Presenting a live 90-minute webinar with interactive Q&A Structuring CC&Rs for Mixed Use Projects Drafting, Analyzing, Interpreting, and Amending CC&R Declarations TUESDAY, FEBRUARY 6, 2018 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Janet L. Bozeman, Principal, Hyatt & Stubblefield, Atlanta David A. Herrigel, Principal, Hyatt & Stubblefield, Atlanta 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. 1.
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Structuring CC&Rs for Mixed Use Projects February 6, 2018 Janet L. Bozeman Hyatt & Stubblefield, P.C. 233 Peachtree St. NE, Suite 1200 Atlanta, Georgia 30303 jbozeman@hspclegal.com (404) 659-6600
Understand Project Identity 17
Project Organization Single building with different uses or multiple buildings? Is condominium applicable or appropriate? Condominium act might provide appropriate rights and protections Does act adequately contemplate mixed use without unduly burdening business? Reciprocal easement agreement? Need to create appropriate easements, rights and protections 18
Preliminary matters Evaluate physical arrangement and shared uses Parking Pedestrian access Utilities Building systems Life safety systems (fire suppression, fire escape) Loading docks Trash & recycling collection 19
Preliminary matters Determine plan for maintenance and operation Utilities Cleaning Beautification (flowers, decorations, etc.) Routine maintenance Security Repairs Renovations and alterations 20
A. Identify and Describe Project Components Identify and describe all of the shared project components in a precise manner to help ensure that all necessary easements are created and allocate maintenance responsibility for each component. 21
A. Identify Project Components 1. COMMON AREAS Property owned by association for the common use or benefit of more than one unit 2. SHARED USE AREAS Property or facilities within one or more units for the common use or benefit of more than one unit 3. LIMITED COMMON AREAS Property or facilities for the exclusive use or primary benefit of less than all units 22
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A. Identify Project Components 1. POTENTIAL COMMON AREAS Parking facilities (including subsurface garages underneath parcels) Driveways or private roads Loading docks Trash & recycling facilities Sidewalks and pedestrian thoroughfares Signage Stormwater runoff and drainage facilities Skywalks Management or security offices Janitorial and maintenance facilities 24
A. Identify Project Components 2. POTENTIAL SHARED USE AREAS Life safety systems (fire suppression, fire escape) Elevators, escalators and stairwells Building systems Building support/structure Utility lines Party walls Foundation Roof 25
A. Identify Project Components 3. POTENTIAL LIMITED COMMON AREAS Elevators that serve only upper floors Utility pipes, lines and ducts that go through one unit to serve another unit Rooftop HVAC or antennae Awnings, signage, balconies Assigned parking 26
B. Create Appropriate Easements or Use Rights Easements will depend upon design and intended uses Describe with specificity the burdened and benefitted properties Specify whether appurtenant (for the benefit of property, not a particular owner) or in gross (for the benefit of a particular person; terminates when person is no longer the property owner) 27
C. Particular Easements 1. CONSTRUCTION, MAINTENANCE AND REPAIR Provide an easement through another owner s unit for the purpose of constructing initial improvements, performing routine maintenance, repairing or reconstructing (after a casualty) the initial improvements and, if appropriate, altering and renovating the initial improvements. 2. SUPPORT AND ENCROACHMENT Provide an exclusive easement to attach improvements to or receive support from another unit. 28
C. Particular Easements 3. LIMITED COMMON AREAS Provide an easement for the purpose of installing, maintaining and using the item. 4. ACCESS EASEMENTS FOR SHARED USE AREAS 5. INTENDED USE Easements over another s property should generally be restricted to the intended use of the item. 6. VIEW EASEMENT Exclusive or limited rights for sight, views, air and ventilation. 29
D. Construction 1. APPROVAL OF PLANS If project components will be constructed by different owners, the design of the different improvements will affect other parcels Is total architectural control appropriate? Approval over only certain aspects of design? Standards for disapproving Approval not unreasonably withheld 30
D. Construction 2. COORDINATION AND COOPERATION May need oversight where initial construction, reconstruction or renovation of existing improvements will impact other units. May need to address hours of construction, staging and storage areas Temporary access, facilities or utilities needed (i.e., cranes over other property) 31
D. Construction 3. CONSTRUCTION STANDARDS Design guidelines o Setbacks o Building envelopes o Building heights o Curb cut locations Good and workmanlike manner using quality materials Good construction and engineering practices 32
E. Affirmative and Negative Covenants 1. PROHIBITED USES OR USES REQUIRING APPROVAL Exclusivity/competition concerns Quality of vendors some debate about what first class means Types of commercial uses prohibit those not compatible with residential Limits on signs, sidewalk sales, etc. Airspace development rights 33
E. Affirmative and Negative Covenants 2. PREFERRED USE RIGHTS Reserved or restricted parking (e.g., bank parking can be used by restaurant at night) Must have procedures to ensure handicapped spaces available for disabled persons o Reserve handicapped spaces only for disabled persons o If selling/assigning handicapped spaces to non-disabled persons, have clawback rights o Provide valet parking 34
E. Affirmative and Negative Covenants 3. MAINTENANCE OBLIGATIONS Generally each owner maintains its own private or exclusive area Obligate someone to maintain common areas and shared use areas (association) Not all components need to be addressed the same 35
E. Affirmative and Negative Covenants 4. ALLOCATE SHARED COSTS Determine a method for allocating costs for shared components among benefitted parties Can be difficult to conceive of what may be fair to all at the outset Build in as much flexibility as possible to change allocations or add/subtract cost categories Allocation should bear some relation to type of shared item, intensity of use and benefit received 36
E. Affirmative and Negative Covenants 4. ALLOCATE SHARED COSTS Consider whether some uses should be charged less/subsidized by other uses (e.g., nonprofits) Consider whether some uses should be charged less because they support or provide needed amenities to residents or retail customers (food vendors, newsstand, convenience store) 37
Common Methods for Allocating Liability for Common Expenses Fixed percentage allocations o Arbitrary allocation (e.g., 50-50 split) Percentage based on land use/load factor in relation to other land uses; assign points or equivalent units o Land points based on parcel size o Points based on linear feet of road frontage o Building points based on square feet of gross floor area within structures o Use points based on land use classification o Combination of the above 38
Common Methods for Allocating Liability for Common Expenses Fluctuating percentage based on value or actual use/intensity of use o Percentage of sales o Quantity of parking spaces used 39
E. Affirmative and Negative Covenants 5. CASUALTY PROVISIONS Obligation to rebuild for critical items Circumstances under which owner does not have to rebuild Time frame during which must be rebuilt Clearing of premises 40
F. Consider Current Trends Make sure restrictions are adequate for current trends Electric vehicle charging stations Drought-resistant landscaping & sprinkler systems Solar panels Modular and refabricated construction Home-based businesses Curbside management Uber/Lyft pickup stations Drones 41
G. Drafting Considerations 1. Leverage of anchors is significant. 2. Strike a balance between sufficient limitations/description of future development to protect rights of pioneer developers without imposing unworkable limitations. 3. Make cost allocations fluid and easily amendable. Do a budget and work backwards to create a methodology that the market will accept. 42
G. Drafting Considerations 4. Don t allow residential to unduly restrict or control commercial operations but give residential reasonable protections to allow peaceful enjoyment of residences. 5. Understand the relationship of the project components and uses. 6. Maintain appropriate developer control. 7. Flexibility, flexibility, flexibility to deal with the unexpected. 43
Questions? 44