Recently, the Yellow Springs Village Council voted to adopt a “Community Bill of Rights” ordinance banning shale gas drilling and related activities in the village. The Bill of Rights declares the fundamental rights of residents to clean air and water, and to protect the rights of nature. 

 

Yellow Springs is the first municipality in Ohio to enact a local Bill of Rights and has directed toward prohibiting shale gas drilling and related injection wells. While Yellow Springs is located in southwest Ohio, away from the Utica and Marcellus shale plays in the eastern part of the State, the geological formations there are ideal for storing fracing wastewater.

Yellow Springs’ Bill of Rights is just another step toward a showdown between local versus state law in the regulation of oil and gas operations. Like our neighbors in Pennsylvania and New York, more Ohio communities are taking steps to regulate oil and gas within their borders and are putting proposals to voters this election day.  

Ohio law, however, grants sole and exclusive authority to the Ohio Department of Natural Resources (“ODNR”) to regulate oil and gas activities, and provides those activities are matters of “general statewide interest” requiring “uniform statewide regulation.” Further, Ohio Revised Code Chapter 1509 and the rules adopted under it constitute a “comprehensive plan” for the regulation of oil and gas. Accordingly, ODNR’s position has been that Ohio law gives it the sole authority to regulate oil and gas wells, from the issuing of permits for new wells through the time inactive wells are plugged. 

Inspired by the limited success of municipalities in Pennsylvania and New York, Ohio local governments continue to attempt to regulate through ordinances, zoning, and now a bill of rights, to attempt to limit oil and gas operations in their communities. 

How successful these local regulations will be may depend upon a court decision in Preferred Fluids Management, LLC v. the City of Mansfield (N.D. Ohio Case No. 1:2012cv01804). Preferred is seeking to construct two injection wells in an industrial park in Mansfield, but was blocked by local ordinances prohibiting such wells. Preferred is alleging that the Mansfield ordinances are in direct conflict with the state’s exclusive and comprehensive authority over oil and gas operations.  

A hearing is set for this case on Oct. 19 in Cleveland. Both landowners and oil and gas operators will keep an eye on this case and the polls next month in what could affect shale development in Ohio. 

The Yellow Springs’ Bill of Rights, however, remains significant in its own right. It offers a new wrinkle to the state versus local power debate as it grants rights directly to the citizens, and not to a local government. How Ohio courts distinguish between local governments and citizens in the context of oil and gas activities, if at all, is another developing issue.

Following the publicized overhaul of the Cuyahoga County Board of Revision, property owners and practitioners alike should be aware of the  Board’s recent changes in procedures regarding hearing notices to Complainants, in addition to the implementation of the Board’s updated Rules of Valuation Procedure (which quietly went into effect  December 2011). 

 When a property owner has filed a Complaint seeking a reduction in excess of $50,000 market value in valuation on their property, under Ohio Revised Code 5715.19(B), the Board of Revision must notify the affected school district of the filing of the Complaint and afford them the opportunity to file a Counter-Complaint in opposition.  In contrast, there is no requirement under the ORC requiring the Board of Revision to notify the Complainant of the filing of the Counter-Complaint.  Instead, in past years, the Board of Revision would “informally” notify a property owner that a Counter-Complaint had been filed by sending the property owner a copy of the hearing docket before the scheduled hearing referencing both the Complaint and Counter-Complaint.  

Under their updated procedures, the County Board of Revision has stopped distributing hearing dockets to Complainants.   Instead, under Section IV (C) of their updated Rules of Valuation Procedure, the Board of Revision relies upon the counsel for a Counter-Complainant to contact the Complainant.  Counsel is now required to certify to the Board of Revision that they served a copy of the Counter-Complaint to the Complainant at the address as stated on the Complaint.  This rule went into effect beginning with the Counter-Complaints that were filed in May 2012.  Knowledge of, and compliance with, the new rule this past spring was spotty.  Of course, ignorance of the pending Counter-Complaint is no excuse for a Complainant’s failure to serve the Counter-Complainant with evidence in advance of the hearing. 

 

Property owners and practitioners seeking a reduction in value in excess of $50,000 in market value before a Board of Revision should ASSUME that they are being opposed and should contact the Board of Revision to inquire if there has been a Counter-Complaint filed in their case (http://www.bor.cuyahogacounty.us/find_complaint.asp) and should closely follow the Board’s rules.

 

 

As the construction industry starts to rebound from a down market, rentals of project equipment are on the rise. Whether you are an owner, principal contractor, or specialty trade subcontractor, you may very well be renting equipment for use on an upcoming project. Here are five important points to bear in mind:

 

1.    Do not accept the equipment without thoroughly inspecting it first. Failure to do a full, visual and utility inspection on a rental product could mean that you may be held responsible for existing damages or defects in the equipment. If damage is not documented prior to acceptance of equipment, it will be your word against the lessor’s—and the lessor is likely to have favorable contract language on its side. The best way to avoid this fight is to conduct a thorough inspection while recording (perhaps by taking digital photos) every aesthetic or operational issue with the equipment. Conduct the inspection in the presence of the lessor, provide the lessor with documentation or notes of all existing damage, and retain a copy of the documentation. Also be sure to reject the equipment if it does not appear to be fully functional.

2.    Be sure to obtain insurance coverage for the rental, or confirm in writing that coverage is otherwise in place. Under the lease agreement, the renter is typically charged with the duty to obtain insurance coverage for the equipment, both in the name of the renter and the lessor. Failure to have required coverage in place pursuant to the terms of a lease agreement will mean that you are responsible for casualty or loss to the equipment.

3.    Make sure your operating team is well-trained on the equipment’s maintenance. Required maintenance will often be spelled out succinctly in the rental agreement. If so, be sure to train your team to abide by it. If not, ask the lessor for its suggested maintenance in writing. If you fail to conduct required maintenance, the equipment may be damaged and you will be stuck with a hefty repair bill, or worse, you may be forced to purchase it —whether you want it or not.

4.    Meet the scheduled equipment return deadlines. Per most rental agreements, you will be charged an entire extra day (or week or month, depending on the duration of the rental) if you fail to return the equipment by the allotted time set forth in the contract. For large pieces of machinery, this could mean a significant price.

5.    If the equipment runs on gas or diesel, return it with a full tank. Much like national car rental companies, an equipment lessor can charge you significantly enhanced amounts for fuel if you neglect to “gas up” before
you return a piece of construction equipment. These amounts can add up and hurt your bottom line if your project teams are consistently leaving the gas bill to the mercy of your lessors.

With these points in mind, rent wisely and build safely, timely, and well.

Cross laminated timber or CLT, was developed in Austria in the 1990’s as a structural wood building product engineered to replace steel and concrete in building construction. 

What is CLT ? It is laminated sheets of wood glued together much like plywood only thicker and much stronger. 

Why use CLT ? It is a renewal forest product which absorbs CO2 and can be recycled when its original purpose has been retired.

The New York Times reported on the background and use of CLT last week. Popular in Europe, in use in Austrialia, CLT is just starting to be recognized in the United States.  Innovative Timber Solutions, LLC  is marketing CLT products now in the US.  Below is one of their instructive videos on how CLT is produced and can be used.  It may be worth considering as a componant in your next project.

 

 

 A highly significant ruling involving fraudulent transfers recently decided by the Eleventh Circuit could have a far-reaching impact on distressed lending and investing.   In Senior Transeastern Lenders v. Official Committee of Unsecured Creditors (In re TOUSA, Inc.), 2012 WL 1673901 (11th Cir. May 15, 2012), the Eleventh Circuit Court of Appeals reversed the district court and upheld the bankruptcy court’s ruling that liens granted by TOUSA’s subsidiaries to lenders constituted fraudulent transfers. In general terms, a fraudulent transfer is a conveyance by a debtor of property to a third party to place intentionally that asset out of reach of a creditor or creditors, or a conveyance made by the debtor to a third party for less than reasonably equivalent value, which conveyance was made while the debtor was insolvent or caused the debtor to become insolvent.  

TOUSA, a Florida company, and its subsidiaries were once one of the largest homebuilders in the country. TOUSA had borrowed large amounts of money during the boom years prior to the collapse in the housing market. TOUSA defaulted on its loans to its original lenders, with whom TOUSA reached a settlement with those lenders in the amount of $421 million. TOUSA borrowed $500 million of new money to pay the $421 million settlement. In conjunction with the new $500 million loan, certain of TOUSA’s subsidiaries guaranteed the new loans and provided security interests in their assets. None of those subsidiaries, however, received any of the proceeds from the new loans.

Less than six months after the new loans, TOUSA and most of its subsidiaries filed for protection under Chapter 11 of the Bankruptcy Code. The Unsecured Creditors Committee in those cases filed a lawsuit to avoid the liens and guarantees made by TOUSA’s subsidiaries, arguing that the subsidiaries’ guarantees and liens provided to the new lenders constituted fraudulent transfers because the subsidiaries did not receive reasonably equivalent value in exchange. In ruling for the Creditors’ Committee that the subsidiary liens and guarantees should be avoided, the Eleventh Circuit rejected the argument of the lenders that the subsidiaries received indirect value from providing the liens and guarantees because the new loans enabled the subsidiaries to avoid defaulting on bond and bank obligations. 

The Eleventh Circuit’s decision in TOUSA could have serious implications in the distressed financing industry.  Transactions involving debtors with subsidiaries will need to be structured to avoid the TOUSA fraudulent transfer problems.  TOUSA could chill the availability of rescue financing for distressed entitities, although the full implications of the decision will not be known for some time.

 

In order to replace aging public infrastructure assets you have to move the existing ones out of the way.  See the video below on how a bridge across the Ohio River was removed to make way for a replacement.  This one is for our readers who are in the demolition, road building and engineering industries.  Enjoy !

 

http://www.youtube.com/watch?v=P6i_7JhpRqk

2012 is likely to be similar to 2010 and 2011 in many segments of the real estate industry.  However, the residential rental market is frequently mentioned as a bright spot. There is more demand than supply to meet the needs of the market place.  Apartment communities and apartment buildings will surely meet most of the need with an already existing ready to go inventory.

The over building and easy credit  of the pre-recession period put many homeowners into properties which are presently under water.  The lenders are faced with the decision to either:

1.  Foreclose and sell;

2.  Amend and extend the loan; or

3.  Allow the homeowners to short sell.

 

None of which are good options for anyone.  Employment opportunities make increasing family incomes difficult to achieve; so even employed homeowners which are not in default can not keep up as their homes lost market value as a result of foreclosures and over supply.  The best thing for the home owner is to remain in their home, keep it up and seek to stabilize the neighborhood. 

 

We can wait for the government to legislate a solution, or we can consider what is best for our lending institutions, communities and neighbors.  Richard Florida in his book The Great Reset identifies the problem, cause and some solutions such as:

 

1.  Reduce interest rates to reset the home financing to a level in which the homeowner can afford to remain in the home.  Surely, this would cost less than foreclosing and selling a home at a loss.

 

2.  Agree with the homeowner to take a deed in lieu of foreclosure, transfer ownership of the home to either the lender or a rental company; rent the home to the former homeowner at a market rental rate; and give the homeowner or renter the option to buy the home back (with appropriate credits for previously paid equity etc.).

 

Keep the home occupied by the people who will take care of it the best and give them an opportunity to once again become a home owner.  Everyone wins when the property values in a neighborhood stabilize. 

 

Lenders and developers can create opportunity where everyone benefits and the capital cost is low.