Presenting a live 90-minute webinar with interactive Q&A CC&Rs and Easements for Commercial and Mixed-Use Projects Drafting and Amending CC&R Declarations and Easements: Best Practices for Commercial Developers THURS DAY, NOVEMBER 7, 2013 1pm East ern | 12pm Cent ral | 11am Mount ain | 10am Pacific Today’s faculty features: David A. Herrigel, Principal, Hyatt & Stubblefield , Atlanta Robert M. Diamond, Partner, Reed Smith , Falls Church, Va. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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CCR’s and Easements for Commercial and Mixed-Use Projects November 7, 2013 Prepared and Presented by: David A. Herrigel Hyatt & Stubblefield, P .C. Peachtree Center South Tower 225 Peachtree Street, N.E., Suite 1200 Atlanta, Georgia 30303 (404) 659-6600 dherrigel@hspclegal.com
A. Goals of Governance Structure 1. Long-term ownership, operation and maintenance of common areas and amenities 2. Smooth and efficient operation and administration before and after development period 3. Foster an environment for all uses to succeed 6
A. Goals of Governance Structure (cont.) 4. Creation and enforcement of community-wide standards of architecture, maintenance, and use 5. Maximize marketability, developmental control, flexibility 6. Create a community 7
B. Things to Avoid and Why 1. Creating a nonresidential association unless a reason exists to do so (e.g., ownership of common property) a. Nonresidential or commercial owners may not have time, resources, or interest to be involved in the day-to-day planning and affairs of the community b. Creates unnecessary administrative and other costs 8
B. Things to Avoid and Why (cont.) 2. Too much governance – Service Areas v. Sub- Associations a. Administrative and other costs of Sub-Associations b. Finding something for Sub- Association to do 9
B. Things to Avoid and Why (cont.) 3. Direct interaction between nonresidential and residential owners a. Competing interests and expectations for the community and for residential and nonresidential owners b. Different levels of commitment and participation 10
C. Drafting Tips/ Techniques 1. Know your audience • Be user friendly • Use plain language; Avoid legalese 2. Organization • TOC • Consistent use of defined terms 3. Be wary of forms 4. Flexibility v. certainty 11
D. Significant Document Provisions 1. Membership and Voting • Parcel owners and parcel associations • Composition of board of directors • Assigning votes to different uses 12
D. Significant Document Provisions (cont.) 2. Allocation of assessment liability Allocation methods – Who • pays what? How to calculate? Different assessments for • different services Lien rights • 13
D. Significant Document Provisions (cont.) 3. Easements Granting and reserving in CCR’s • Development and construction • period Operational easements • Public use of facilities • 14
D. Significant Document Provisions (cont.) 4. Development Rights What declarant rights are • appropriate? What is an appropriate period of • control? Transition/ turnover to owner • control 5. The 1000 Pound Gorilla – Dealing with anchors and other big players 15
Documenting Mixed-use Developments Robert M. Diamond rdiamond@reedsmith.com
Essential Principles 1. Anticipate the unexpected 2. Define shared components 3. Understand the relationship of the parts or uses 4. Opt for simplicity 5. Avoid complex, multi-level structures with varying membership 6. Documents must be flexible 7. Maintain control by the developer 17
Essential Provisions of the Documents A. Definitions 1. Shared use areas; common areas; limited common areas; reserved common areas 2. Mortgagee 3. Maintenance (operating expense) vs. capital replacements (reserve expense) 18
Essential Provisions of the Documents B. Easement rights C. Maintenance Responsibilities D. Expense allocation and assessment provisions E. Voting rights and governance/decision- making process F. Insurance G. Reconstruction and repair 19
Essential Provisions of the Documents H. Enforcement provisions I. Architectural control and use restrictions J. Mortgagee rights K. Amendment L. Termination M. Alternative dispute resolution vs. litigation 20
Special Situations A. Leasehold and fee B. Seniors communities C. Timesharing parking D. Using airspace and land condominiums before construction to finance the project 21
Ballston Metro Center Half leasehold over Metro station; Half fee simple Hotel, retail mall, parking garage and residential condominium Components The “box” – O = office who owns C = residential condo H = hotel who uses R = retail who fixes P = parking who pays 22
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Leisure World of Virginia holes in the donut limited liability company Governance structure – Each subassociation and each owner NOT in a subassociation is a member. Individual homeowners are NOT members. Five condominiums plus the developer. Developer has voting control until the project is completed. 30
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