Changes to Tax Law Will Affect Municipal Bonds

The new tax legislation promises to alter the municipal bond tax landscape. Muni investors are smart to pay close attention to the upcoming reconciliation process. Their tax liability and muni yields hang in the balance.

Until Congress completes reconciliation, none of the changes can be taken for granted. The House and Senate bills are just too far apart on many subjects that affect the muni market. There is little way to know which aspects of which measure will prevail. Because of this, muni investors should watch Congress closely but avoid recalibrating their portfolios until the final tax bill passes.

Individual-investor demand for municipal bonds unlikely to diminish

With the new bill’s reduction in tax rates, many investors are gravely concerned a muni selloff will reduce their values. After all, municipal bonds pay lower interest rates compared to corporate bonds. Muni bonds are only attractive to investors whose tax savings outweigh the decreased interest. Tax reform promises to diminish this incentive.

Though the bill promises tax savings, those tax savings won’t be enough to erase the benefits of municipal bonds for taxpayers in brackets paying above 25.6 percent, according to an analysis by Charles Schwab, investors above this tax bracket stand to save money on federal taxes while retaining the benefits of municipal bond tax status. If anything, demand for muni bonds may increase.

This is especially the case if the Senate bill’s provision of eliminating the deductions for state and local taxes prevails. In high tax states like New York or California, some taxpayers could see an increase in marginal tax rates, the Schwab analysis notes. Investors in top tax brackets are sure to seek tax-exempt income sources. Municipal bonds fit the bill.

Constraints on municipal bond supply?

Under the House bill, municipal governments are prohibited from releasing private activity bonds (PAB) after December 31, 2017. PABs are municipal bonds issued by state and local governments to fund special projects, such as airports, hospitals, and universities. PABs accounted for 20 percent of new muni issuance in 2016, according to Bond Buyer. This decreased issuance could push muni yields down in comparison the treasuries, which could also spell trouble for smaller issuers, such as rural hospitals. Without PABs, they may need to resort to taxable bonds, which increases their borrowing costs and their odds of defaulting.

Muni investors should also watch bank’s demand for muni bonds, which may be affected by corporate tax rates making other bonds more attractive, causing banks to curtail their muni exposure. It is also important to remember that the benefits of municipal bonds go beyond tax incentives. They are also very high-quality investments, with average default rates of just 1 percent of new issues this year. Muni bonds are likely to remain attractive investments. Muni investors should keep an eye on the progress of the tax bill and adjust their holdings according to the outcome.

What Are Common Reasons for Towns to Get Sued?

Communities get sued just like any other business entity, as there is no particular designation of immunity for a town only because they are authorized to form a government. All community governments are responsible to its residents regarding standard safety and reasonable duty of care that is consistent with civil law precedent. However, there are some instances where cities are sued similarly to a company and other times when they may be sued based on overuse of governmental authority or failure to perform a particular act.

Personal Injury

The first and most apparent legal action against a city is usually for personal injury. Injuries can occur in many ways such as public transportation auto accidents and slip-and-fall incidents when a property is not adequately maintained. Many cities even have a designated policy regarding the handling of injury claims, which sometimes can shorten the time a claimant has to submit a filing. These types of injury claims increase during the winter months because of inclement weather, but they typically happen on a regular basis.

Unlawful Detainment and Police Brutality

Many small towns employ police officers who are not necessarily trained well on arrest protocol. Officers are restricted from arresting whomever they please and must find probable cause while conducting a legal investigation. Many times charges are dismissed when the evidence was gathered unlawfully or does not amount to probable cause. Anyone arrested without probable cause is being illegally detained and could have the standing to sue.

Employee Lawsuits

Towns are required to comply with the workers’ compensation insurance law just like companies and employees are injured commonly. However, this does not mean that cities will always agree with claims of employees regarding how an injury may have happened, often resulting in a lawsuit when compensation is denied. In addition, discrimination suits can be filed against towns for a variety of reasons that also include employment-related issues.

Zoning Actions

One of the most controversial actions of local governments involves zoning a town into business and residential districts. As cities grow and city management officials look at facilitating the growth, many residents in the rezoned areas do not always like the business district coming to their neighborhood. These problems arise more commonly than people realize and can quickly lead to a very contentious situation resulting in legal action requesting a restraining order.

More Sprinklers for High Rise Buildings?

Mere weeks after a high-rise fire whipped through the Grenfell Tower in London, killing dozens of people in the process, another high-rise fire struck Honolulu, Hawaii. Although there weren’t as many casualties as the Grenfell Tower fire, the tragedies had something in common: both residential buildings lacked fire sprinklers.

It’s reported that the Grenfell Tower did not have sprinklers because not only would it would have delayed last year’s renovation process, but it would have been more costly to the renovators and the residents. As for the Marco Polo high-rise in Honolulu, the building was constructed in 1971, before the city mandated fire sprinklers in all newly constructed buildings. Because of a loophole in this measure, many buildings in Honolulu weren’t required to install sprinklers in buildings that were constructed before the law was passed.

Now, the topic of fire safety and fire regulations have come to the attention of millions of residents and lawmakers across the country. Because believe it or not, there are still quite a few residential buildings in cities all across the United States that don’t have this safety measure — including New York.

Reasons often cited are cost and time constraints. But with the tragedy from Grenfell and Honolulu, is it time to re-evaluate these measures and mandate that all buildings, regardless of when they were built, should be fitted with sprinkler systems?

Municipal Art Society of New York Releases City-Owned and Leased Property Database

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The Municipal Art Society of New York is constantly working to maintain the beauty of New York City’s past while implementing the best ideas for the city’s future. The Municipal Art Society (MAS) is largely responsible for keeping New York afloat as the cultural hub that many people know and love. In fact, MAS was founded in 1893, five years before the consolidated City of New York was officially established.

One of the most recent actions taken by the Municipal Art Society of New York is creating a database for searching city-owned and leased property. The Municipal Art Society (MAS) issued a report on November 21, 2016 which aggregated information about city-owned and leased properties and how they relate to the infrastructure, environment, population, landmarks and local rezonings. Alongside the report was the first-ever interactive city map, a compilation of information for over 14,000 city-owned and leased properties. With the help of the interactive tool, properties are categorized into four groups. These groups are properties with a residential use, properties with a current use that is not residential, properties with no current use and property used for parks and open space. According to MAS, the report and the interactive map represent the first step toward MAS’s goals to improve their public assets and make New York City healthier and more dynamic.

The Municipal Art Society found that the 14,000 city-owned and leased properties in New York City took up a total of 43,000 acres. For reference, this is an area the size of Brooklyn. In light of this number, Gina Pollara, the President of MAS, spoke about the significance of the report and the interactive map. She said that the report provides a detailed view of land owned by the city, which allows MAS to understand the city and to help it reach its potential. This is especially important now that New York is facing challenges such as infrastructure development, rising population and density, climate change and social equity.

There were a number of other significant findings that were revealed through the report. For example, a total of 1,832 acres of city-owned land are classified as underutilized. That makes up twenty-two percent of city-owned land. The term “underutilized” refers to property that has no current use. Included in this category are 78 properties that contain nonresidential structures that are not in use. One of these properties is the former Rockaway Court House. This former court house, located in Queens, is managed by the Department of Citywide Administrative Services.

Also provided by the interactive map is information about population and income for the city, median household income from the U.S. Census Bureau and census tract income for total population. The data showed that the average population density per census tract in New York City is 84.3 people per acre. According to the report, seventy-one percent of city-owned properties are located in census tracts that are below the average density. Also significant is the fact about half of city-owned properties are located in census tracts below the median income. The median annual income of New York City is $52,737.

The report also found that sixty-four percent of city-owned properties are in areas that are at a high risk for floods now and in the future. There are 247 city-owned properties that are fully or partially designated as New York State environmental remediation sites.

This report and the interactive map will be instrumental in the way that MAS and New Yorkers at large will understand city-owned land. This could play a large role in the steps that MAS takes in the future to make sure the city can reach its full potential.

Anti- LGBTQ Discrimination Being Prohibited In Cities Across The U.S.

Anti- LGBTQ Discrimination Being Prohibited In Cities Across The U.S.

Last month, the Human Rights Campaign released its fifth annual Municipal Equality Index (MEI) in partnership with the Equality Federation Institute. The MEI is the only nationwide system that exists to rate the level of LGBTQ inclusion in municipal law and policy.

According to the 2016 MEI, municipalities in both red and blue states are enacting laws and policies prohibiting discrimination against LGBTQ people in housing, employment and public accommodation. These cities are enacting these policies despite some elected state officials threatening to deny cities the ability to extend full-inclusive protection to their workers and residents. These cities are not intimidated by these officials, and are instead working to ensure that everyone has the same access to city services. They aren’t waiting for their states to extend vital protection to the LGBTQ community; they’re taking action now.

Since last year, the number of cities achieving perfect scores on the MEI increased from 47 to 60. However, there is still anti-LGBTQ legislation such as North Carolina’s HB2, which prevents cities from passing LGBTQ-inclusive non-discrimination ordinances. But despite North Carolina’s actions, cities across the country are passing non-discrimination ordinances and doing away with harmful exceptions to existing ordinances.

Human Rights Campaign President Chad Griffin states that the cities’ determination to stand up for LGBTQ people when state governments refuse to do so is proof that local governments are at the forefront of the fight for equality. Unfortunately, this progress has occurred among those pushing for anti-LGBTQ laws and policies as well. Anti-LGBTQ lawmakers have in recent years pushed legislation with the intent of pre-empting local protections. According to Griffin, this is why it’s important to fight to enact federal protection for LGBTQ people under the Equality Act.

Since the debut of the MEI in 2012, the number of cities with perfect scores has more than quintupled. Progress on transgender equality has been especially significant. Since 2012, the number of municipalities with transgender-inclusive healthcare benefits offered to employees increased from 5 to 86.

This year was the first time that the MEI deducted points in cities where non-discrimination protections have carve-outs that prevent people from using public facilities consistent with their gender identity. There was also a new category of points for cities that offer city services specifically catering to the needs of transgender people.

Despite the absence of state laws in certain states, cities continue to excel in the way of anti-discrimination laws to protect the LGBTQ community. This year, 37 cities in states that lacked comprehensive non-discrimination laws scored above 85 points. 87 cities in states without these laws scored above the nationwide mean of 55 points. Cities with a higher proportion of same-sex couples tended to score higher. The presence of city officials who are openly LGBTQ also correlated to higher scores.

The Municipal Equality Index is a great way for us to be able to asses how much progress is occurring in the way of LGBTQ protection under the law. There is still a lot of progress to be made, especially at the federal and state levels, but there a number of cities around the world that are standing up for the LGBTQ community. This shows that our country is moving toward providing more and more protection for the LGBTQ community.

Regulations to Permit Use of Drones in Real Estate Marketing

Regulations to Permit Use of Drones in Real Estate Marketing

Some real estate professionals have mused about how drones could be helpful in marketing properties, particularly sprawling properties for sale that cannot easily be examined by a potential buyer. New regulations from the Federal Aviation Administration, or FAA, may soon change all of that.

Change in FAA Regulations

The FAA has just announced new regulations addressing the use of drones. Specifically, the FAA has announced regulation changes that will permit real estate professionals the ability to use drones in real estate marketing and sales.

The new regulations will permit the operation of a drone without the need for a pilot’s license. Rather, the operator of a drone used for real estate marketing purposes will only need to obtain what is being called a remote pilot in command certificate.

In announcing the new regulation, the FAA underscored the fact that the focus of the changes has been on ensuring that other aircraft as well as property and people on the ground will be kept safe. Allowing more people to operate drones, provided they have this special certification, will not jeopardize safety, according to the FAA.

Drone Use for Commercial Purposes

Over the course of the past few years, drone use for commercial purpose has been a significant issue. The most significant movement occurred in 2014 when the commercial use of drones was deemed illegal. This incremental movement to permit real estate professionals the ability to use drones for marketing purposes is considered the first step in liberalizing the rules regarding commercial use of drones.

Drone Photography for Real Estate Sales and Marketing

The use of drones to take images of real estate for sale, as well as surrounding property, is expected to become far more prevalent as early as the first part of 2017. These aerial photographs are thought to be highly helpful when it comes to selling property.

These photos will allow people the chance to see sprawling properties more completely. It will also give consumers the chance to get a bird’s eye view of the neighborhood, and area, in which a piece of real estate sits.

Drone Use and Appraisers

Another area in which drones will be highly helpful to real estate professionals is in the realm of appraisals. Appraisers will be able to more quickly determine the state of property. For example, an appraiser will be able to evaluate the state of a the roof on a property in a matter of minutes, as opposed to the traditional amount of time this type to of inspection requires to complete.

The NY Bar Association & Municipal Law

The New York Bar Association is a voluntary state bar association, It even holds the title of the oldest and the largest organization of its type across the nation. Over 75,000 lawyers from every town in New York educate and inform the public and members of the profession about law and the evolving needs of society. This group adopted their constitution in 1887, which clearly lays out the objectives of the Association. The NYSBA aims to, “cultivate the science of jurisprudence, promote reform in the law, facilitate the administration of justice, and elevate the standards of integrity, honor, professional skill and courtesy in the legal profession.”

NYSBA contains a section dedicated to Municipal Law. This aspect of the website provides exclusive access to articles and case reviews to members and visitors who join. The purpose of this section is, “to serve, educate and provide a common meeting ground and impartial forum for those attorneys engaged in dealing in any capacity with issues in municipal law.” Membership benefits also include receiving the latest developments in municipal law and practice. This comes in the form of the Municipal Lawyer newsletter or by getting involved in a committee.

The structure of the New York Bar Association consists of a House of Delegates, an Executive Committee, a series of Sections, Committees, and various special groups. The office is headquartered in Albany, New York and operated with an administrative staff and a dedicated Governmental Relations Office. To find more information about joining, visit the NYSBA website here.

Creating Success in a Small Law Practice

tal rapplyea law firm

It’s no secret that small law firms and solo practitioners have their work cut for them in our current society’s legal landscape. Larger firms tend to generate the largest amount of business and hold the most clout.  Individuals who are seeking more affordable legal counsel aren’t a guaranteed client either. Those seeking a lawyer often go through a careful selection process based on research and word-of-mouth. With the apparent over saturation of law school graduates, it’s even more important today to set your small firm up for success.

If you are looking to open up a solo (or small) practice, these are a few tips to keep in mind during your journey:

 

Specialize

While it may feel counter intuitive to narrow down the number of potential clients that are available to you, specializing is absolutely the more promising route for your small firm or solo practice. You can create a specialization in one of two ways. One, you can determine exactly which kinds of cases you will work on. Alternatively, specialization can be built by specifying which cases your firm will not work on.

The reality is that clients are not looking for a jack-of-all-trades when it comes to their lawyers. Clients want to know exactly what your firm is good at, and they want to know that the firms’ proficiencies align exactly with their individual issues.

Network

No matter what route you took to get to law school, it’s highly likely that you’ve been told how important your network is. That importance never weans. As a solo practitioner or small firm, it’s supremely important to have other lawyers in your corner.

When clients come seeking advice that doesn’t align with a particular firm’s specialty, they refer them to other lawyers in their network. Being a part of a large network of lawyers gives your firm a larger referral base.

 

Build A Brand

Small firms need to establish themselves as both reputable and consistent. There are several different resources that a firm should access in order to gain exposure and create a notable brand.

For one, the firm should engage with the local news outlets. Offer news sources your expertise, and provide expert legal opinion on a pro bono basis in order to build up credibility in the community. In addition to offering services to news outlets and the press, your firm should also offer pro bono publico services. Try to be strategic about the cases that you offer free legal services to; work with cases where the public is likely to engage. You want to your achievements in these cases to be twofold: to win the case for your client and to gain public recognition.

 

Check back next month for more tips on creating a successful small law firm.

Local Municipalities Look to Go Green(er) By Curbing Plastic Bag Usage

tal rappleyea plastic shopping bag

Sustainability and environmental protection are ongoing topics of conversation and debate in every level of government. One of the current hot topics for municipalities in the New York and New Jersey area is the continued usage of one-use plastic (and paper) bags in grocery stores.

While many of these bags tout small sayings encouraging users to recycle them after use, the reality is that those bags contribute to a $12.5 million bill that the city of New York pays to transport waste to landfills. The City Council in New York City recently voted on a bill that proposed charging a 5 cents fee for each one-use bag (paper or plastic). The final votes tally of 28 to 20 landed in favor of the nickel charge, and it will be going into effect on October 1st.  

The same issue is being addressed across the river in New Jersey, where Assemblywoman Grace Spencer, is currently pushing a bill to have the same 5 cents charge applied on single use bags by the summer of 2017.  Spencer has been quoted saying,

“It is important that we find more ways to better address pollution,” Spencer said. “As a country, we must begin to recognize that part of the destruction of our planet comes from how we dispose of materials we use in our everyday life.”

The Northeast is not the only area of the country that’s looking to stop the frivolous usage of single-use shopping bags. This has been a pressing issue for some time now, with major cities on the West coast looking to make changes. Currently, the state of California is the only state in the country that has a statewide ban on plastic bags, but every county in the state of Hawaii has imposed its own ban on the bags.

There are some people who feel like the fee isn’t enough for a true long term impact. The director of the New Jersey Sierra club, Jeff Tittel, believes that New Jersey’s bill needs to include an eventual cut off date for the usage of plastic bags, as the fee will not be enough of a deterrent. Others feel like it’s a punishment to the consumer. NJ Assemblyman Scott Rumana believes that there must be a better way to address the excess plastic use, outside of charging consumers more.

 

This will be an ongoing issue for individual municipalities to address as the movement towards more sustainable practices continues.


Sources: Philly.com & NY Times

Municipal Laws Lead to Continued Uber Conflict In Newark, New Jersey

tal rappleyea newark new jersey

Newark Penn Station

The most interesting and disruptive services to enter the service industry recently have been the rideshare services (ie: Uber & Lyft). Their booming success has completely changed the landscape of the private transportation business, and they have been under scrutiny for their business practices and overall business model. Ride-sharing companies are constantly coming under fire in municipalities all over the world, and one of the most recent and “local” stories is taking place in Newark, New Jersey.

There has been an ongoing conflict between Uber and the City of Newark since the beginning of 2016. In January, Evans C. Anyanwu, Newark’s Chief Municipal Prosecutor notified Uber that their drivers we violating Newark’s taxicab ordinance. Newark government officials had been pushed by unionized taxi drivers to regulate the new ride-share drivers. Traditional taxi drivers were quoted saying that have been making as little as 20% of their normal profits since the influx of Uber rides.

There was a great deal of conflict surrounding the issue. The City of Newark proposed a ban on Uber drivers around Newark Liberty airport and Newark Penn Station, but both NJ Transit and the Port Authority refused to get involved. Neither organization agreed to enforce the ban. But the City of Newark continued to be pressured by licensed taxi drivers, and began ticketing Uber drivers and towing their personal vehicles.

As Newark begin to make plans to regulate Uber and other ride-share services in the city, Uber noted that they were prepared to pull their services out all together if specific regulations were passed. The regulations were going to “require drivers to pay annual licensing fees and acquire a separate license to operate at Newark Liberty International Airport”. Uber adamantly opposed the regulation, as the fees that were being proposed would greatly outweigh the fees that taxi drivers are asked to pay annually – and yellow taxis were not required to pay an additional fee for airport services. Uber’s argument was that the city of Newark was willing to force its residents that drive for uber to pay 5 times the amount of fees than their taxi drivers would have to. Newark’s counter argument was that Uber itself had more than enough profit to cover the taxes and fees for its drivers.

As of April 15th, the mayor of Newark, Ras Baraka announced that the city and Uber had come to an agreement, and Uber was allowed to stay in the city.  The tentative agreement was designed to keep Uber within the city, while simultaneously providing a boost to the city’s economy. The deal’s terms were that Uber would pay Newark $ 10 million dollars to operate at Newark Airport for the next 10 years, and pay $1.5 million in liability coverage.

But, the problem continues as the Port Authority has stepped in. Officials from the Port Authority say that the deal between Uber and Newark is illegal. Terminal A, which is technically in Elizabeth (not Newark) is the property in question, and there are ongoing debates as to whether or not Uber will be allowed to operate there.