which are far from green has created "The Perfect Storm" when you add rising oil prices into the equation. How can the real estate community create value and make the Cincinnati area a highly desired location in which to live and work ?

1. Drive less, look for public transportation options;
2. Design new buildings or rehabbed buildings as environmentally friendly green buildings;
3. Encourage our city planners to design roadways incorporating bicycle lanes and mass transit lanes;
4. Encourage our public leaders to increase the taxes collected for parking and fuel consumption; rather than build new roads, invest in alternative transportation;
5. Educate our clients on the long term benefits of operating their businesses within I-275 and closer to the urban core where there is ample supply of labor and transportation options for the same; and
6. Encourage our public leaders to draft legislation to encourage all of the above.

We must strengthen our cities by halting urban sprawl. We must grow our cities up not out. We must give our citizens the means to commute to their jobs in a reliable and cost efficient manner. As all of these suggestions develop and come together the value of real estate within I-275 will naturally increase. Make no mistake about it, we all pay the indirect subsidies to maintain the cities and roads which we have built to service them. We need to reallocate our collective resources and look inward again.

H.R. 6003 Passed by the House of Representatives

Also known as the “Passenger Rail Investment and Improvement Act of 2008” was passed to provide Amtrak with $14.4 billion for capital and operating grants, state intercity passenger grants, and high-speed rail over the next five years. This signals that our leaders have not given up entirely on rail transportation. Where and how these funds will be spent is still somewhat unknown, but we certainly hope to see improved Amtrak service between cities like Chicago and Cincinnati. All one needs to do is ride the Megabus to see the demand for clean, efficient mass transit.

What is it Going to Take ?

On June 10, I attended the Cincinnati Streetcar Forum at the University of Cincinnati. While listening to the speakers I concluded that regardless of how long it will take to build a streetcar system and perhaps even a light rail system, any of us who can should get out of our cars as much as possible. Ride public transportation or use alternative forms of transportation or just car pool with our neighbors and colleagues. I am fortunate that I work in the central business district which is well served by Metro. While not a stranger to Metro, Tank or the Chicago Transit Authority, I fell into the habit of convenience and the desire to maintain my individual schedule. Having been a rider of public transportation for years; I am a currently a regular bus and train rider when working in our Chicago office or traveling to other cities. I have also taken to Megabus to travel between Chicago and Cincinnati. So, my Cincinnati commuting experiment begins on July 1 as I give up my parking pass in the 600 Vine Garage and split my commute between Metro and my scooter. I hope you consider joining me !

See the Recently Added Links

Please check our Links section in the sidebar for useful links to organizations and government resources around town. If have any additional suggestions please let us know.

North Avondale Home Tour May 10, 2008

Below is a slide show of some pictures I took at the recent Cincinnati Preservation Association (link in the sidebar to their website) North Avondale Home Tour. It was a wonderful day and we owe many thanks to those who organized the event and especially to the home owners who opened up their treasures for us all to experience ! See you next year !