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Land Use and Zoning

6
Aug
2019

Qualified Opportunity Zone Funds

6.08.2019 Jessica Perdue Commercial Financing and Lending Land Use and Zoning Public Private Partnerships Real Estate Development

Tax reform legislation enacted in 2017 created the opportunity for significant new capital gains tax benefits for investors in qualified opportunity funds (QOFs). The primary purpose of the law is to create economic development as well as job creation in economically distressed communities. The Treasury, in coordination with State Governors, certified nearly 9,000 census tracts as QOZs.  There are two enumerated QOZs right here in Manassas and several more throughout Fauquier & Prince William County. See Designated Qualified Opportunity Zone map here.

Significant capital gains tax benefits for investors

A QOF is an investment vehicle that invests in real estate or other businesses located in certain areas that have been designated as qualified opportunity zones (QOZs). This legislation provides the ability for investors with existing capital gains tax liability, to reduce the amount of those tax obligations by up to 15%, and more significantly, allowing the reinvestment of those funds to accrue tax free; provided, that, they are invested in a QOZ and held for at least 10 years.  Clearly, this is a tremendous tax advantage for investors that are interested in making a real estate or business investment in a QOZ.

No restriction on the source of those capital gains

Another added benefit is that there is no restriction on the source of those capital gains in order to take advantage of this new legislation. While QOZ investment options are limited to real estate or businesses in QOZs, the source of funds can come from a wide range of investments giving rise to capital gains tax.

Additional guidance released in May 2019

Although when it was first enacted, there were many unanswered open issues with respect to the legislation, the United States Department of the Treasury (Treasury), has issued proposed regulations and additional guidance related to QOFs on May 1, 2019, which updated the original regulations and guidance from October 19, 2018. Updates included clarification on topics such as:

  1. Investing Capital gains into a QOF
  2. Structuring Issues related to investment into a QOF
  3. Investing by the QOF into a QOZ property
  4. Operating within the qualified opportunity zone
  5. Exiting the QOF

Need Assistance?

Our experienced team of attorneys are able to assist you with your QOF investment questions, clarification on the recent legislative updates, and prospective transactions in order to take advantage of this unique opportunity.

Authored by: Markus Ebert

14
May
2019

Book Smarts…VF&N attorney, textbook contributor

14.05.2019 Jessica Perdue Construction Land Use and Zoning News & Events Real Estate Development

Pictured above: VF&N land use and zoning attorney, Karen Cohen, with legendary engineer, Sid Dewberry, PE, LS, Chairman Emeritus, Dewberry, Kat Grimsley, Director of the MS Real Estate Development program at George Mason University, and the team of book contributors, celebrating the publication of the third in a series of land development books by industry-leading design firm, Dewberry. 

Development of the Built Environment: From Site Acquisition to Project Completion is a textbook that explores the entire development process from an applied perspective to provide architects, civil engineers, and other team members with an understanding of the context in which real estate development occurs.  Karen, fellow alumnae of the Mason Masters of Real Estate Development (MRED) program, and others, were contributors and advisors.

2
May
2019

Land use and zoning explained: Repurposing an established building through a special use permit

2.05.2019 Jessica Perdue Agritourism Land Use and Zoning Real Estate Development

The commercial real estate and property sector in Northern Virginia and Prince William County has experienced fluctuations in recent years which resulted in vacant buildings. For the owners of these properties, they’re left with a tough decision – let the property stay vacant or repurpose the property.

Repurposing property is using a building differently than the original intent. As a property owner, you are looking for cost-effective ways to keep your investment profitable.  For example, If you turn an old factory into loft apartments, or a barn into an event center, the building sees new life, you continue to make money, and all without building on existing green space. But it isn’t always that easy to change land use of an existing property.

Land use considerations

Land use laws regulate how businesses can operate on certain lands. The most common form of land use regulation is zoning. Cities use this legal process all across the country to help regulate their local development. Zoning laws prevent you from coming home to your well-established housing neighborhood and finding a big box store has set up shop next door.

While it’s not likely for a big box store to pop up next to houses, it is possible as in our earlier example, for a factory to become loft apartments. The zoning for that land must change to account for residents living on the property instead of people coming to work. Without making this change, it puts both the business operator and you, the property owner, in legal peril. It’s up to you to make sure the city allows the land use modification.

Special use permit (SUP)

A special use permit allows a local government to take a look at one particular development and to impose conditions needed to mitigate any impacts on the community. It is available only if the zoning ordinance provides for it.

To obtain a special use permit, you must get approval from the governing body in your community. You need to file an application, submit the filing fee, provide documentation supporting your request, and submit to questioning at a public hearing.  See the steps outlined below:

The process to obtain a SUP

Special Use Permit flow chart
Click to Download PDF
6
Dec
2018

VF&N Litigation Attorney Brett A. Callahan Wins Precedent Setting Cell Tower Case for Homeowners

6.12.2018 esettlemyer Land Use and Zoning Litigation Real Estate Development

Special Use Permit is Invalid

On Sept. 10th, 2018, Prince William County Circuit Court Judge Carroll Weimer, Jr. ruled in favor of a group of homeowners, voiding the grant of a Special Use Permit (SUP) for a cell phone tower.

Under the legal representation of Brett A. Callahan of Vanderpool, Frostick & Nishanian P.C. litigation team, the homeowners claimed that they were not properly notified of the Planning Commission hearing or the Board of Supervisors (BOS) public hearing on the SUP for a cell phone tower to be placed near their homes.

Meaning of the word “Current”

The homeowners bought into a new subdivision March through late May 2016, yet the SUP applicant and County used a February 3, 2016 Adjacent Property Owners (APO) list to send notices. This list was based on an earlier list generated by the County from the tax records. The applicant maintained that they had relied on the list provided by the County and the County’s policy was that an APO list up to six months old is “current.” The County likewise argued that it is their prerogative to apply an administrative interpretation that an APO list based on tax records up to six months old is “current” under the notice statute to avoid excessive burden on the County.

The judge determined:

  • A policy permitting APO lists based on six-month-old tax records is not in compliance with the law either under the plain meaning of the word “current” in the statute or legislative intent standard of statutory interpretation, especially in light of how quickly County tax assessment records are updated and the free and easy access to tax assessment records through the County’s website.
  • The SUP is void ab initio for lack of notice.

* NO GUARANTEE OF RESULTS: Our prior results, including successful judgments and settlements, do not guarantee a similar outcome. Each case we handle is different and therefore we cannot guarantee any specific result in your case

5
Jan
2018

Cheers to Randy for Effingham Manor Winery Win

5.01.2018 esettlemyer Agritourism Land Use and Zoning Litigation News & Events

VF&N Litigation Attorney Randolph D. Frostick Wins Case for Effingham Manor Winery

This story was reported in full in VA Lawyers’ Weekly (login required).

The Case

The conversion of the 18th century historic estate, Effingham Manor, into a winery caused a stir among residential neighbors who claimed that the winery breached the community’s 2004 development covenants and filed suit. The opposition came as a surprise to the winery owner, Chris Pearmund, thinking the winery would be an ideal fit for the bucolic community. He came to Manassas trial attorney Randolph D. Frostick (Randy) of Vanderpool, Frostick, & Nishanian, P.C. for legal representation in the case. On May 26, 2017, Prince William County Circuit Court Judge Steven Smith ruled in favor of our client, allowing Effingham Manor Winery to open for business in Fall 2017.

“Not only did Randy have compelling evidence in this case, but he also argued his point with finesse and detail in line with the law, which is what VF&N’s attorneys are known for. We are proud of his hard work, skill, and dedication to his client, and are thrilled by the outcome” says VF&N managing partner Michael Vanderpool.

The Facts 

A main point of contention in the case was a 2005 amendment to the development’s covenants that removed the manor house from the residential restrictions. This amendment was upheld in court despite arguments that it was invalid because it was not filed with a certification required by the Virginia Property Owners Association Act. Circuit Judge Steven Smith ruled that the legislation’s use of “may” over “shall” in regard to the amendment allowed an alternative method if authorized by a declaration.

Three key pieces of evidence bolstered the decision:

  • Zinone v. Lee’s Crossing Homeowners Ass’n held amendments following the terms of the declaration valid without regard for statutory procedure.
  • The General Assembly amended the POAA legislation this year to exempt declarations from the POAA’s procedural requirements for amendments, effective July 1, 2017.
  • The developer, Frank Smerbeck, testified that he had intended to keep the manor lot free of residential restrictions due to its historic value and commercial potential.

Homeowners also tried to block the winery’s road access, claiming that the increased traffic would overburden the easement. However, the judge backed the winery’s existing agreement to pay half of the road maintenance costs for the subdivision.

This case, along with the new legislative amendment, assures property owners’ associations and their lawyers that their declarative amendments are legally sound.

About Randy

Randy Frostick has been providing civil trial and alternative dispute resolution solutions to clients throughout Virginia since 1983 in both state and federal courts and various arbitration and mediation panels. He represents a diverse range of clients, including businesses, municipalities, and individuals, in a wide range of cases.  For over thirty years, Randy has provided his clients legal guidance to both avoid and resolve civil disputes without litigation, and when necessary, zealously advocated for their legal rights in court or arbitration. Learn more about Randy here.

25
Aug
2017

The Landing At Cannon Branch Moves Forward with Grants

25.08.2017 Mike Vanderpool Agritourism Land Use and Zoning Municipal Law Real Estate Development

On Wednesday, representatives from the City of Manassas came together with Governor Terry McAuliffe and Buchanan Partners to announce the receipt of grants permitting the construction of a new brewery and restaurant in the commercial development of the Gateway Center, now known as The Landing at Cannon Branch. The attorneys at VF&N are pleased to have represented the City of Manassas Economic Development Authority regarding the legal work necessary for the development of The Landing at Cannon Branch and the proceedings moving forward.

The Landing at Cannon Branch is a 40 acre, $250 million-dollar mixed used development which will house, not only the brewery, but hotels, retail, offices, restaurants and over 270 new homes, aiding in the community’s economic growth and engagement. Governor Terry McAuliffe announced that 66 new jobs will be created in the City of Manassas due to the placement of the brewery.

The City of Manassas has been marketing the Gateway property for twenty years, waiting on the best project and development partners to collaborate and make it into a unique place that residents of the locality and businesses can benefit from.

Buchanan Partners is working as the master developer of the project, while Stanley Martin will be developing a component in the residential side of the property. The location will also feature hotels, restaurants, and other commercial developments. As the attorney’s overseeing the City of Manassas developments for this project, we look forward to seeing what’s in store for this site.