Articles Posted in Outlook and Trends

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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.

CONTINUE READING →

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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?

by
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 →

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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 →

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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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27 December 2021

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Click here for the latest on labor and employment guidance.

Labor & Employment New Year Round-Up
What to Expect in 2022

Several new pieces of California legislation have either recently gone into effect or will take effect in 2022, impacting nearly all employers and how they handle employment agreements, disability related to COVID, training, rehiring and retention, and a range of other practices. A new presidential administration also means a shift in the political landscape and the role played by the NLRB, OSHA and other regulatory bodies.

Our round-up will help you determine which key issues may impact you in 2022; contact us to be sure you’re ready for all these upcoming changes. Click the “read more” link for each topic to see a comprehensive summary.

Expansions to the California Family Rights Act

Effective January 1, 2022, AB 1033 adds “parent-in-law” to the list of persons that an employee may take time off to care for, pursuant to the California Family Rights Act (CFRA). It also recasts the notice provisions of the small employer family leave mediation pilot program to require the DFEH to notify an employee of the requirement for mediation prior to filing a civil action, and requires the employee to contact the DFEH’s dispute resolution division prior to filing an action.

What this means for employers: Employers should review family leave policies to ensure they are compliant with AB 1033. Although the law adds a new category of person an employee may take time off to care for, it does not expand the total amount of leave an employee is entitled to take per 12 month period. Small employers should be aware of their ability to request mediation, and should consult with labor and employment counsel immediately upon receiving notice by a plaintiff or the DFEH that a plaintiff is seeking a civil lawsuit—the deadline to request a mediation is only 30 days from receipt of notice.

Read the full article.

Changes to the Fair Employment and Housing Act

Effective January 1, 2022, SB 807 amends various statutes concerning the Department of Fair Employment and Housing (DFEH) procedures when enforcing California’s civil rights law—notably, the FEHA. These changes include tolling the deadline for the DFEH to file a civil action under the FEHA while a dispute resolution is pending, increasing the amount of time employers must keep certain records, and authorizing the DFEH to appeal court decisions.

What this means for employers: Employers should review their current record retention policies and amend them as necessary. This also provides an opportunity to ensure that employers are retaining all the necessary records so that they do not face unnecessary penalties or subject themselves to avoidable liability. SB 807’s tolling of the statute of limitations deadline provides additional leeway to employees who are seeking redress, and the authorization for the DFEH to appeal decisions grants it additional flexibility when pursing actions against employers.

Read the full article. CONTINUE READING →

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08 April 2021

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Click here for the latest articles on Outlook and Trends.

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is currently accepting public comments on a provision in the recently enacted Corporate Transparency Act (CTA) which requires some privately-held business entities to disclose ownership information directly to a law enforcement agency. Interested parties should consider commenting before the May 5th deadline, and companies who may be impacted should take this opportunity to review their anti-money laundering compliance programs. Vince Farhat and Samuel Buchman of JMBM’s White Collar Defense and Investigations Group have written an article detailing this legislation below.

FinCEN Seeks Comments on Ownership Disclosure Requirements in New Federal Anti-Money Laundering Law

by
Vince Farhat, Chair and Samuel Buchman, Associate
JMBM’s White Collar Defense & Investigations Group

On April 1, 2021, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) published an advance notice of proposed rulemaking giving companies and individuals the chance to comment on the new beneficial ownership disclosure requirements contained in the recently-enacted Corporate Transparency Act (“CTA”), which is part of the Anti-Money Laundering Act of 2020 (“AMLA”) included in the National Defense Authorization Act (“NDAA”). Under the CTA, some privately-held business entities will be required, for the first time, to disclose ownership information directly to a law enforcement agency. FinCEN is accepting public comments on the CTA disclosure requirements through May 5, 2021, and companies and other interested parties should consider commenting by this deadline to help shape the anticipated rulemaking process at this early stage. This article focuses on two specific legislative changes which could lead to an uptick in federal anti-money laundering enforcement: (1) the CTA beneficial ownership disclosure requirements; and (2) enhanced whistleblower incentives and protections under the AMLA. It is critical for companies to stay abreast of regulatory developments in order to maintain proper compliance with these changing enforcement rules.

Background

Congress enacted the NDAA on January 1, 2021. This year’s iteration of the NDAA gained notoriety when former President Trump vetoed the bill, taking issue with the bill’s failure to repeal Section 230 of the Communications Decency Act. However, following a veto override, 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 represents the most significant reform to anti-money laundering laws in two decades since the 2001 USA PATRIOT Act.

Among the AMLA’s sweeping reforms are efforts to strengthen FinCEN, extend the reach of the Bank Secrecy Act (“BSA”), and expand the Department of Justice and Treasury Department’s ability to subpoena foreign financial institutions.

In its advance notice of proposed rulemaking (“ANPR”), FinCEN requested comments on the new CTA beneficial ownership disclosure requirements. The comment period will last until May 5. The ANPR solicits comments on a variety of topics, including: definitions of the various ambiguous terms in the law; the disclosure procedure; determining the scope and content of the disclosures; the means by which entities will seek an exemption from the reporting requirements; and how the disclosures will be shared with state and local law enforcement and financial institutions. CONTINUE READING →

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20 February 2021

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Click here for the latest articles on C-PACE Financing.

Hotel finance lawyer: C-PACE Financing is now mainstream

About five years ago, my partner David Sudeck, a senior member of JMBM’s Global Hospitality Group®, spoke at a hotel industry conference about the attractive features of Commercial PACE (or C-PACE) financing as an innovative financing technique. David has extensive experience with virtually all kinds of real estate financing from senior debt to joint ventures. At the time, he had just finished working on a hotel financing that included components of a senior construction loan from a private lender, Mello Roos community facilities district financing, EB-5 financing, and C-PACE Financing. Few people in the audience at the conference had heard about Commercial PACE financing, and there were a lot of questions about its characteristics.

Over the past five years, C-PACE financing has gained wider acceptance, and moved from a novel or creative technique to a widely-accepted practical solution to financings. It has gained traction with both lenders and borrowers. But its gradual increasing use was accelerated by the COVID pandemic and resulting lockdowns, and near collapse in many segments of the hospitality industry. The accompanying deficiency of construction and other financing since March 2020, supercharged the importance and use of C-PACE Financing. Over the past few months alone, David Sudeck and his team have worked, on the lender and borrower-side of transactions, on more than a dozen Commercial PACE financing transactions. The largest that we have worked on, more than $40 million of C-PACE financing, closed just a few weeks ago.

At this point, most owners and developers are considering C-PACE financing as part of their capital stack for development, for renovation, and for rescue capital (more on this below). And more and more lenders have been approving C-PACE as a part of the capital stack. Why, you ask?

Why C-PACE financing can be attractive:

C-PACE financing takes the form of a voluntary tax assessment on real property, having the same features and priority as an ad valorem real property tax (typically paid only twice per year, when real property taxes are paid). Here are some of the features that may be negotiated which can make it attractive financing: CONTINUE READING →

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19 February 2021

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Click here for the latest articles on Hotel Finance.

The Global Hospitality Group® just hosted a very timely webinar discussing the state of the hotel and CMBS industries. Our program featured senior representatives from Argentic, Greystone, and Situs – three of the largest CMBS special servicers with the most distressed hotel debt – as well as leading data and analytics firm Trepp, HREC’s runway capital program, Manhattan Hospitality for hotel industry perspectives, and our own hospitality workouts and receivership expert to break down the current state of the distressed hotels market and CMBS special servicing.

Two of our panelists, Jack Westergom of Manhattan Hospitality Advisors and Manus Clancy of analytics firm Trepp, presented slides packed with useful information, and we wanted to make them available to those who were not able to attend the program. Jack’s update on the state of hotel industry, and Manus’ state of the CMBS industry presentation are both available for download below.

CONTINUE READING →

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31 December 2020

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Click here for the latest on labor and employment guidance.

As 2020 comes to a close, many employers have questions about a number of new laws which are about to come into effect. In the article below, JMBM’s Labor and Employment Group have summarized recent changes to labor regulations and provided a snapshot of what to expect in the new year.

Labor & Employment New Year Round-Up
What to Expect in 2021

Several new pieces of California legislation have either recently gone into effect or will take effect on January 1, 2021, impacting nearly all employers and how they handle COVID-19 related issues, leaves of absence, workers’ classification, discrimination disputes, arbitration agreements, union relations, and other miscellaneous issues.

The start of a new presidential administration also brings potential changes to labor regulations; find out what we’ll be watching for, below.

Our round-up will help you determine which key issues may impact you in 2021; contact us to be sure you’re ready for all these upcoming changes. Click the ‘read more’ link for each topic to see a comprehensive summary.

New COVID-19 Reporting Obligations

AB 685 adds to California’s growing list of COVID-19 health and safety related laws, imposing additional reporting obligations on employers and expanding Cal/OSHA’s authority to issue shutdown orders for workplaces that pose a risk of an “imminent hazard” relating to COVID-19.

What this means for employers: Employers should update their written COVID protocols for employees, and prepare template notices that include the information required under the new law.

Read more here.

COVID-19 Workers’ Compensation Presumption

SB 1159 creates a disputable workers’ compensation presumption that illness or death related to COVID-19 is an occupational injury and therefore eligible for benefits.

What this means for employers: The presumption is disputable, meaning that employers have an opportunity to refute the presumption by providing evidence to indicate that an employee did not contract COVID-19 at the workplace. Employers should ensure that they implement adequate measures to reduce potential transmission of COVID-19 in the workplace and that these measures are well documented.

Read more here.

Temporary Cal/OSHA “COVID-19 Prevention Rule”

California’s Office of Administrative Law approved Cal/OSHA’s emergency COVID-19 Prevention Rule, which will remain in effect through at least October 2, 2021. One of the key provisions of the new rule requires California employers to establish and implement a written prevention program tailored toward preventing the spread of COVID-19 in the workplace.

What this means for employers: This rule is expansive and imposes a number of significant burdens on employers. Employers should consult with counsel upon reviewing each of the Rule’s mandates to ensure compliance.

Read more here.

Significant Expansion of Family Leave Requirements to Almost All CA Employers

CONTINUE READING →

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20 December 2020

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Click here for the latest articles on the coronavirus. and here for the latest on labor and employment guidance.

Hotel Lawyer: What stance should hotels take on mandatory COVID-19 vaccinations?

Most of the world has been anxiously waiting for the “silver bullet” of an effective COVID-19 anti-virus vaccine to save lives, reopen business, save severely damaged hotels and restaurants, and restore public confidence. The FDA approval of the first two US vaccines and the massive distribution immediately thereafter is projected to provide sufficient doses of the vaccine for about half the US population by March 2021 and 100% of the population by the Summer of 2021.

But almost before the anti-virus vaccine distribution started, a significant faction of anti-vaxxers started challenging the effectiveness and desirability of taking the vaccine. Many such advocates said they do not want to take the vaccine, or at least want to wait. Some raised questions about the vaccine’s effectiveness and side effects. Issues of allergic reaction and religious conviction (against the vaccine) were raised. “Social control” issues started to shape the debate and the controversy. It is ironic that so many are fighting for priority to get the vaccine first while others fight attempts to force vaccination.

So, what should hotels do to protect their employees and guests? Can – or should – hotel employers mandate vaccination for their public-facing workforce? What are the important legal and business considerations in charting the right course? CONTINUE READING →

Contact Information
Jim Butler, Chairman
Global Hospitality Group®
Jeffer Mangels Butler & Mitchell LLP
(310) 201-3526 • jbutler@jmbm.com
www.HotelLawyer.com

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