Articles Posted in Real Estate

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This update follows an earlier post discussing Proposition 10’s potential impacts and pre-election prospects, available here.

What happened on Election Day
Despite California’s sky-high rents, voters just rejected a ballot measure that would have allowed cities to expand rent control. With 100% of precincts reporting, 61.7% of voters opposed Prop 10, while 38.3% voted to approve the measure. The ballot measure only achieved a majority in one of California’s fifty-eight counties, San Francisco. In Los Angeles County, 47.2% of voters supported the proposition. However, the ballot measure fared substantially worse in Sacramento, San Diego, Fresno and Orange counties. These results highlight the measure’s widespread unpopularity.

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The Committee on Foreign Investments in the United States (CFIUS) is an inter-agency committee designed to review foreign investments that raise national security concerns. While you may have seen CFIUS play a role in prior transactions, upcoming expanded regulations will further impact acquisitions of U.S. real estate.

How exactly will this occur?

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In less than two weeks, California voters will decide whether to pass Proposition 10, which would allow cities and counties across the state to expand rent control.

Supporters of the measure say it will protect tenants during a time of unprecedented housing affordability problems in California. Opponents argue that the measure will stall housing construction—the levels are already low—and further increase costs.

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On June 28, the U.S. Court of Appeals for the Ninth Circuit decided the case of Center for Biological Diversity, et al., v. Export-Import Bank of the U.S., affirming the ruling of the District Court, which granted Export-Import Bank of the United States’ (Ex-Im Bank) summary judgement motion finding that, “as a threshold matter,” the plaintiff environmental groups lacked standing to pursue either of their National Historic Preservation Act (NHPA) or Endangered Species Act (ESA)] claims. On appeal, the Ninth Circuit held “that the action is not moot [but] affirm the district court on the question of standing.”

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Recently, our colleague Trevor Wood published a Client Alert titled LIBOR and the Transition to Risk-Free Rates, discussing the Chief Executive of the UK Financial Conduct Authority’s (FCA) recent announcement that, because of insufficient trading in the underlying markets, the London Interbank Offered Rate (LIBOR) will no longer be supported by the FCA after 2021. Take always from the Client Alert include:

  • Work continues on the transition to risk-free rates, but progress is slow—FCA has published timetable and milestones.
  • The London Loan Market Association (LMA) issued guidelines, but changes may not be readily accepted by market participants.
  • A “synthetic” or “zombie” LIBOR will likely continue to be published in order to deal with legacy transactions.

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Legalized cannabis use is rapidly sweeping the nation. Currently, 29 states have legalized some form of cannabis, effectively turning the majority of the United States green. In this post, we will take a closer look at some of these green states and discuss cannabis real estate trends across both state and country lines.

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On April 30, the U.S. Court of Appeals for the Ninth Circuit issued an unpublished order in Hemp Industries Assoc. v. U.S. Drug Enforcement Administration, et al., denying the Hemp Industry Association’s (HIA) cannabis-real-estatepetition seeking review of the DEA’s Final Rule establishing a new drug code for  marijuana extract that went into effect on January 13, 2017.

Denying the petition, the Ninth Circuit noted that

“A party may petition a Court of Appeal for review of a final DEA decision, 21 U.S.C. § 877, but if the party fails ‘to make an argument before the administrative agency in comments on a proposed rule,’ they are barred ‘from raising that argument on judicial review.'”

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On April 27, the U.S. Court of Appeals for the Ninth Circuit held, in the case of California Dep’t of Toxic Substances Control v. Westside Delivery, LLC, that a purchaser of land at a California tax sale was not entitled to the third party defense for clean-up costs contemplated by the Comprehensive Environmental Response, Compensation, and Liability Act’s (CERCLA), known also as Superfund. The Ninth Circuit concluded that The panel concluded that Westside Delivery, LLC (Westside) had a “contractual relationship” with the pre-tax-sale owner of the property and that the previous owner caused contamination of the site “in connection with” its contractual relationship with Westside. The case has been remanded for further proceedings.

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iStock-183575355-law-marijuana-300x201The cannabis industry–both recreational and medicinal–is one of constant development, with a litany of obstacles. Even since December of last year when we began our series on the legalization of marijuana and its correlation to the real estate industry, new wrinkles have emerged, which may have an effect on future cannabis real estate deals.

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California rang in 2018 as the largest legal marketplace in the country for recreational marijuana when it implemented the Medicinal and Adult-Use Cannabiscannabis-real-estate Regulatory Safety Act (“MAUCRSA”). As we discussed in Part 1 and Part 2 of this blog series, while California’s real estate industry is budding with recreational marijuana, negative side effects are inevitable. In this Part 3 of our five part blog series on the legalization of marijuana and its correlation to the real estate industry, we discuss what has changed since January 1st, what still needs to be done, and how the real estate industry has been impacted.

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