Archives for 2017

Craft breweries are raising a glass to the Republicans’ new tax overhaul: It cuts the excise tax on beer. Retailers, long saddled with heavy tax bills, will get relief. So will some high-profile names in corporate finance, led by Wells Fargo.
The tax measure that President Donald Trump signed into law Friday distributes benefits across a range of American industries, from construction to health care.
“As a general rule of thumb, everybody’s doing well under this bill,” Martin Sullivan, chief economist at Tax Analysts, says of U.S. companies. “When you give out a trillion in tax breaks, it’s hard to create a lot of losers.”
No wonder the stock market has been roaring in anticipation of fatter after-tax corporate profits. The new law slashes the corporate tax rate to 21 percent from 35 percent. It applies a low one-time tax to the profits that corporations have long kept overseas to avoid paying taxes under the current higher rate.
It also delivers a windfall to people who pay personal taxes on business earnings. It lets companies immediately write off the full cost of new equipment. And it showers goodies on some individual industries, such as craft brewers, distilleries and wineries.
The reasoning behind shrinking the tax burdens of corporations is to free up money for companies to invest in buildings, equipment and people and thereby juice the economy — and, in turn, benefit workers. Yet mainstream economists have expressed mainly doubts that workers will benefit much from corporations’ lower tax burdens.
In dollars, the biggest tax savings from 2018 through 2027 go to manufacturers: $261.5 billion, according to an analysis by the University of Pennsylvania’s Penn Wharton Budget Model. Next-most-fortunate are insurance and finance companies ($249.4 billion) and retailers ($171.4 billion).
Supporters of the Republican tax bill point out that America’s 35 percent corporate tax is one of the highest among advanced economies. But the tax code is so riddled with loopholes that few corporations have actually paid that list price. Without the new law, the effective tax rate across all industries would have been 21.2 percent next year. With it, the effective rate across industries drops all the way to 9.2 percent in 2018, according to the Penn Wharton Model.
Not all industries have gained equally from loopholes. Retailers, for example, would have paid a 27.5 percent rate in 2018; under the new law, they’ll pay just 15.6 percent.
“The tax bill is a big shot in the arm for retailers, who have traditionally paid taxes at nearly the full amount,” says Matthew Shay, CEO of the National Retail Federation.
Shay says he thinks the bill will help retailers accelerate investment in e-commerce and mobile technology. He also predicts that the bill will induce foreign-owned retailers to shift investment dollars into the United States.
Finance and insurance companies would have paid an effective corporate tax rate of 26.1 percent next year. Now, it will be 14.3 percent. Analysts at Goldman Sachs have estimated that the tax law will boost big-bank earnings per share by 13 percent next year. The top beneficiary will be Wells Fargo, which has been dogged by scandals over cheating customers. It will enjoy an 18 percent earnings surge in 2018, Goldman estimates.
Technology companies like Apple and Google’s parent Alphabet Inc. can now catch a break on profits they’ve stored abroad. Under current law, corporations must pay the U.S. corporate tax on overseas earnings, but not until they return the money.
So tech companies have kept a big chunk of profits overseas — $669 billion worth at the end of last year, according to Moody’s Investors Service.
The tax overhaul imposes a discounted one-time levy on those earnings — 15.5 percent for earnings held in cash or other liquid assets and 8 percent for earnings held in harder-to-sell assets. That means tech companies can return the money the United States with less of a tax burden. But their employees may not have cause to rejoice: CFRA analyst Scott Kessler predicts that tech companies will use most of the money they repatriate to buy back their stock and pay shareholder dividends.
The tax bill let craft brewers cross something off their longstanding wish list: The federal excise tax they pay will be halved to $3.50 a barrel on the first 60,000 barrels. Wineries and distillers also get tax breaks.
At COOP Ale Works in Oklahoma City, founder Daniel Mercer forecasts a tax windfall of about $60,000 next year. The 8-year-old brewery, which has quadrupled its staff to 31 in the past 2½ years and whose annual revenue has reached $5 million, was already planning to invest $2 million in equipment. The tax savings will contribute to that project and also “helps with building tap rooms, and tap rooms are a really high-margin source of revenue,” Mercer says.
The tax plan also benefits owners of “pass-through” businesses, who pay personal income tax on business earnings: It lets them deduct 20 percent of the first $315,000 in earnings. The pass-through provision will help Esther Novis, who owns the Young Scientists Club, a company in Jamestown, Rhode Island, that sells science kits and other toys that encourage children to dabble in science.
“Margins in the toy industry are very small,” Novis says. “If there’s more money left over because we pay less taxes, we can be a little more competitive” and invest in new products.
Like many Americans, Peter Koehl of Skullduggery Inc., a toy maker in Anaheim, California, isn’t yet familiar with the details of the tax changes.
“As with most government actions, we hope for the best and brace for the worst,” Koehl says. “I can confidently tell you that a significant percentage of any ‘windfall’ will be invested in things that either increase sales or efficiencies.”
By: Paul Wiseman (Albuquerque Journal)
Click here to view source article.

Taos’ electric cooperative has announced it will build its largest solar array yet, to provide power for about 1,500 area homes.
In a news release, Kit Carson Electric Cooperative and its provider Guzman Energy Partners say Taos town officials signed a land-lease agreement along with a 30-year solar power purchase agreement for a four-megawatt solar power array at The Taos Regional Waste Water Treatment Plant.
Earlier this year, the Town Council approved a one-megawatt solar array at a cost to the town of about $2 million.
A new project, with a groundbreaking scheduled for February, will expand the array to provide an additional three megawatts, costing about $5 million, paid for by Kit Carson and Guzman, according to the co-op’s CEO Luis Reyes.
The upcoming project is part of Kit Carson’s goal of covering customers in its service areas in Taos, Colfax and Rio Arriba counties with 100 percent “daytime solar generation” by 2022, through eventual development of about 35 megawatts of solar power.
The four megawatts from the treatment plant array will serve Taos’ largest electrical substation covering most of the town and surrounding neighborhoods. “Taos is our largest load center,” said Reyes. “The array will easily absorb the load in that area.”
Last summer, Kit Carson joined a 10-year agreement with Guzman, a Florida-based company with a Denver office, to provide more renewable energy. With the plans at the treatment plant and two arrays under way at Angel Fire and Eagle Nest substations, Reyes hopes to have seven additional megawatts of solar power by mid-2018, adding to nine currently.
The news release from Guzman said having 100 percent daytime renewable energy will save 30,000 co-op members between $50 and $70 million through lower rates in the next 10 years.
By: Megan Bennett (Albuquerque Journal)
Click here to view source article.

Zoning due diligence, always a necessary process in every commercial real estate transaction, is now more important than ever.

Zoning due diligence has become a necessary process in every real estate investment transaction. A zoning report is a very inexpensive investment when compared to the cost of the transaction. The purpose of the report is to meticulously detail the allowances and restrictions within branded municipal codes that divide geographic areas, referred to as zones. Any development or acquisition needs to adhere to these codes to be considered legally compliant. Lenders, insurers, and buyers need to minimize their risk and ensure their investment is smart, safe and profitable before executing a transaction.
Lenders generally require a property to follow zoning ordinances before they will issue a loan. Certain states, such as New Jersey, make zoning reports compulsory before a commercial property can be purchased. In the event that a property becomes legally nonconforming, commonly referred to as “grandfathered,” lenders require a certain damage and reconstruction threshold percentage to again minimize the risk to their investment. Especially for longer-term occupants and investors, liability is the single greatest threat to property, either if a jurisdiction or zoning law changes, or if specific property designation changes. It is in the client’s best interest to protect their property by choosing a due diligence advisor that can provide insight and meticulous zoning reports, involving a team of professional planners, civil engineers, and legal professionals.
With zoning codes and commercial real estate development ordinances changing rapidly, a zoning report provides assurance to a lender and/or investor that the current and future use of the property will comply with local laws. It will also protect the property owner against future actionable liabilities based on compliance or municipal or neighborhood changes. Executing these reports in a timely manner has heightened importance due to new changes in how this information is used for ALTA surveys. In the adaption of the 2016 ALTA/NSPS minimum standard detail requirements, the reporting of zoning information on the survey changed, specifically in the Table A items 6(a) and 6(b).
When item 6(a) is included, the surveyor will list the current zoning classification, setback requirements, the height and floor space area restrictions and parking requirements on the face of the survey. But for a surveyor to do this, they must be provided with a zoning report or zoning letter from the client. Previously, it was left open to interpretation where this information came from. When item 6(b) is included, the surveyor will graphically depict the building setback requirements, if the zoning setback requirements are set forth in a zoning report or letter provided to the surveyor by the client, and those requirements do not require an interpretation by the surveyor.
Zoning items should include:

• Table of current zoning municipal requirements
• Copy of current certificate(s) of occupancy
• Conforming status as provided by municipality
• Zoning verification or zoning compliance letter
• Notice of outstanding code violations of record (zoning, building or fire)
• Copy of zoning map or applicable map portion
• Adjacent property zoning designations
• Notice of applicable variances/special permits/exceptions/conditions
• Municipal zoning code sections for permitted uses, height, setback, lot area, minimum parking and right to rebuild in the event of casualty
• Comparison of current zoning code requirements to as-built survey conditions and notice of any nonconforming characteristics observed.

In order to conduct this report, due diligence consultants also need the following information from our clients:

• Property address
• Parcel number
• Current Use
• Prior Survey
• Offering memorandum
• Turnaround time

It may be necessary for the surveyor to qualify or expand upon the description of the aforementioned items (for example, in reference to ALTA Item 6(b), there may be a need for an interpretation of a restriction). The surveyor cannot make a certification on the basis of an interpretation or opinion of another party.
New ALTA survey changes requiring zoning reports directly from clients requesting the survey will encourage synergy between due diligence components, but it’s a trend that makes a lot of sense. ALTA land surveys are often ordered together with zoning reports. Furthermore, if you need zoning for lender approval, chances are good that you probably also need a Phase I Environmental Site Assessment, a Property Condition Assessment, and possibly even geotechnical investigations for new development land. Obtaining all of this information from the same trusted knowledgeable professional consultants provides meticulous, streamlined due diligence assessments, while avoiding delays and unnecessary additional costs along the way.
By: Timothy Kidd (GlobeSt)
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Friday, March 20th
9:15 a.m.
Alverno College Pitman Theater
3400 S 43rd Street
Join Us to show the Joint Finance Committee your support of the Arena!

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