TRIA (Terrorism Risk Insurance Act) is reauthorized for 7 years – through 12-31-2027

On December 20, 2019, President Trump signed a spending bill that includes a 7-year extension of the Terrorism Risk Insurance Act (TRIA).

TRIA was originally passed in November 2002 as a response to the insurance industry’s inability to cover the scale of losses associated with the September 11 attacks. On a prospective basis, acts of terrorism continue to present numerous challenges in modeling risk due to the infrequency, unpredictability, and of the magnitude of potential attacks. According to CRE Financial, Federal participation in supporting private insurance provides the support and certainty of coverage for policyholders and avoids the potential disruption that a lapse in coverage would create.

The bill essentially left the TRIA program structure unchanged, as significant reforms occurred in the last reauthorization effort. TRIA is now reauthorized through December 2027.

From the Land of OZ – Final OZ Regulations Issued by the IRS/Treasury

On December 19, 2019, the U.S. Treasury Department and the IRS issued final regulations implementing the Opportunity Zones tax incentive. According to the IRS press release, the final rules seek to provide clarity for Opportunity Funds and their eligible subsidiaries in determining qualification and levels of new investment in Opportunity Zones. They also provide guidance regarding the types of gains that qualify for Opportunity Zone investments, as well as gains that may be excluded from tax after a 10-year holding period.

Read more on our new Opportunity Zones blog.

 

From the Land of OZ: New CRA Regulations proposed – including credit for providing “financing for or supports for a QOF”

The Office of the Comptroller of the Currency (OCC) along with the Federal Deposit Insurance Corporation (FDIC) released proposed regulations on December 13, 2019 which would institute significant changes to the implementation of the Community Reinvestment Act (CRA) if implemented.

Read more on our new Opportunity Zones blog.

From the Land of OZ: Rapid increase in funds invested in Opportunity Zone Funds

Despite the laments that I have heard of late at various conferences and read in various articles, Opportunity Zones are, in our little slice of the world, very busy, very active and, per both Novogradac and Bisnow, OZ Funds who are focused on raising third party equity have seen a marked increase in funds under management in the last few months and have raised approximately $4.5B to date. While this is indeed less than the $6T of unrealized capital gains estimated to be available to invest, it is still a very sizable sum of money.

Read more in our new Opportunity Zones blog.

Mayor Signs Energy Efficiency Tune Up Bill making it the Law in Philadelphia

Beginning in 2021, many commercial property owners in Philadelphia will be required to conduct energy efficiency tune-ups in their buildings. The new legislation requires owners of all nonresidential buildings of 50,000 square feet or larger to either conduct a “tune-up” to bring existing building energy systems up to a state of good repair or submit a certification of high energy performance to the city’s Office of Sustainability. The Bill which was signed into law yesterday by Mayor Kenney is intended to help cut citywide carbon emissions.

Stay tuned for a Client Alert from David B. Amerikaner and me on this topic if of interest, which will be published later tonight. Best regards. -Brad A. Molotsky

Philadelphia Passes Mandatory Building Energy Efficiency Tune-Up Bill

Philadelphia’s City Council unanimously passed a bill requiring owners of non-residential commercial buildings larger than 50,000 square feet to perform regular building tune-ups to improve their energy efficiency performance.

This policy marks Philadelphia’s first mandate regarding building energy performance improvements and is intended to help meet Mayor Jim Kenney’s clean energy goals to reduce citywide carbon emissions 80% by 2050.

The Bill requires small low- or no-cost adjustments to existing building energy systems and controls that improve their energy efficiency performance. According to the Institute for Market Transformation (“IMT”), these minor tweaks on average result in 10-15% annual energy savings, more comfortable tenants, and less equipment failure issues down the road.

Philadelphia’s new law builds upon its prior 2012 mandatory energy benchmarking policy and program. The 2012 benchmarking law requires building owners to measure and publicly report their yearly energy usage using Energy Star’s Portfolio Manager (a free tool available from the EPA).

Since making a building more energy efficient requires professionals to work directly in that building, energy efficiency jobs typically lead to higher local employment, as these jobs tend to be locally-based jobs that cannot really be outsourced.

Following Seattle, Philadelphia is the 2nd city in the U.S. to enact a building tune-up policy, and are several other key big cities have taken similar action through laws such as retro-commissioning or energy audit requirements, including Atlanta, Boston, and Los Angeles.

Per IMT, a few local jurisdictions are going even further by enacting building performance standards to reduce carbon emissions and waste. The New York City and Washington, DC policies that were passed earlier in 2019 are some of the most ambitious climate actions cities have taken to date, requiring building owners to achieve a certain level of performance that is set by the cities, with sizable fines for those who do not comply.

As cities account for a high percentage of nationwide greenhouse gas emissions, cutting the energy use from their buildings will meaningfully contribute to reducing our national carbon footprint.

To date, only a few cities have actually mandated building energy performance improvements. Philadelphia, has now taken this step forward.

From the Land of OZ: House Legislation Would Establish OZ Reporting Framework and Penalties; Senate Bill Would Limit Application of OZs

While impeachment discussions continue to garnering most of the headlines, Representatives Ron Kind, D-Wis., Mike Kelly, R-Pa., and Terri Sewell, D-Ala., introduced legislation in the House to establish a reporting framework, disclosure requirements and a penalty structure for qualified opportunity funds (QOFs).

Read more on our new Opportunity Zones blog.

Climate Change viewed as a Major Problem in NJ according to a recent Stockton University poll – Brad A. Molotsky, Duane Morris, LLP

According to a Stockton University poll released earlier this week, 2/3 of New Jersey residents believe climate change is a crisis and almost 75% believe it is affecting New Jersey.

Per Stockton’s press release, “the results show climate change is a concern to people all over New Jersey and not just those who live along the Jersey shore,” said John Froonjian, interim director of the William J. Hughes Center for Public Policy at Stockton, who presented an overview of the results at Coast Day at Stockton Atlantic City on Oct. 13.

As reported in Bisnow, among those who believe climate change is currently affecting NJ, more than 75% cited rising sea level, earth warming, harming or changing the ocean, extreme weather, and worsening pollution as major problems they are concerned about.

Beach erosion was cited by 70% as a major problem, while harm to farming was mentioned by 68%, flooding by 66%, and health effects by 57%.

More than half of respondents (56%) believe government could or should do more, and 31% say the government response is totally inadequate.

Per the poll, views did vary along party lines. Democrats (92%) and independents (64%) were more likely to see climate change as a crisis or major problem than Republicans (35%). Women (72%) were also more likely to view it as a crisis or major problem than men (62%).

The results also showed while young people are the most concerned about the issue, concern cuts across age, racial, ethnic, economic, gender and geographic lines. Almost 80% of respondents ages 18-29 see climate changes as a crisis or a major problem. That percentage drops to under 70% for those over 65.

We will continue to monitor trends and thinking in ESG and climate change and report back. If you have any questions, please do not hesitate to contact me at bamolotsky@duanemorris.com and I will direct your question accordingly.

-Brad A. Molotsky, Esq., LEED AP – O+M

New Markets Tax Credits – Application process and key dates announced by the CDFI – Brad A. Molotsky, Duane Morris

Earlier today, September 4, 2019, the Community Development Financial Institutions (CDFI) Fund announced the opening of the calendar year 2019 allocation round of the new markets tax credit (NMTC).

For those who participate in the New Markets arena, applications are due Oct. 28, 2019.

The CDFI Fund anticipates announcing 2019 NMTC awards in summer 2020.

If of interest to you, the NMTC program application, a notice of allocation availability, an introduction to the NMTC program, an Awards Management Information navigation guide, a frequently asked questions guide, and an application roadmap presentation are all available on line.

Copies of these materials can be found at www.newmarketscredits.com. If you have any questions, please do not hesitate to call or contact us – bamolotsky@duanemorris.com

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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