Articles Posted in Outlook and Trends

Published on:

26 January 2024

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Global Hospitality Group® Chairman Jim Butler to receive [CLIC] Lifetime Achievement Award

LOS ANGELES—Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that Jim Butler, a founding partner of JMBM and chairman of the Firm’s Global Hospitality Group®, will receive the Lifetime Achievement Award at the 2024 California Lodging Investment Conference [CLIC].

“Jim was the obvious and unanimous choice to receive the third [CLIC] Lifetime Achievement Award,” said Craig Sullivan, founder/president, [CLIC] in a press release. “Not only did he co-found one of the leading hospitality law firms that has become synonymous with the industry, but he also has worked on thousands of acquisitions, sales, developments, brandings, repositionings and financings throughout his career. He has graciously taken the time to mentor new hospitality professionals, helping to make the industry a better place. For this and so many more reasons, he is the perfect recipient.”

Jim is one of the top hotel lawyers in the world, and he devotes 100% of his practice to hospitality, providing unmatched hotel business experience and practical legal advice.

Jim and his team represent lenders, owners, developers, independent management companies and capital providers on their hotel projects worldwide. The Group brings more than 30 years’ of hotel experience with more than 4,700 hospitality properties located around the globe valued at more than $125 billion. They have worked on more than 2,700 hotel management and franchise agreements and more than 100 hotel mixed-use developments.

“I am honored to accept CLIC’s Lifetime Achievement Award,” said Butler. “I would like to extend my gratitude to the thousands of clients who have trusted the Global Hospitality Group to help them accomplish their goals.” CONTINUE READING →

Published on:

07 December 2023

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On December 5, 2023, the Los Angeles City Council removed a contentious measure from the March 2024 ballot which would have required hotels in the city to provide accommodation for homeless individuals alongside paying customers. The proposed ordinance, initially sponsored by hospitality worker union UNITE HERE Local 11, was withdrawn at the request of the union following a compromise ordinance.

UNITE HERE Local 11’s original proposal would have compelled hotels to report their vacancies to the city of Los Angeles Housing Department. Individuals or families would then be given a “market rate” voucher for payment at these locations which the hotels would not be able to refuse.

The measure faced sharp criticism from the American Hotel & Lodging Association (AHLA). AHLA President and CEO Chip Rogers accused Unite Here of creating “an atmosphere of dangerous uncertainty for hotel employees, hoteliers and the City of Los Angeles.” He characterized the proposal as a bargaining chip rather than a genuine effort to tackle the homelessness issue. Following the withdrawal of the ballot measure, Rogers expressed gratitude to the LA City Council for brokering a compromise that removed what he called UNITE HERE’s “ridiculous homeless-in-hotels proposal” from consideration. He emphasized the importance of prioritizing the safety and security of hotel employees and guests, urging leaders in LA and other cities to learn from this episode and put safety first in future dealings with Unite Here. CONTINUE READING →

Published on:

07 November 2023

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In 2021, Congress passed the Corporate Transparency Act in order to combat money laundering and other illegal activities. The CTA goes into effect on January 1, 2024, and requires almost all businesses to file a report with FinCEN identifying their beneficial owners. JMBM’s Taxation, Trusts & Estates Department has written the below article detailing the steps businesses should take to prepare for this new law.


Preparing for the Corporate Transparency Act
Disclosure of Beneficial Ownership Information to FINCEN

by JMBM’s Taxation, Trusts & Estates Department


New federal disclosure requirements for your businesses and entities will become effective January 1, 2024 – the reporting requirements are burdensome, can be triggered multiple times in a single calendar year and are subject to both civil and criminal liability. Accordingly, you should prepare to comply with the new law now.

Specifically, in 2021, Congress passed the Corporate Transparency Act, which can impact (subject to certain exceptions) essentially all businesses and investment vehicles (including, but not limited to, partnerships, limited liability companies and corporations). The CTA itself aims to combat money laundering, terrorism financing and other illegal activities by requiring entities to disclose information about the individuals who beneficially own and control them to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

In that regard, the CTA authorizes FinCEN to collect beneficial ownership information (“BOI”, as discussed below) and disclose it to various federal and state agencies (including the Internal Revenue Service). Accordingly, if you own or control an entity, then you may be subject to these requirements.

Reporting Requirements

Beginning on January 1, 2024, most U.S. entities will be required to file a report with FinCEN identifying the beneficial owners of such entity (inclusive of driver’s license and/or passport), in addition to (among other things) the reporting entity’s address, jurisdiction and taxpayer identification number (TIN). Reports will be filed electronically through FinCEN’s filing system. CONTINUE READING →

Published on:

25 July 2023

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Earlier this week, the Global Hospitality Group® co-hosted a breakfast briefing in Los Angeles with CREDE, a leading real estate development and project management firm. The program focused on how hotel owners and developers can reduce their cost of capital and costs of construction while filling in gaps in their capital stack through a few critical construction management techniques and exploitation of both traditional and alternative financing options.

Luigi Major, Managing Director of HVS, opened the program with an economic overview, providing an inspiring update on the state of the industry. His data shows depressed urban markets like San Francisco and San Jose are now enjoying double digit RevPAR growth, and some formerly red-hot leisure markets such as Santa Barbara have softened (-24% RevPAR growth). Business travel continues to get stronger and leisure travel is slowing. Cap rates are rising, but only by 40-90 basis points, which is modest compared to the interest rate environment. Luigi believes this is due to hotels coming into favor as a class of real estate. CONTINUE READING →

Published on:

09 December 2022

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Last month Los Angeles voters approved Measure ULA, imposing a new tax on all real property sales or transfers over $5 million. This will affect all parties involved in a real property transaction, and it is important to understand the implications of the measure before negotiating on a new project. My colleague David Tabibian, partner in JMBM’s Real Estate Department and Global Hospitality Group®, explains the initiative and its potential impact below.

Measure ULA Approved: New Transfer Tax on All Real Property Sales Over $5 Million in the City of Los Angeles

David Tabibian

In an effort to combat the homelessness crisis, Measure ULA (aka the “Homelessness and Housing Solutions Tax”) was recently approved by voters in the City of Los Angeles on November 8, 2022. The measure imposes a very significant increase in transfer taxes on certain real property sales within the City of Los Angeles, which will have far-reaching impacts throughout the real estate market. It is anticipated that the new tax will generate approximately $600 million to $1.1 billion annually in order to fund affordable housing and tenant assistance programs administered by the Los Angeles Housing Department. Given the high cost of this new tax, it is important that buyers, sellers and developers fully understand its implications.

What Does Measure ULA Do?

Although commonly referred to as the “mansion tax,” it is actually much broader in scope since it applies to all real property asset classes, including residential and commercial properties as well as vacant land. In fact, many industry experts anticipate much of the revenue generated from Measure ULA will instead come from sales of apartment buildings and commercial properties as opposed to sales of mansions.

Currently, unless a specific tax exemption applies, all transfers of real property, regardless of value, are subject to a documentary transfer tax from both the City of Los Angeles and the County of Los Angeles at a combined rate of $5.60 per $1,000 of consideration. Simply put, it is a 0.56% tax on the consideration received and is collected at the time of closing.

Under the new measure, however, sales of residential and commercial real property valued at over $5 million but less than $10 million would be subject to an additional transfer tax at the rate of 4%, and sales of real property valued at $10 million or more would instead be subject to an additional tax at the rate of 5.5%. In contrast to the existing documentary transfer tax, the value of the property for purposes of the measure will include the value of any lien or encumbrance remaining on the property when it is sold so that the tax is on the gross value, not just the consideration received. Moreover, the tax would be due regardless of whether it is being sold at a gain or a loss. The thresholds under the measure will be adjusted each year for inflation. Although Measure ULA will become law on January 1, 2023, it applies to property sales occurring on or after April 1, 2023. CONTINUE READING →

Published on:

23 November 2022

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Effective January 1, 2024, companies will have to report their beneficial owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network as part of the updated Corporate Transparency Act of 2021 (CTA) rules. Unless they are exempt under the CTA, businesses that fail to submit this information may be faced with steep civil or criminal penalties. Vince Farhat and Alan Azar of JMBM’s White Collar Defense and Investigations Group have written an article explaining CTA’s new reporting requirements and how to comply with them below.

FinCEN Issues Final Rule for CTA’s Beneficial Owners Reporting Requirements

Vince Farhat and Alan Azar
JMBM’s White Collar Defense & Investigations Group

Congress passed the Corporate Transparency Act of 2021 (CTA) as part of the Anti-Money Laundering Act of 2020 (AMLA) included in the National Defense Authorization Act (NDAA). The CTA created a beneficial ownership registry within the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). On September 29, 2022, FinCEN issued a final rule implementing the beneficial ownership information (BOI) reporting requirement of the CTA, which will go into effect on January 1, 2024. Reporting companies created or registered before January 1, 2024 will have one year to file their initial reports, whereas reporting companies created or registered on or after January 1, 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports.

Unless they are exempt under the CTA, companies will be required to submit information to FinCEN on their beneficial owners or face the prospect of civil and criminal penalties if they fail to comply. FinCEN estimates that most of the 32 million companies anticipated to be subject to the Final Rule will be small businesses, single-owner LLCs, or other types of business entities with four or fewer beneficial owners. The overall compliance costs could reach $22.8 billion for the first year and $5.65 billion annually after that.[1]

AMLA Background

The NDAA took center-stage when former President Trump vetoed the bill in 2021, taking issue with the bill’s failure to repeal Section 230 of the Communications Decency Act. Following a veto override, however, the NDAA became law, marking the 59th consecutive year in which some form of the NDAA has been passed. This Section 230 scuffle diverted attention away from the AMLA, a separately named Act within the NDAA. The AMLA represented the most significant reform to anti-money laundering laws in two decades, since the 2001 USA PATRIOT Act. CONTINUE READING →

Published on:

09 September 2022

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GHG Partner David Sudeck Recognized as a Real Estate/Construction Law Trailblazer

Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that Real Estate Partner David Sudeck has been recognized in the National Law Journal’s 2022 list of Real Estate/Construction Law Trailblazers.

This list honors legal professionals who have made significant marks on the practice, policy and technological advancements in their sector.

“David’s legal expertise and excellent client service have been essential to the success of the Global Hospitality Group and to the Firm as a whole,” said Jim Butler. “We are pleased that he has received this recognition as a Trailblazer.”

Sudeck is a seasoned dealmaker with an international reputation as an expert in hospitality projects. He provides critical business and legal advice to owners and lenders in the purchase, sale, development, construction, financing, leasing, and sale-leaseback of hotel, resort and mixed-use properties, including structuring complex hotel management and branding agreements.

In 2021, David and his team at JMBM’s Global Hospitality Group® closed more than $210 million in Commercial Property Assessed Clean Energy (C-PACE) loans and in 2022 assisted in structuring the largest ever C-PACE transaction in the United States. His trailblazing work in this area has led to him representing the top lenders in the space. As David told the National Law Journal, “[C-PACE financing] has been a critical part of the capital stack…Borrowers have embraced the fact that it is non-recourse financing at a low cost.”

To read David’s profile, click here.


Published on:

10 June 2022

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Deadline nears. More than 56,000 business and 1 million servers are affected. Of the million servers, only 33,000 are certified now.

Is your California alcoholic beverage outlet ready for
new August 1, 2022 ABC certification
of all alcoholic beverage servers and managers?

Jim Butler, Chairman of JMBM’s Global Hospitality Group®


Responsible Beverage Service Training Act of 2017 (the “RBSTA”)

A new law that many of the affected people have never heard about becomes effective July 1, 2022. It all involves liquor licenses from the California Department of Alcoholic Beverage Control (“ABC”) and persons employed by such licensees to serve alcohol to patrons.

The new law is known as the “Responsible Beverage Service Training Act of 2017” or “RBSTA.” Many are now using the acronym of “RBS” to refer to matters involving the RBSTA such as certification, training and related matters. It is embodied in the California Business & Professions Code (Div. 9, Ch. 16, Art. 4, Section 25680 et seq.).

Who is affected? How many are affected? How many comply today?

The ABC estimates that the law affects 56,000 businesses that hold on premise liquor licenses from the ABC and approximately 1 million servers of alcohol and their managers at such locations. Of the million servers and managers, only 33,000 have been certified to date!

Such licensees include all California restaurants, bars, cafes, clubs, wineries, breweries, stadiums, event centers and virtually any other outlet that sells alcoholic beverages and permits customers to drink on site. CONTINUE READING →

Published on:

06 June 2022

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GHG Partners Guy Maisnik and David Sudeck Recognized by the Los Angeles Business Journal and the Los Angeles Times

Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that two senior Global Hospitality Group® members were honored last month for their legal accomplishments.

Guy Maisnik, Vice Chair of JMBM’s Global Hospitality Group®, has been included in the Los Angeles Business Journal’s list of “Top 100 Lawyers.” This list honors the top lawyers in Los Angeles for their legal achievements, professional impact and community involvement.

Guy advises clients on hospitality transactions, representing buyers, sellers, lenders, opportunity funds, special servicers, REITs, and developers in hotel transactions, joint ventures, hotel management agreements and franchise agreements, buying, selling and ground leasing of hotels, complex mixed-used development, and fractional and timeshare structuring.

David Sudeck, senior member of JMBM’s Real Estate department, has been recognized as a 2022 “Commercial Real Estate Visionary: Professional Service Advisor” by the Los Angeles Times. This list spotlights the top commercial real estate professionals in the region who have helped businesses reach the next level of growth.

David is a seasoned deal maker with an international reputation as an expert in hospitality projects. He provides critical business and legal advice to owners and lenders in the purchase, sale, development, construction, financing, leasing, and sale-leaseback of hotel, resort and mixed-use properties, including structuring complex hotel management and branding agreements.

These awards are a result of their excellent legal work and dedication to client service. To read Guy Maisnik’s profile in the Los Angeles Business Journal click here and to read David Sudeck’s profile in the Los Angeles Times click here. CONTINUE READING →

Published on:

22 February 2022
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If you are planning to make a large gift as part of your estate plan, you should consider taking advantage of the current tax exemption in effect until the end of 2025. After this time, the exemption will revert back to approximately one-half of its current value. This has potentially huge implications for hospitality executives and other high-net-worth individuals. Gordon Schaller, managing partner of JMBM’s Orange County office, explains below.

The Cost of Waiting to Make a Large Gift: Compounding Your Tax Savings

by Gordon Schaller

The Tax Cut and Jobs Act of 2017 doubled the lifetime gift and estate tax exemption, effective for gifts made from 2018 through the end of 2025. In 2026, the exemption will revert to the 2017 exemption, adjusted for inflation (approximately one-half of the 2025 exemption). There was great concern during the last part of 2020 and most of 2021 about the possible reduction of the lifetime gift and estate tax exemption prior to the scheduled reversion. However, Congress did not enact any change to the exemption, and it seems unlikely to do so for the foreseeable future. The current exemption is $12,060,000 per person, or $24,120,000 per married couple.

What should clients do now? For those who can afford to do so, they should utilize the exemption now. The cost of waiting, or the benefit of acting now, can be illustrated by the following table. The first example demonstrates the effect of a $12 million gift now, compounded at 6% over many years, compared to a $6 million gift when the exemption reverts in 2026, compounded over the remaining years. By 2050, the difference is $37 million in the first example. The second example shows an even greater disparity in outcomes ($57 million) when the assets gifted consist of an interest in a partnership, LLC, corporation or real estate that qualifies for valuation discounts for lack of control and lack of marketability. CONTINUE READING →

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