In the Know: Spring 2024 - Sullivan County Partnership

From the CEO

When you find yourself seeking answers and you have not a clue as to how to proceed forward it most likely means you should have hired a lawyer long ago. This cannot be more evident than when seeking approvals in the development world. I have been in economic development for nearly 28 years. I have witnessed project approvals go smoothly when the proper professionals were hired (particularly lawyers) and allowed to complete the task at hand. Too often, however, applicants decide not to hire professionals at the appropriate time.

Many times, they seek to keep soft costs down or think they have the expertise to interpret zoning, SEQRA, and other requirements themselves. It has been my experience that each time that happens, time is wasted, errors and omissions occur, and the process ends up costing at least double what it should have had the professionals been engaged from the outset. Add to that the ever-changing environmental laws, the lack of detail and the variations in language from one municipality to the next and the process can get delayed significantly. For a developer delays mean money.

For economic development, delays mean projects do not get approved in timely manner, investments are not made, and jobs are not created. The greater risk is that the developer gets so frustrated that he/she decides to cut their losses. So, the lessons learned over time is that a professional team working together, with great chemistry means a successful outcome is forthcoming.

This edition of In The Know focuses on how the law impacts projects, the obstacles and the steps needed to succeed. We will cover, IDA, SEQRA, corporate law, land use and other pertinent issues related to development. The member contributors in this edition have vast experience in all facets of development. From impacts to benefits, residential to industrial, coverage ratios to height variances, each facet of development requires a professional team with the expertise and experience to achieve the goal of securing the approval. The old adage time is money could not be more true in this case so starting off on the right footing will insure a smooth outcome.

As always, we seek to provide useful content that you can use as you go about your busy schedules. If there is topic you would like to see covered, please do not hesitate to make that request. Thank you all for your continued support and to those who contributed content. It provides a great benefit to our membership and our organization overall.

Sincerely,

Marc Baez CEO

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The IDA and PILOTS

by Eon S. Nichols, Esq., Partner Cuddy + Feder

Industrial Development Agencies (“IDAs”) are instrumental in financing real estate projects through the so-called IDA “straight-lease” transaction which offers mortgage recording tax exemption, sales and use tax exemption, and real property tax abatements through the payment-in-lieu-of-taxes (a/k/a the Pilot).

IDA

The Law

IDAs are public benefit corporations and most IDAs were created pursuant to Article 18-A of the General Municipal Law of the State of New York. IDAs exist on the county level in most parts of New York State. However, there are some cities, towns and villages that have their own IDAs.

Article 18-A of the General Municipal Law enables IDAs, for the benefit of New York State and its counties, cities, villages and towns, to acquire, construct, lease, improve, equip and furnish real and personal property, suitable for, among other things, manufacturing, warehousing, research, commercial or industrial purposes, in order to advance the job opportunities, health, general prosperity and economic welfare of the people of the State of New York. In essence, the primary goal and function of an IDA is to foster economic development in New York State through financing real estate projects. Although today’s difficult economic environment limits governments’ financial resources and incentives available for assisting businesses, IDAs serve as a vital tool in economic development as it is helpful in retaining, expanding and attracting companies.

Type of Projects

If a project is eligible, IDAs may offer financial assistance for the acquisition, development, construction and/or renovation of real property and the buildings located thereon as well as the acquisition of personal property in order to equip and furnish such buildings. IDA projects run the gamut from assisting local developers build medical treatment centers, storage or warehousing facilities or multi-family housing and may include assistance with straight-forward small equipment purchases to complicated real estate refinancing projects.

IDA Basics

IDAs foster economic development and offer financial assistance to projects by two primary means: the issuance of bonds and the Straight-Lease Transaction. IDA bond financing has been used to obtain funds to finance a project; in a nutshell, the IDA issues bonds, the bonds are sold by an underwriter (or bought by an institution) and the proceeds from the sale of the bonds finance the project. In an IDA Straight-Lease Transaction, however, a borrower will not receive any funds or bond proceeds. Rather, the IDA offers financial assistance in the form of benefits. The benefits include mortgage recording tax exemption, sales and use tax exemption and the Pilot.

1. Issuance of Bonds

2. Straight-Lease Transaction

The Straight-Lease Transaction

Straight-Lease Transactions have been used in conjunction with traditional real estate loans, new markets tax credits transactions, residential developments and all types and varieties of commercial real estate transactions. It is very common that a borrower will undertake a Straight-Lease Transaction in conjunction with a traditional mortgage loan.

One of the first steps in a Straight-Lease Transaction consists of an applicant/borrower submitting an application to the appropriate IDA requesting financial assistance. The application will describe the project and the benefits being sought by the borrower. The IDA will review the application and advise the applicant whether the IDA will offer financial assistance which

is based on several factors; such as whether or not the project will result in significant job retention and/or employment and create opportunities for new business partnerships. Ultimately, the IDA needs to determine if a project will be worthwhile.

If the IDA decides to provide financial assistance, then the IDA’s lawyer will start preparing the StraightLease documentation. Once the documentation has been completed and negotiated by the IDA’s counsel and the borrower’s counsel, and provided that the borrower is otherwise ready to close, the parties will proceed to a closing. Once the transaction closes, the borrower will be entitled to the financial benefits.

The Financial Benefits

The financial benefits offered by the IDA consist of mortgage recording tax exemption, sales and use tax exemption, and Pilots. We will use a hypothetical project to discuss and explain the benefits. The hypothetical project involves the acquisition, construction, furnishing and equipping of real property for a total project cost of $3.5 million. Our hypothetical borrower will borrow $3 million from an institutional lender to fund the cost of the project and will insert $500,000 of its own money as equity. The cost breakdown is as follows: $750,000 for the acquisition of the land, $2 million to build the building (or renovate an existing building) and $750,000 to furnish and equip the building.

Unless exempt, all mortgages recorded in New York State are subject to mortgage recording tax. The amount of mortgage recording tax owed depends

on the location of the real property. A mortgage on commercial property in Sullivan County is subject to a tax of 1.0% on the face amount of the mortgage while Rockland, Dutchess and Westchester Counties (except Yonkers where the tax is 1.8%) is subject to a tax of 1.3% on the face amount of the mortgage and while a mortgage on commercial property in Putnam and Orange Counties is subject to a 1.05% tax on the face amount of the mortgage. In an IDA Straight-Lease Transaction, the IDA, in addition to the borrower, will be a party to the mortgage (with non-recourse language in favor of the IDA and the IDA having no obligations under the mortgage). By having the IDA as a party to the mortgage, the mortgage will be exempt from mortgage recording tax. This benefit can amount to huge savings for borrowers. In our hypothetical project, assuming the lender will want to record a $3 million mortgage on the real property as collateral for the $3 million loan, the borrower would save $30,000 if the project is in Sullivan County.

Construction materials purchases to construct a facility are subject to sales tax and, further, purchases of machinery, equipment, and furnishings (including personal property such as computers) are also subject to sales tax. In New York State, the sales tax rate ranges from 7.000% to 8.875%. In an IDA Straight-Lease Transaction, the IDA will issue a sales tax exemption letter which will exempt sales tax on materials, machinery, equipment, and furnishings for the project. The borrower (and or its contractors, agents, etc.) will present the sales tax letter when purchasing such materials, machinery, equipment, and furnishings for the project. Depending on the amount of materials being bought, the sales and use tax exemption can amount to considerable savings. Under the hypothetical project, the borrower is spending

$750,000 to furnish and equip the building which, in an IDA Straight-Lease Transaction, would save the borrower about $60,000 in sales tax, assuming a sales tax rate of 8.00% for Sullivan County. Note that in our hypothetical project, we assumed that only $750,000 was allocated to furnishing and equipping the building. We did not factor in the sales tax which would be paid on construction materials. In the hypothetical project, $2 million has been allocated to construction of the building. It is safe to assume that a good portion of that sum will be allocated to the purchase of materials for construction, which purchases would not be subject to sales tax under an IDA Straight-Lease Transaction and, therefore, would lead to further savings for our hypothetical borrower.

New York State law provides that once an IDA has an interest in real property (whether fee simple or leasehold), the real property is exempt from real property taxes. IDAs do not typically provide 100% real property tax exemptions, therefore, IDAs and

IDA Straight-Lease Real Property and Sales Tax

borrowers enter into an agreement with respect to the real property taxes (better known as the payment-inlieu-of-taxes agreement or Pilot Agreement). In some instances, the IDA may require that the borrower pay real property taxes as though the IDA had no involvement with the property. In other instances, upon the borrower’s request and the IDA’s agreement, real property taxes on the project may be abated for a certain period of time. For example, the IDA may provide the borrower with a 50% abatement for the first three years of the project, 25% abatement for the second three years and, thereafter, the property would be fully taxable. What the IDA offers and what the borrower is able to obtain in terms of real property tax abatements depends on the project and the needs of the borrower as well as the IDA’s tax exemption policy. In any event, an IDA Straight-Lease Transaction may

provide a borrower and a project with real property tax abatements resulting in substantial savings for a borrower which, ultimately, will help a borrower get the project “off the ground.”

In sum, the Straight-Lease Transaction, whether or not it is coupled with a traditional mortgage loan transaction, offers substantial benefits to borrowers and ultimately makes the difference in whether a project will be financially viable and successful.

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Communities can use SEQRA’s Framework to Attract Economic Development

by Alexander G. Main, Esq. J&G Law

SEQRA Overview

New York’s State Environmental Quality Review Act (“SEQRA”) is a law that requires local, regional, and state government agencies to examine the environmental, social, and economic impacts that certain projects will have on the surrounding community. SEQRA is implicated when these projects are subject to discretionary government approval (e.g., licensing, permitting, etc.) or will receive government funding.

When SEQRA applies, there are several steps that a project applicant must complete before the lead agency (i.e., the government agency in charge of coordinating the SEQRA review process) allows a project

to proceed. SEQRA can be used as a tool to promote community-based economic development when applicants design their projects to minimize adverse environmental impacts and promote local economies through benefits such as jobs, housing, and new revenue streams.

SEQRA’s Framework Promotes Economic Development

Economic development considerations are often addressed by applicants during the SEQRA review process through collaboration with localities where projects will be located, the completion of required documentation, and by responding to public comments.

Communities can use SEQRA’s Framework to Attract Economic Development

Project applicants and municipalities should use SEQRA to foster economic development by building relationships with each other. Doing so in an efficient manner (e.g., proactively identifying suitable project site locations and study areas, setting standards for prospective developers to meet as to reduce SEQRA process time, etc.) will allow municipalities to attract development and ultimately save all stakeholders time and money. Project applicants can fulfill their role by invoking SEQRA as early as possible, in the planning stages of a project. Open communication with involved agencies can lead to productive discussions regarding not only environmental analyses that may be required, but also economic considerations such as site selection and funding opportunities. One example of an agency applicants can discuss projects early with is the County of Sullivan Industrial Development Agency (“IDA”). The job of the IDA is to provide financial/tax incentives for companies to come to and expand within Sullivan County. The IDA, amongst other government agencies, can serve as an involved or lead agency during the SEQRA process, and fostering a relationship early on with these stakeholders that have a grasp on what local communities need will lead to a better-planned project that is more likely to survive SEQRA review.

As part of the SEQRA process, applicants may have to fill out documentation such as an environmental assessment form (“EAF”) and/or an environmental impact statement (“EIS”). By completing these documents, applicants can present key characteristics of the project, including any project alternatives explored and the short- and long-term impacts of the proposed action. These documents also allow applicants to address economic development considerations. It is important for applicants to complete these documents diligently, as they are made available to the public to examine and will serve as the basis for the agency’s ultimate SEQRA determination.

When an EIS is prepared, the lead agency has the discretion to require a public hearing. To make this determination, the lead agency will look to factors such as interest shown by the public in the project and the overall impact that a project will have on the community. When applicants work closely with community stakeholders (e.g., IDA, Sullivan County Partnership for Economic Development, etc.) throughout the SEQRA process, this encourages advocates of economic development to participate in public hearings to express their support for the project, which will ultimately influence the lead agency’s final decision.

SEQRA Success in Sullivan County

One example of SEQRA success from an economic development perspective in Sullivan County is the Resorts World Catskills Casino. When the New York State Constitution was amended to allow casino gambling years ago, there were worries that the casino would not survive a SEQRA court challenge given the major impacts, both from an environmental and a social perspective, a new casino can have on the community. However, community stakeholders representing areas such as rural development, tourism, unions, and workers made their case to the Town of Thompson regarding the financial gains for Sullivan County residents and its local businesses and ultimately, all SEQRA approvals were granted. Today, the casino continues to thrive, and this was enabled because of a successfully run SEQRA review process which involved many members of the Sullivan County community.

When applicants and government agencies use SEQRA as a tool to promote productive discussions that lead to projects that mitigate adverse environmental impacts and which produce financial benefits for the community, SEQRA can foster economic development and leave a lasting impact.

Brownfield Redevelopment: Right Team = Real Profits

by Derek Ersbak, PG & Kris Almskog, PG —P.W. Grosser Consulting

The phrase “reduce, reuse, recycle” was born in the 1970s by a nation coming to grips with the impacts of decades of industrial development coupled with lack of regulation regarding harmful chemicals and processes.

Though

the mantra was targeted towards consumers, it was no less applicable to aging industrial locations that had negatively impacted the environment and regional economies in which they were located.

These impacts can still be seen today with former industrial/commercial properties lying vacant, abandoned, and underutilized. These properties are often referred to as brownfield properties.

In New York, as land becomes a more precious commodity, efforts were put forth to successfully return these brownfields to the tax rolls. In 2003, the New York State developed the Brownfield Cleanup Program (BCP) to offer financial assistance in the form of tax credits to parties interested in cleaning up brownfields. Enrollment in the BCP in its current iteration will be in effect until December 31, 2032, with site remediation requiring completion by 2036. Currently, NYS offers refundable tax credits up to $35

million for most brownfield sites, or up to $45 million for sites used primarily for manufacturing activities.

Since being enacted, the BCP has been a catalyst for reclaiming brownfields across NYS. Since March 31, 2023, there have been 1,246 projects enrolled (177 in NYSDEC Region 3, which covers Sullivan County) and 597 projects completed (92 in NYSDEC Region 3) with 2,867 acres of underutilized land put back into use, which has helped revitalize communities by bolstering tax rolls and creating jobs. In 2023 alone, the State issued approximately $600 million in tax credits to brownfield developers (~$98 million in NYSDEC Region 3) on over 131 sites (13 sites in NYSDEC Region 3).

GARVIES POINT—GLEN COVE, NY BEFORE AND AFTER

Because of the significant amount of state dollars at play, the path to completing a successful brownfield redevelopment and maximizing the financial return of available tax credits requires a savvy team to navigate the legal nuances of the changing program and of the environmental conservation law (ECL Article 27 Title 14) that dictates the rules. This team is often made up of environmental consultants/engineers, attorneys including land use, real estate & environmental, accountants, remedial contractors, developers, and many more that will work with the BCP applicant to progress the project through the program.

Because of the legal requirements of the program and the tax credits at stake, an experienced team should be brought on early to ensure the project’s success.

Legal issues that we have seen that have negatively affect BCP projects’ progress includes incomplete or deficient applications, delays in filing the proper environmental easements and deed restrictions, and inability to receive timely certificates of completion from the State due to documentation issues with reports, surveys, and submittals. These legal issues could impact millions of dollars of tax credits on a single project from being issued.

Other important items to consider include the following:

Tax Credits: Prior to enrolling into the BCP, it is important to fully evaluate the maximum potential tax credits with your team and devise a remedial strategy accordingly. The brownfield redevelopment tax credit consists of the sum of three separate credit components related to (1) site cleanup, (2) groundwater cleanup, and (3) development on a brownfield site.

• The site cleanup credit component is the product of the site preparation costs incurred by the applicant for the qualified site multiplied by the applicable percentage. The site preparation credits range from 22% - 50% of cleanup cost.

• The on-site groundwater remediation credits range from 22% - 50% of applicable groundwater remediation costs.

• The tangible property credit is the cost of personal property, and other tangible property, including buildings and structural components of buildings meeting certain criteria. The tangible property component credit ranges from 10% - 24% of redevelopment costs (with a tax credit cap).

Project Schedule: While the State is committed to working closely with the project team to meet project schedules, they request that their administrative and community outreach timelines be factored in at the beginning stages. In our experience, the timeline from enrollment to an approved remedial plan that allows for construction could range from one to several years.

Cost Tracking: Upon acceptance into the BCP, it is extremely important to keep track of costs incurred and understand if that cost is associated with the remedy, part of construction, or possibly both as documentation of these costs will be part of the tax filing at the end of the project which will be subject to audit. This is best discussed with the team’s tax professionals and attorneys prior to beginning the project.

The State’s BCP has been a catalyst for reducing the environmental impact of these sites, allowing for the reuse of the properties to the benefit of local and regional municipalities and recycling the site, which permits/allows for preservation of wilderness areas/ regions that may have faced development pressures otherwise.

It’s a win, win, win!

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DEMYSTIFYING ZONING LAWS AND VARIANCES:

Navigating Regulations and Appeals

Barbara Garigliano Blustein, Shapiro, Frank & Barone LLP

Zoning laws and variances are essential tools for shaping the building environment and managing growth in our communities. While zoning laws provide a framework for orderly development, variances offer flexibility to accommodate unique circumstances

Zoning Laws: A Blueprint for Development

Zoning laws are a community’s roadmap for future development, outlining permissible land uses and development regulations within designated zones or districts. These regulations, found in local ordinances, govern various aspects of development, including building height, setbacks, lot size, and permitted uses. The overarching goal of zoning laws is to promote orderly development, protect property values, and ensure compatibility between land uses.

When the first zoning ordinance in this country was passed in New York City in 1916, there was doubt that the courts would uphold its constitutionality, since it

was a new and, at that time, radical system of land use control. Various “safety valves” were, therefore, included in that first ordinance, in an attempt to relieve the pressure of too rigid enforcement of the zoning ordinance and any attendant hardship, and also to attempt to ensure judicial approval of the new concept. Foremost among these “safety valves” was the concept of an administrative body that would stand as a buffer between the property owner and the court, designed “to interpret, to perfect, and to ensure the validity of zoning.” That administrative body is the Zoning Board of Appeals, referred to in the 1916 NYC Zoning as a board of adjustment. continued...

Variances: Flexibility Within the Framework

Despite the rigidity of zoning laws, variances offer a mechanism for property owners to deviate from regulatory requirements under certain circumstances. A variance is a request to deviate from zoning law requirements. If granted, it permits the owner to use the land in a manner not otherwise permitted by the zoning law. It is not a change in the zoning law. Instead, it is a specific waiver of requirements of the zoning law.

Variances come in two primary forms: use variances and area variances. A use variance permits land use that is not typically allowed within a zoning district, while an area variance provides relief from dimensional requirements such as setbacks, lot coverage, or building height. Property owners must demonstrate unique hardships or practical difficulties to justify the need for a variance.

The Role of Zoning Boards of Appeals

Zoning boards of appeals (ZBAs) play a crucial role in the variance process, serving as administrative bodies with the authority to review and decide on variance requests. Empowered by state law, ZBAs have the jurisdiction to reverse, affirm, or modify determinations made by administrative officials charged with enforcing zoning laws.

In the context of variance appeals, ZBAs conduct de novo reviews, meaning they reconsider all relevant facts and make decisions independent of previous determinations.

This allows ZBAs to act as a “safety valve” to relieve the pressure of rigid zoning regulations, ensuring fairness and flexibility in land use decisions.

Challenges and Considerations

While variances provide flexibility within the zoning framework, they also present challenges and considerations. The variance process can be complex, involving public hearings, appeals, and potential opposition from neighboring property owners. Additionally, there is often confusion surrounding the authority of ZBAs and the interpretation of zoning laws.

Zoning boards of appeals serve as critical decision-making bodies, tasked with balancing the interests of property owners with the broader goals of community planning. By fostering transparency, dialogue, and adherence to legal standards, ZBAs can ensure that zoning regulations are applied fairly and consistently, promoting sustainable development, and preserving the quality of life for all residents.

Local governments may vary in their approach to zoning enforcement and variance procedures, leading to inconsistencies and potential conflicts. It is essential for property owners, developers, and community stakeholders to navigate these challenges with a clear understanding of the legal and procedural requirements involved.

Zoning laws and variances form the backbone of urban planning, guiding the development of communities while balancing the needs of property owners and the public interest. Understanding these intricate regulatory frameworks is crucial for anyone involved in land use and development projects.

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FEDERAL & STATE TAX INCENTIVES: WHAT’S AVAILABLE TO HELP SMALL BUSINESSES IN 2024?

Recognizing small businesses are the backbone of the U.S. economy, the Federal and NY State governments offer many tax incentives to support growth, development, and sustainability.

The first step to maximizing tax deductions (which reduce the amount of business income subject to taxes), credits (which reduce the amount of taxes you owe dollar for dollar), and other incentives is knowing which ones exist and may apply to your business.

BUSINESS INCENTIVES

At the federal level, the Qualified Business Income (QBI) Deduction remains a significant benefit for small businesses. The QBI (also referred to as Section 199A) deduction allows eligible small business owners and self-employed individuals to deduct up to 20% of their QBI.

Then there’s Internal Revenue Code (IRC) Section 179. If you buy or lease (with qualified financing) appreciable business equipment, deduct the full purchase price (or lease amount) from your gross income. Eligible equipment can include computers, furniture, machinery, vehicles, and more. Plus, for 2024, there’s a 60% bonus depreciation to reduce your tax liability further.

You can also reduce your income tax liability with Section 174 tax credits for research and development. The tax credit is available to businesses of all sizes for qualifying research activities like software development, architectural design, product enhancements, and more.

As for New York, the Investment Tax Credit rewards businesses that invest in production property and equipment, providing a credit of 5% to 10% on their investments. Furthermore, the START-UP NY program creates tax-free zones for new and expanding businesses, offering a ten-year tax holiday on various state taxes to qualified businesses that relocate to these zones.

HIRING AND RETENTION INCENTIVES

The Federal Work Opportunity Tax Credit (WOTC) is available to businesses that hire individuals from certain groups facing barriers to employment like veterans, individuals on public assistance, ex-felons, qualified summer youth, and more. The WOTC credit equals 40% of the first $6,000 in qualified first year wages. The maximum credit is $2,400.

New York State also offers several different tax credits for hiring employees from targeted groups. What’s more, the Excelsior Jobs Program provides refundable tax credits for businesses in certain industries that commit to invest in, hire, and retain employees in NY. Also, the Empowerment Zone Tax Credit provides an employer in a designated empowerment zone with up

to a 20% credit of the first $15,000 in annual wages paid to residents of the zone for services within the zone. Learn more at www.tax.ny.gov/bus/business-incentives.

There are also incentives to help you retain employees. For example, under SECURE 2.0, you may be eligible to claim a tax credit of up to $5,000 for each of three years for the costs to start, administer, and educate employees about a SEP, Simple IRA, or other qualified plan. Under the Employer-Provided Childcare Credit you may be eligible to receive a tax credit of up to $150,000/year for a qualified childcare facility, resources, and referrals.

WORKFORCE DEVELOPMENT INCENTIVES

When you invest in developing your employees’ skills, you may be eligible for New York tax incentives. For example, the Employee Training Incentive Program provides a refundable tax credit of up to 50% of eligible training costs, as well as a tax credit of 50% of any stipend paid to an intern. The Empire State apprenticeship tax credit provides a credit of $2,000 to $6000 per apprentice per year (up to five years), with a higher credit available when the apprentice is a disadvantaged youth.

ENERGY INCENTIVES

The Inflation Reduction Act (IRA), combined with New York State incentives, can help your small business adopt clean energy technologies and equipment and save on energy costs. For example:

• Energy Efficient Commercial Buildings. Receive a federal tax credit of up to $5 per square foot for new construction or a retrofit involving lighting, heating, cooling, ventilation, hot water systems and building envelop improvements. In addition, in New York you may be eligible for a variety of equipment rebates for heat pumps, boilers, water control systems, HVAC systems, lighting, weatherization and more, depending on your energy provider.

• New Electric Vehicles. Receive a federal tax credit of up to $7,500 for vehicles under 14,000 pounds and up to $40,000 for larger vehicles. In addition, the Charge NY initiative offers up to $2,000 in rebates for new EV car purchases or leases.

• Vehicle Charging & Fueling Stations. Receive a federal tax credit of up to 30% ($100,000 maximum) for installing a vehicle charging station. In addition, NYS offers up to a $2,000 rebate per port at workplaces plus an additional $500 per port if located in a disadvantaged community.

• Solar. Receive a federal tax credit of up to 30%, plus another 40% in bonus credits if certain materials are mined, produced, or manufactured in the U.S.; if the business is in a low-income or energy community; and if labor requirements are met. Also accelerate depreciation on installation costs. Combine that with potential NYS tax credits, financing, and incentives.

As always, it’s in your best interest to speak with a tax professional when it comes to any tax matters.

WHY CHOOSE US?

Building projects that build community

At LeChase, our reputation for integrity, safety and quality has earned us the privilege of building projects – large and small – that continue to shape the future of Sullivan County. Whether a project is in healthcare, K-12, higher education, commercial, manufacturing, hospitality or housing, we are proud to support efforts that make the community an even better place to live, work and learn.

Time to Celebrate Partnership turns

2024 is the 30th Anniversary of the Sullivan County Partnership for Economic Development. To commemorate this milestone, we had our friends at Media Solstice design us a special logo to be used all year.

In February, we kicked off the year-long celebration with a “Speakeasy-themed” networking event at a secret location. (The Black Library, Monticello, NY) A great time was had by all at this sold-out event, complete with period dress, an old bank vault, bourbon and spirits tasting provided by Do Good Spirits, Roscoe, NY., craft beer provided by the Roscoe Beer Company and Aspire Brewing, and wine provided by Decant Wine and Spirits, Hurleyville, NY.

A special thank you to Party Master for the incredibly authentic 1920’s staging and décor.

Mark your calendars!

For Thursday, October 3rd for our Annual Meeting at Resorts World Catskills. You don’t want to miss this premiere event in Sullivan County celebrating 30 years of supporting and driving economic development and enhancing the quality of life in the Sullivan Catskills.

The Importance of NON-DISCLOSURE AGREEMENTS in Business Transactions

Consider a scenario: A developer, on his usual route home from work, stumbles upon a prime piece of waterfront property. Eager to explore its development potential, he reaches out to an investor, sharing his vision and securing a partnership for acquisition and development. Fast forward a few years, and the once-undeveloped land is now a thriving luxury shopping and residential complex—owned solely by the investor. The developer, now left out of the equation, laments his failure to safeguard his interests with a Non-Disclosure Agreement (NDA).

In this fictional tale, the investor leveraged the developer’s insights for personal gain, leaving the developer sidelined. What could the developer have done differently to protect his position? The answer lies in the power of Non-Disclosure Agreements. This article delves into the significance of NDAs, outlines their fundamental elements, discusses best practices in their drafting, and offers sample provisions under New York law.

UNDERSTANDING NON-DISCLOSURE AGREEMENTS (NDA s)

A Non-Disclosure Agreement, commonly referred to as an NDA, is an agreement between two or more parties pursuant to which one party agrees not to disclose or utilize information obtained from another party for purposes beyond a defined scope or without specific

Amy Natsoulis, Partner Cuddy & Feder LLP

The Importance of Non-Disclosure Agreements in Business Transactions

authorization. NDAs can be unilateral, involving one party’s commitment to confidentiality, or mutual, where both parties agree to protect each other’s confidential information.

THE IMPORTANCE OF NDA s

The developer’s plight underscores the critical role of NDAs in business dealings. Without such an agreement in place, a party seeking to prevent the unauthorized use of confidential information may face a daunting legal challenge. Establishing the nature of the disclosed information as protected under common law, such as trade secrets, often requires time, expense, and often occurs after the disclosure has occurred and harm has already been inflicted. In contrast, NDAs offer a proactive approach, enabling parties to delineate and safeguard sensitive information beyond what common law may protect. Furthermore, NDAs foster an environment conducive to transparent negotiations, assuring the disclosing party that their proprietary information remains secure.

IDENTIFYING PARTIES AND TIMING OF NDAs

NDAs find application in various business transactions, including joint ventures, development agreements, and asset sales. Prompt execution of an NDA, preferably before divulging confidential information, is paramount. Clearly identifying the parties involved, including their affiliates and representatives, ensures comprehensive coverage under the agreement.

Best Practices Tip: You may wish to consider defining the “receiving party” (i.e., the party obligated to protect the Confidential Information) and the “disclosing party” (i.e., the party disclosing the Confidential Information) as including the affiliates, officers, members, shareholders, etc. of each of the receiving party and the disclosing party.

ESSENTIAL ELEMENTS OF NDAs

1. Party Identification: The NDA should unambiguously identify the disclosing and receiving parties, specifying their obligations regarding confidential information.

2. Definition of Confidential Information: Clarity in defining what constitutes confidential information prevents misunderstandings. The scope of confidential information should be carefully delineated to include relevant details while excluding publicly available or previously known information.

3. Restrictions on Disclosure and Use: To safeguard confidential information, NDAs impose restrictions on its disclosure to third parties and limit its use to specific purposes outlined in the agreement. Exceptions may allow disclosure to authorized advisors or when legally compelled.

SAMPLE LANGUAGE REGARDING COMMON CARVE-OUT TO RESTRICTIONS ON DISCLOSURE:

In the event that receiving party becomes legally compelled (by deposition, interrogatory, request of documents, subpoena, civil investigative demand or

similar process) to disclose any of the Confidential Information of disclosing party, receiving party shall provide disclosing party with prompt prior written notice of such requirement so that it may seek a protective order or other appropriate remedy and/ or waive compliance with the terms of this NDA. In the event that such protective order or other remedy is not obtained, or the disclosing party waives compliance with the provisions hereof, receiving party agrees to furnish only such portion of the Confidential Information which is legally required to be furnished.

• Receiving Party will not use any Confidential Information for any purpose other than in furtherance of the Business Purpose [should be a defined term] or as expressly authorized in writing by the disclosing party. Receiving Party shall not disclose the Confidential Information to any person or entity other than receiving party’s officers, employees, consultants and legal advisors who need access to such Confidential Information to affect the intent of the Business Purpose.

About Amy Natsoulis

Amy is a Partner at Cuddy & Feder LLP where she serves as Vice-Chair of its Real Estate, Corporate, Finance & Non-Profit Groups. Amy’s practice is multifaceted, encompassing commercial and residential real estate transactions, commercial lending transactions, leasing (including retail, office, medical, solar and telecom leases), and various corporate matters such as formation, operating, employment, and termination agreements.

REMEDIES AND MISCELLANEOUS PROVISIONS

In the event of a breach, NDAs typically provide for remedies such as injunctive relief and indemnification. Additionally, they safeguard the proprietary nature of confidential information, shield disclosing parties from liability arising from inaccuracies, and prevent the misuse of information to circumvent business opportunities.

CONCLUSION

In conclusion, Non-Disclosure Agreements serve as invaluable tools in safeguarding sensitive information and preserving business interests. Their proactive implementation fosters trust and transparency, enabling parties to engage in negotiations with confidence. By adhering to best practices in drafting and incorporating robust provisions, parties can mitigate risks and ensure the integrity of their confidential dealings.

About Cuddy & Feder LLP

Cuddy & Feder LLP proudly serves clients in the areas of real estate; public and private finance (including tax-exempt and taxable bond financing); litigation & appellate practice; land use, zoning & development; telecommunications; energy & environmental; cannabis law; non-profit organizations; and trusts, estates & elder law. Over 50 years, we have established ourselves as the leading law firm serving a vast region that includes Westchester, New York City, Connecticut and the Hudson River Valley. Our foundation is local, and we enjoy enduring relationships with leaders, institutions and decision-makers in the communities we serve.

NEW

YORK’S FRESHWATER WETLANDS ACT: Navigating Changes and Challenges in 2025 and Beyond

By James S. Arrabito, Esq., Catania, Mahon & Rider, PLLC

In April 2022, the New York State Legislature amended the Freshwater Wetlands Act to make several impactful changes to the way freshwater wetlands are regulated. These changes are intended to increase the protectiveness of the State’s wetlands rules.

These amendments arose even as federal jurisdiction over freshwater wetlands was once again thrown into limbo by the United States Supreme Court’s decision in Sackett v. EPA – the latest installment in the ongoing debate over the reach of EPA jurisdiction under the Clean Water Act. The Department of Environmental Conservation (“NYSDEC”) has not yet issued a formal rules proposal to implement the amended Act provisions. However, many of the changes set forth in the amended Act will start phasing in at the beginning of 2025, and NYSDEC recently issued an Advanced Notice of Proposed Rule Making (“ANPR”) seeking stakeholder input on the development of regulations to implement the amended Act. There are several crucial considerations that NYSDEC and the regulated community would do well to keep in mind as the rulemaking process unfolds.

WHAT ARE FRESHWATER WETLANDS?

Broadly speaking, freshwater wetlands are ecosystems characterized by the presence of water, unique soil conditions, and specific plant life. Wetlands play a crucial role in the environment. For example, wetlands are critically important in mitigating the impacts of climate change by acting as carbon sinks and by sequestering large amounts of carbon dioxide. Moreover, they provide resilience against flooding.

NEW YORK’S BASIC FRAMEWORK FOR REGULATING FRESHWATER WETLANDS

Freshwater wetlands are subject to robust regulation by NYSDEC, aiming to protect important ecological functions while balancing against the need and desire for development and redevelopment of real properties around the state. Under the Act, NYSDEC is tasked with identifying, mapping, and regulating activities within designated freshwater wetland areas and to administer a permit program for certain activities to be conducted within or nearby wetlands. NYSDEC’s wetlands inventory map has historically been a fundamental aspect of that regulatory regime. Under the Act, NYSDEC was required to map those areas that would be regulated as freshwater wetlands. By various means, NYSDEC delineates potential wetlands for mapping and regulation, as well as 100-foot buffer (or ‘check’) zones around those wetlands. While the Act and its implementing regulations set forth various criteria for classifying a site as freshwater wetlands, the current framework places sites within NYSDEC’s jurisdiction only when they meet the default threshold size of at least 12.4 acres in area or have “unusual local importance.” The default threshold imposed under the current framework in conjunction with the relatively strict definition of “unusual local importance” has left many smaller would-be wetlands unregulated.

REDUCED IMPORTANCE OF NYSDEC’S WETLANDS MAPS

Pursuant to the 2022 amendments to the Act, as of January 1, 2025, NYSDEC’s wetlands maps will become informational only. In place of definitive mapping, NYSDEC will rely “primarily on available aerial imagery and available remote data to determine whether there are state-regulated freshwater wetlands on a parcel.” Those parcels depicted as having wetlands on the maps will continue to be regulated as such, but, going forward, the maps can no longer be relied upon as being definitive. Also beginning in January 2025, the State will expand the definition of “unusual importance” for determining whether potential wetlands not meeting the default threshold will nonetheless be regulated as wetlands. The application of eleven new criteria to define “unusual importance,” as outlined in the ANPR, will likely significantly expand the scope of NYSDEC jurisdiction. Although the practical implications of these amendments are not yet fully known, taken together, they could create significant uncertainty in the development community. Under the present state of play, NYSDEC mapping provides some extent of predictability, even if that predictability has the effect of artificially limiting NYSDEC jurisdiction given the administrative processes required to amend the maps. But under the coming state of play, it may be difficult for developers to know with certainty whether a particular parcel contains jurisdictional wetlands where the would-be wetland does not meet the default threshold, raising new complications in the due diligence and project planning processes. Thus, as a practical matter, developers may effectively need to avail themselves of NYSDEC’s jurisdictional determination process for each individual site, which would undoubtedly add time and expense to projects.

LOWERED DEFAULT ACREAGE THRESHOLD

The most significant of the amended provisions will come online in 2028: the current 12.4-acre default threshold for NYSDEC jurisdiction will be lowered to 7.4 acres. This will dramatically increase NYSDEC protection over freshwater wetlands and can be expected to bring many, many new parcels into the

New York’s Freshwater Wetlands Act: Navigating Changes and

regulated fold. Certainly, this increasing protection of wetlands is an important goal, but NYSDEC will need to carefully consider how best to implement this sweeping increase in regulatory scope. For example, NYSDEC should consider how best to grandfather sites with projects underway or in the approvals process (including local-level land use approvals), which may be impacted by this expanded jurisdiction. Many shovel-ready sites that did not formerly meet the default threshold may suddenly find themselves with a potential regulatory problem, and NYSDEC ought to be sensitive to that as it proceeds through the rulemaking process. Moreover, developers will want to be aware of this coming change and keep abreast of the evolving state of play. Indeed, as these expansions in wetlands protections phase in, developers will be well-advised to consider the impact of expanded wetlands jurisdiction as a key part of their due diligence and project planning processes.

Although the comment period for the ANPR is closed, public participation remains essential. The ANPR was

only the beginning, and it is anticipated that NYSDEC will issue its formal proposed rulemaking later this year. Stakeholder participation is key to ensuring that NYSDEC’s rulemaking adequately balances the need to protect freshwater wetlands and the desire for continued robust and sustainable growth, particularly in the Lower Hudson Valley.

gary silver

Describe your business.

Our firm’s practice focuses on the areas of real property (development, planning, zoning, sales and purchases –residential and commercial), corporate (preparation of agreements, purchase and sale of companies), litigation (personal injury, commercial), municipal law, and wills and estates. We pride ourselves in personal attention to each of our clients and our diligence in serving our clients’ needs.

My expertise is in analyzing a particular issue, breaking it down into its component parts, addressing each component part, and then designing solutions to best serve the needs of the person or entity which faces that issue. I am the “detail” guy.

How long have you been on the partnership board?

Since 2014.

What made you initially want to get involved with the partnership and ultimately run for the board?

Sullivan County was financially distressed, and I wanted to become part of an organization which worked to improve the economy in our county. I have always believed that a high tide raises all boats, and the better the overall economy in our county, the better will be the lives of our residents. Bringing in new businesses and supporting our existing businesses is crucial to this.

What is the importance of economic development? Specifically, as it relates to Sullivan County.

Economic development helps impoves the lives of everyone. It creates more jobs and better paying jobs. It helps businesses expand, improving the lives of its owners, and helps them hire more employees. With higher paying jobs, employees can live better lives and spend more money in our county (e.G. Restaurants, stores, suppliers), which increases sales tax revenue (allowing our county to provide greater services and/or lower taxes) and puts more money in

the hands of businesses, which starts the cycle all over again. I view economic development as leveling the playing field, allowing more of our residents to participate in our economy at a higher level.

Where do you see economic development headed in the next five years?

I see more new home construction, more second home purchases, expansion of “recreational” services (breweries, distilleries, restaurants), an expansion of our hospitality sector (with more boutique hotels and b&bs), and more distribution centers constructed. I also expect to see more small businesses opening, perhaps in niche areas which only serve small segments of society (e.g., Hobbies, gift items, clothing).

What things do you believe economic development organizations and professionals should be addressing moving forward?

We need to be more transparent and public about our efforts, so more residents know what we are doing and the results we have achieved; too many residents have no idea what we are doing and the postivie impact it will have on their lives. We also need to take steps to include more of our citizens in our developing economy, by reaching out to more small businesses and assisting them with the issues that they face.

Here’s your chance to brag about your company and its people— what are you proud of?

My law firm is small, but it is mighty! We consider ourselves a family who works together (and sometimes yells at each other), but we always have each other’s backs and we work tirelessly to achieve our goals. My partner Jacob is the “master” of real estate development: he can corral a project from its initial proposal to final approval like no one else I know. My paralegal Eve can get more done – and done professionally – than any 3 other people working together, and in half the time. I may not like what I am working on at a particular time, but I am always happy to work with my firm and staff.

personal

Education

I grew up on Long Island. Graduated from Brandeis University in 1981 and moved up to Sullivan County in June 1984 after graduating from Hofstra Law School (with distinction) in December 1983 to take a job as the Confidential Law Secretary to the Hon. Robert C. Williams, Sullivan County supreme court judge.

Family

My wife Diane and I loved it up here and decided to stay in Sullivan County and raise a family here. We have two daughters — Alexandra and Michelle (who is married to Bradley) and two grandsons, Julian and Nico.

2017

• Tansukh Dorawala Humanitarian Award—Rotary

• Partnership Distinguished Service Award

Medinova NY—Community Service Award (Haiti)

If you were to sit down with a new member of the partnership, what advice would you give them to make the best use of their membership?

Go to our website to see what we do. Find out the services we can offer you. If you are thinking of expanding or purchasing a new facility (or building one), ask our staff what we can do to assist you. See who our other members are. Are there any with which you can partner in your business? If so, contact our staff to see if they can assist getting you together to assist in that area or assist you in finding other funding sources. Consider running for the board to get more involved in improving Sullivan County’s economy.

Volunteer/Humanitarian Activities Boards:

• Cornell Cooperative Sullivan County

• Operation Endeavor

•New Hope Community (Vice-Chair)

Liberty Rotary, participated in disaster relief in Haiti, Puerto Rico and North Carolina. I was raised to believe that if you can help someone, you should. That credo spills over to my work with the Partnership.

2019

• Sullivan County Democratic Committee— Humanitarian and Community Work 2020

• Syda Foundation Community Service Award

WHO WANTS TO BE FEATURED

in our very special Summer edition of In the Know?

As the Partnership prepares to celebrate 30 years as an organization, we’d like to invite our members to tell us THEIR stories of success. As we reflect on our journey and the contributions of those long-standing companies who have also endured and prospered, we believe it’s essential to highlight those who have stood the test of time and achieved similar remarkable milestones.

We are planning to feature a select group of Sullivan County “home-grown” businesses in our upcoming Summer issue in August. The article will be a tribute to the businesses that have not only weathered storms, but have also thrived, survived, expanded and continue to serve as pillars of strength and longevity in our community.

Being featured in our anniversary article provides a unique opportunity to showcase your business to our readership. It’s a chance to share your story, your successes, and your insights with a broader audience and to inspire others on their entrepreneurial journey. We believe your stories will resonate deeply and add significant value to our 30th celebration in print.

If you’re interested in participating, please contact Jen Cassaro at cassaro.jen@scpartnership.com to schedule a brief interview. We’ll be sending out e-mails sometime in May and will include companies on a first come-first served basis. Thank you all for being a part of “Our Story” and we look forward to hearing yours.

Investors on the Map

Monticello

South Fallsburg

Ferndale

Goshen

Circleville

Cold Spring New Windsor

Ever Wonder Where Our Investors are Located?

From Roseland, NJ to Livingston Manor, NY — they’re not just from Sullivan County! Each issue, we’ll be calling out members from all over the map.

845-434-8812

14 Walden Savings waldensavings.bank

845-346-5621

2108 Route 302

Circleville, NY 10919

15 Yasgur Road Productions LLC

yasgurroadcampgrounds.com

845-798-5906

34 Yasgur Road Bethel, NY 12720