Association News Rochester Chapter

LEGAL ADVISORY FROM RAC NYSCAR AFFILIATE MEMBER, HARRIS BEACH PLLC:  Recent Decision Narrows Commercial Tenants’ Recourse to Yellowstone Injunctions

Last week, in 159 MP Corp. v. Redbridge Bedford, the Court of Appeals upheld a recent decision of the Second Department that limits the rights of commercial tenants to obtain Yellowstone injunctions.  Read Full Article

From the Desk of Ginny Squire, RAC NYSCAR 2019 President:

I am absolutely thrilled to announce that our own Mercedes Brien, RAC NYSCAR Past President, has been named the New York State Commercial Association of REALTORS® Realtor of the Year!! The NYSCAR Realtor of the Year recognizes and honors those who have served not only in the Commercial Real Estate profession but also within their community. Mercedes' award was presented to her at the Board of Governors General Session, held on Tuesday, February 12, 2019, in the King Street Ballroom at the Desmond Hotel and Conference Center in Albany, NY. Congratulations, Mercedes!! Mercedes is also serving as this year's Secretary on the NYSCAR Board of Governors. 

Doug Johnston, Principal of Impact4Results, was our special guest speaker for our January 19 Kick-Off Luncheon.  Doug’s topic was “Thriving in Conflict,” and his points were very relevant and his suggestions to resolve conflict issues were insightful.  View the video of Doug’s presentation.

Based on the results of the Membership Technology Survey, members expressed an interest in learning about the new and changing technology trends that will affect Commercial Real Estate in the coming year.  Therefore,  the RAC NYSCAR Technology Committee has prepared a handout with six quick trends to watch out for in 2019.  There is also a link to one of the sources used to prepared the handout if members would like a more in-depth picture of what’s to come; check it out!
Also, as a result of the formation of our RAC NYSCAR Technology Committee, the State has decided to form their own State-wide Technology Committee, of which Mercedes Brien will be the Chair. 

LEGAL ALERT FROM RAC NYSCAR AFFILIATE MEMBER, HARRIS BEACH PLLC:  Mixed-Use Development Incentives for Downtown Rochester Extended to 2021

A valuable incentive for mixed-use development in downtown Rochester has been extended. The City of Rochester has reauthorized an exemption from real property taxation and special ad valorem levies for the conversion of property within the Rochester Center City Zoning District from non-residential to a mix of residential and commercial uses.  Read Full Article

LEGAL ALERT FROM RAC NYSCAR AFFILIATE MEMBER, HARRIS BEACH PLLC:  White House Opportunity and Revitalization Council to Facilitate Investment in Opportunity Zones.

President Trump has established the White House Opportunity and Revitalization Council (the “Council”) by Executive Order 13853 (“Order”) issued on December 12, 2018. Its stated purpose is to encourage public and private investment in urban and economically distressed areas, including Qualified Opportunity Zones (“QOZs”).

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LEGAL ALERT FROM RAC NYSCAR AFFILIATE MEMBER, HARRIS BEACH PLLC: LEGAL ALERT: IRS Issues Proposed Regulations and Guidance on Opportunity Zones.  Read below or download the document.

On October 19, the IRS and Treasury Department issued long-awaited proposed regulations, Revenue Ruling 2018-29 (the "Revenue Ruling"), and draft forms regarding the Opportunity Zone program to encourage private investment in low-income communities.

Enacted as part of the Tax Cut and Jobs Act of 2017, Sections 1400Z-1 and 1400Z-2  of the Internal Revenue Code of 1986, as amended (the "Code") establishes the Opportunity Zone program as the first new federal economic development tax incentive since the popular New Markets Tax Credit Program was enacted in 2000.  This program is designed to provide a federal tax incentive for investors to reinvest capital gains generated in 2018 into economically distressed areas. 

The program allows a taxpayer to defer federal income tax on capital gains due upon the sale of property(any property type, real or personal) if the capital gains are reinvested within 180 days in a Qualified Opportunity Fund ("QOF") in a Qualified Opportunity Zone ("QOZ").  A QOZ is a low-income area, determined on a census tract basis, where new investments, under certain conditions amplified under the new regulations and Revenue Ruling, may be eligible for preferential tax treatment. Those gains are deferred until December 31, 2026; or, if earlier, the gains will be recognized upon the sale of the investment in the QOF. If the investment in the QOF is held for ten years, a taxpayer may elect to step-up basis in the investment to eliminate tax on any appreciation on the investment value. There are approximately 9,000 QOZs in the United States, including 514 QOZs in New York State.

The regulations and the Revenue Ruling contain proposed guidance addressing the type of gains that may be deferred by investors, the time by which corresponding amount must be reinvested in QOFs, and the manner in which investors may elect to defer specified gains.

For example, only capital gains may be deferred, and taxpayers must invest in a QOF within the 180-day period beginning on the day of the sale or exchange of the capital asset. Taxpayers may make multiple elections within these 180 days.

In addition, the regulations amplify rules relating to QOFs, including self-certification, valuation of QOF assets and guidance on qualified opportunity zone businesses. Proposed Form 8996, Qualified Opportunity Fund, will be used by QOFs to self-certify and for annual reporting compliance. The Revenue Ruling discusses particular QOZ issues pertaining to a QOF's purchase of an existing building located in a QOZ, providing that the basis of the underlying land purchased with an existing building is not taken into account in determining whether such a building is deemed "substantially improved" in accordance with the regulations.

A public hearing on the regulations is scheduled for January 10, 2019 at 10:00 a.m. in the IRS Auditorium in Washington, D.C.  In the meantime, you can review a full text of the  IRS regulations and Revenue Ruling on its website. We will continue to provide updates as the regulations move toward adoption.

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