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Meet the Money® 2014

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This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. Please contact me at Jim Butler at jbutler@jmbm.com or 310.201.3526.

Published on:

4 May 2021
See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on C-PACE Financing.

Over the past five years, Commercial PACE (or C-PACE) financing has gained wider acceptance, and moved from a novel technique to a mainstream practical solution for financing. For more background on what C-PACE financing is, why it can be attractive, why it is becoming more popular and how JMBM’s attorneys can help, see C-PACE Financing – Now an accepted tool for hotel lenders and borrowers.

Now that New York City has released guidelines for C-PACE financing, there are even more opportunities to make the most of this strategy–see our post on the upcoming rules here.

David Sudeck and his team at the Global Hospitality Group® at Jeffer, Mangels, Butler & Mitchell LLP handled a $42 million Commercial PACE loan for the 315-room citizenM hotel in Downtown Los Angeles. The property includes a restaurant, meeting space, and a 24-hour fitness center.

citizenM

photo: citizenm.com

Hotel: citizenM Los Angeles Downtown
Location: Downtown Los Angeles, CA
Size of C-PACE Loan: $42 million

CONTINUE READING →

Published on:

30 April 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on C-PACE Financing, as well as other Hotel Finance strategies.

Commercial PACE (C-PACE) financing guidelines are finally available for New York City, and while the program has not officially launched yet, hotel owners and developers in the area should start planning how to use these loans to retrofit their properties. My Partner David Sudeck discusses the program requirements, below.

 

New York City Releases Commercial PACE Program Guidelines :
A Big Step Toward Opening a Big Market for C-PACE Financing

by
David A. Sudeck, Partner & Senior Member of
JMBM’s Global Hospitality Group®

The NYC Commercial PACE Financing Program has finally released its program guidelines! Prospective qualified C-PACE lenders are now carefully reviewing the guidelines, applying for approval to be a C-PACE lender in New York City, and seeking projects that may benefit from C-PACE financing. It is time to get ready, but the official launch date for the program is being delayed a bit and has not yet been set. We expect the launch soon.

New York’s Law Will Motivate Building Owners to Reduce Greenhouse Gas Emissions

While C-PACE financing has been available throughout the country for years, the C-PACE program for New York State was enacted in 2019 as part of the Climate Mobilization Act. As part of that law, Local Law 97 (which has been subsequently amended by Local Law 147 and Local Law 95), established greenhouse gas emission limitations for certain large buildings in New York City. Buildings covered by the law will be required to report greenhouse gas emissions commencing in 2024, and penalties will be assessed for exceeding the established limitations. The legislature enacted the law with the expectation that it will be more expensive to pay the penalties than to renovate the building to reduce emissions.

New York’s C-PACE Program Will Provide the Financing to Retrofit Buildings

The State’s Commercial PACE Program was then concurrently implemented to provide building owners with a low-interest (usually around 6+/-%), long-term (usually 20-30 year amortization) financing option to support the required energy efficiency retrofits and to support renewable energy projects generally. It is also a form of financing that will result in significant mortgage tax savings (there is not mortgage recorded with C-PACE Financing) and other benefits. CONTINUE READING →

Published on:

28 April 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Hotel Franchise & License Agreements.

After a year of economic upheaval in the hospitality industry, hotels are making big changes as they look ahead to recovery. Oftentimes these changes involve a complete rebrand, and this leads to questions about what is negotiable in a franchise agreement. In the article below, Bob Braun, senior member of JMBM’s Global Hospitality Group® and Co-Chair of the Firm’s Cybersecurity & Privacy Group, talks about 5 important franchise terms that can usually be negotiated.

Hotel Franchise Lawyer: 5 Things to Negotiate
in your next Franchise Agreement

by Bob Braun

To say that the past year has been a shock to the hospitality industry is a gross understatement. While many believe that a recovery is in sight – even if requires high-powered binoculars to see – most properties are being forced to re-evaluate their status and prospects. Many hotel owners – and brands – are re-evaluating whether a current brand is the right brand. While many hotels did well simply because of the surging economy during the long post-recession boom, the new normal, whatever it may be, requires that hotel owners, operators and brands rethink whether what was right in 2019 is right in 2021 (and will be right for the next ten years).

As a result, many hotels are changing their brands and management. This may be the impact of lenders foreclosing on properties, changes in ownership, and increasingly, the mutual agreement of a brand and a hotel owner that the brand may not be the optimal operator, or the brand may not be the optimal brand for the property.

During this time of change, it’s important to reacquaint ourselves with some of the basics of hotel franchising.

What’s really negotiable in a franchise agreement?

The most common question we hear from clients is, “What’s really negotiable in a franchise agreement?” While brands take the position franchise agreements are not negotiable, our experience with hundreds of hotel franchise agreements is that there knows that there is wiggle room to get some important concessions if you know what to go for and don’t waste your effort where it won’t do any good. CONTINUE READING →

Published on:

27 April 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest on labor and employment guidance.

As coronavirus cases drop and economic activity starts to return to normal, the hospitality industry will soon be able to begin replacing workers who were laid off due to the pandemic. Some cities in California, and now the entire state, have enacted requirements for how hotels and other businesses can fill open positions; my partner, Travis Gemoets, has summarized the new law below.

California hospitality workers laid off during COVID-19 pandemic get rehire rights

by
Travis M. Gemoets, Partner & Senior Member of
JMBM’s Global Hospitality Group®

On Friday, April 16, 2021, Gov. Gavin Newsom put new employer obligations into law by signing Senate Bill 93, requiring hotel, event center, airport hospitality and janitorial employers to first rehire workers laid off during the pandemic when jobs become available, essentially establishing “recall rights” more commonly associated with union collective bargaining agreements. Senate Bill 93 takes effect immediately after quickly making its way through the Legislature as a budget trailer bill and will be in effect until the end of 2024. Gov. Newsom vetoed a more expansive labor-backed bill last year.

CONTINUE READING →

Published on:

23 April 2021
See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on C-PACE Financing.

Hotel finance lawyer: Commercial PACE (C-PACE) Financing is now mainstream

Over the past five years, Commerical PACE (C-PACE) financing has gained wider acceptance, and moved from a novel technique to a mainstream practical solution for financing. For more background on what C-PACE financing is, why it can be attractive, why it is becoming more popular and how JMBM’s attorneys can help, see C-PACE Financing – Now an accepted tool for hotel lenders and borrowers.

Our lawyers are at the leading edge of this important new trend. And we think that sharing some of our client’s successes with C-PACE financing may help others evaluate this tool for their own needs. So this is one in a series of successful C-PACE financing closings.

David Sudeck of the Global Hospitality Group® at Jeffer, Mangels, Butler & Mitchell LLP recently worked with a C-PACE financing source to close a retroactive $6 million PACE loan for the 105-room Kimpton La Peer Hotel in West Hollywood, CA. The property includes a full-service restaurant, pool and rooftop deck.

la-peer-lobby-150x150

photo: lapeerhotel.com

Hotel: Kimpton La Peer
Location: West Hollywood, CA
Size of C-PACE Loan: $6 million

CONTINUE READING →

Published on:

20 April 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Buying and Selling a Hotel.

The latest M&A deal closing is not a hotel deal, but JMBM is pleased to announce that Advanced Veterinary Specialists (AVS), a Level II Veterinary Emergency and Critical Care Facility located in Santa Barbara, has been acquired by SAGE Veterinary Centers, a West Coast leader in specialty and emergency vet services. JMBM partner Jeffrey Groendal was the lead lawyer for the seller.

Hospitality is one of JMBM’s core practice areas. But JMBM is a full-service firm with multiple specialties to serve business owners. Another core practice area in addition to hotels is JMBM’s Mergers & Acquisitions Group. The Group handles all kinds of business acquisitions, whether by property, portfolio or M&A deals, including hotels. The Group’s lawyers provide start-to-finish assistance with all aspects of structuring, negotiating, financing, documenting and closing the deal.

Take a look at some recent deals closed in 2021:

JMBM Represents Advanced Veterinary Specialists in Acquisition by SAGE Veterinary Centers

JMBM Represents Borrmann Metal Center in Acquisition by Contractors Steel

JMBM Represents CURLS Beauty Brands in Forming Strategic Partnership with Beauty by Imagination

JMBM Represents BQE Software in Growth Investment from Serent Capital

If you are interested in learning more about our M&A practice, visit www.jmbm.com/mergers-acquisitions or contact Michael N. Steuch at 310.712.6817 or MSteuch@jmbm.com. CONTINUE READING →

Published on:

16 April 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Outlook and Trends.

The recent ruling in Google v. Oracle has altered the definition of “fair use” when it comes to functional works such as code. While the use of existing creative works must still be transformative in order to avoid violating copyright laws, it will now be much easier to claim fair use when building on existing functional creations. JMBM’s Entertainment Litigation Chair Jeff Goldman explains the case below and discusses its potential impact on the hotel industry.

How does the Supreme Court’s Google v. Oracle case
impact the hotel industry (beyond software)?

by
Jeff Goldman, Chair, JMBM’s Entertainment Litigation Group

It was hyped as the “copyright case of the century.” Justice Clarence Thomas, in his dissent, frets that the majority “transforms the definition of ‘transformative’” use into nothing more than “a use that will help others ‘create new products’” — a “new definition” that “eviscerates copyright.” Google LLC v. Oracle America, Inc., dissent at 16-17. As an example of what might now be considered a “fair use,” Justice Thomas cites a “movie studio that converts a book into a film without permission[.]” Id. at 17.

Justice Thomas’s concern may be an overstatement. Whatever the repercussions of Google v. Oracle for the software industry, read in context, any attempt to apply its fair use analysis to works that are more creative than functional — like movies, books, and music — ought to fall flat. Nevertheless, various types of copyrighted works important to hotel operators may well be affected by the Court’s fair use analysis.

Copyright law basics

First, briefly, some background. Copyright law protects original “expression” that is fixed in some tangible medium (e.g., paper, film) but not “the ‘ideas’ that lay behind” that expression. Google at 13. The difference between an “idea,” and the “expression” of that idea, is often a difficult line to draw. One concept used to distinguish between idea and expression is that works, or parts of them, that are largely functional or utilitarian are closer to mere “ideas” than to protectable “expression.” Works — including computer code — that are purely functional or utilitarian are considered noncopyrightable ideas, rather than copyrightable expression. See RJ Control Consultants, Inc. v. Multiject, LLC, 981 F.3d 446, 457-58 (6th Cir. 2020). On the other hand, the threshold for copyrighrability is low; to be copyrightable, a work need only “possess some creative spark, ‘no matter how crude, humble or obvious’ it might be.” Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 345 (1991) (quoting Professor Nimmer).

A copyright owner’s exclusive power over a copyrighted work is also subject to various limitations, including that “a copyright holder cannot prevent another person from making a ‘fair use’ of copyrighted material.” Google at 13, citing 17 U.S.C. § 107. Among the factors courts consider in the fair use analysis is how much the new work “transforms” the original work — a concept that courts have had trouble applying with any degree of consistency and predictability.

The Google case

The Google case centered on the protectability, and Google’s use, of a type of largely functional computer code called “declaring code.” The easy way for the Supreme Court to decide the case would have been to simply rule that Oracle’s “declaring code” was not copyrightable — as Google argued, and the district judge agreed (a ruling the Federal Circuit reversed). But it was clear from oral argument that the Court was having none of that. CONTINUE READING →

Published on:

08 April 2021

See how JMBM’s Global Hospitality Group® can help you.
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 →

Published on:

5 April 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Buying and Selling a Hotel and here for the latest articles on Hotel Franchise & License Agreements.

Bob Braun recently wrote an article for Today’s Hotelier on the issues hotel owners should watch for when selling a property with a franchise agreement. He explores when sellers should start speaking to their franchisor during the sale process, what purchasers can expect when negotiating a new franchise agreement, how guarantees should be handled in a sale or transfer, and several other concerns that may arise when a branded hotel is sold.

On negotiating a franchise agreement, Bob notes:

“Franchise agreements are intentionally designed to be highly favorable to the brand, and brands are unwilling to make changes. That position is even more pronounced in a change of ownership…A purchaser should be aware that, absent special circumstances, brands rarely provide an area of protection to avoid competition, a ramp-up of fees, or other variations from their forms.”

Click here to read the full article. CONTINUE READING →

Published on:

23 March 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on ADA Compliance and Defense.

California has seen an explosion of ADA cases in the past few years, leading the state to impose strict pleading standards and high filing fees for serial litigants. Litigants have previously found their way around this by filing in federal court, but the courts have made it clear that they will decline supplemental jurisdiction in these instances. Martin Orlick, Chair of JMBM’s ADA Compliance & Defense Group, explains below.

California’s Central District tries to curb ADA lawsuits
by declining supplemental jurisdiction
over state law claims

by
Martin Orlick, Chair, JMBM’s ADA Compliance & Defense Group

Declining to exercise supplemental jurisdiction, the United States District Court Central District of California (Central District) is addressing high frequency litigants who file lawsuits in federal court alleging violations of the Americans with Disabilities Act (ADA).

The Central District has been inundated with ADA lawsuits by California plaintiffs. According to its Minutes of March 8, 2021 noted in James Shayler v. JPMorgan Chase Bank there were 419 ADA cases filed in the Central District in 2013, constituting 3 percent of the civil actions filed. Fast forward to 2019, when in the first six months alone, ADA lawsuits comprised 24 percent of its civil cases (1,868 matters). ADA cases filed in 2021 are on pace for even more.

Similar numbers of ADA cases are being filed in California’s Northern District which has seen a significant increase in ADA cases alleging 28 C.F.R. Section 36. 302 (e) hotel reservation lawsuits. In an effort to curb or streamline the plethora of ADA litigation, the Northern District recently revised its General Order 56. CONTINUE READING →

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