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NEW FUNDS ARE AVAILABLE FOR DEVELOPERS OF BROWNFIELDS PROPERTIES  
By Linda Alderman  

We have all seen those vacant and abandoned properties located in historically industrial neighborhoods. You may have wondered how change will ever take place if anyone who is bold enough to buy these properties has the burden of cleaning up the contamination before they invest a dollar in renovation when typically, the cost of remediating these properties far exceeds the property's value. Brownfields properties are defined by the EPA as "those that are abandoned, idled or underutilized industrial or commercial properties where redevelopment is complicated by real or perceived environmental contamination." These properties include vacant commercial and industrial buildings that were once located in thriving locations which are now blighted and rundown. The cycle that was created has left entire sections of Connecticut's municipalities to decay. Why would anyone want to take on the liability of these properties when pristine workplaces, or "Greenfields," can be found in the suburbs? The answer lies with the newly established Connecticut Brownfields Redevelopment Authority (CBRA).  

The CBRA is a subsidiary of the quasi-public Connecticut Development Authority and its goal is to work with municipalities and owners of properties to finance Brownfield redevelopment projects across the state. The program allows the Connecticut Development Authority (CDA), at the request of a municipality, to issue bonds of up to $10,000,000 to support a Brownfield project. The proceeds of the bonds act as an up-front cash incentive to the project developer and cover not only the cost of remediation but also the cost of redevelopment of the property. As long as the owner/developer completes the remediation and redevelopment project there is no obligation on the owner/developer to repay any of the provided funds. In order to come up with this up-front cash, the municipality quantifies the annual incremental personal and real property tax revenues that would be generated by the proposed Brownfields project and determines the percentage of those incremental tax revenues that the municipality will pay to CBRA to reimburse CBRA for the provided funds. The CBRA then provides the developer or owner with the proceeds from the sale of the bonds as an upfront cash incentive to invest in the project.  

For example, let's assume a developer is interested in redeveloping a Brownfields site in Bloomfield and it will cost $1,000,000 to remediate and $4,000,000 to redevelop. Once renovated, the property will employ 100 people and generate $150,000 in annual taxes. The CBRA and the town of Bloomfield would negotiate an annual percentage of the $150,000 in tax revenue that would be provided to CBRA to repay the bond issue. Once an agreement is reached, the bonds would be issued and the $5,000,000 would be provided to the developer. The Town of Bloomfield would repay the funds from the annual taxes, as agreed, until the full amount is reimbursed -- at no cost to the owner/developer.  

Public Act 98-253 was passed to address the liability issues associated with contaminated properties. For a fee of 3% of the value the property would have if it were not contaminated, a purchaser or owner of a contaminated Brownfields parcel can receive a covenant not to sue from the Department of Environmental Protection (DEP). In order to receive the covenant not to sue the prospective purchasers or owners must: 1) agree to remediate the property in accordance with a remediation plan approved by the DEP; 2) demonstrate an absence of any responsibility for the creation or cause of the pollution; 3) commit to redevelop and/or continue the property for productive use. If structured correctly, these covenants not to sue can provide protection to owners/developers for liability from costs associated with the environmental condition of the Brownfields property.  

Funding and protection from liability is now available to developers who redevelop Brownfields properties, providing a new source of interesting investment opportunities. Please contact Linda Alderman if you have any questions about Brownfields matters. 
  


CASES OF INTEREST

    • Local Telephone Exchange Carrier Qualified as "Utility" That Could Be Held Liable for Violation of 11 U.S.C. § 366. In re One Stop Realtour Place, Inc., (Bkrtcy E.D. Pa, 2001).   
     
    • Debtor in Possession Allowed to Implement Key Employee Retention Program with Bonuses and Severance. In re Aerovox, Inc., (Bkrptcy. D. Mass, 2001.) 
     
    • Injunction Preventing Website from Posting Decryption Code Held to Not Violate the First Amendment. Universal City Studios, Inc. v. Corley, (2d Cir., 2001).  
     
    • Son's Use of Deceased Father's Voice and Likeness in a Music Video Was Protected by First Amendment. Montgomery v. Montgomery (2d Cir., 2001) 
 
FINDERS, NOT KEEPERS   
While installing a new driveway for a customer, the owner of a paving company and his employee unearthed a glass jar containing rolls of gold coins wrapped in paper. They collected, cleaned, and inventoried the gold pieces. The coins were worth many thousands of dollars.   

At first, the finders agreed to split the coins between themselves, with the company owner retaining possession. After the two had a falling out over ownership of the coins, the company owner gave them to the customer on whose land they were found. The other finder then sued for possession of the coins.   

The finder of the coins argued that under the "treasure trove" doctrine he should have the right to possess the found property against the entire world, except the rightful owner, regardless of where the property was found. The state court reviewed the law on found property and held that the landowner was entitled to possession of the coins, to the exclusion of all but the true owner.   

The doctrine of treasure trove, and its use of a "finders keepers" rule, had never been adopted in the state where the coins were found. Even if it were otherwise, the court was ready to discard the rule as antiquated and unfair. The doctrine encourages trespassers to roam at large over the property of others in search of hidden treasure, contrary to the reasonable expectations of modern-day landowners.   
   


    
NEW RIGHT FOR WORKERS AT DISCIPLINARY MEETINGS    
Two employees at a foundation wrote office memoranda stating that their supervisor was not needed on a project and that he had behaved inappropriately and unprofessionally. The foundation's executive director informed one of the employees that she wanted to meet with him and the supervisor. Feeling intimidated at the prospect of the meeting, the employee asked that his fellow complaining employee be present as well. When this request was refused, and the employee declined to attend the meeting alone, he was fired for insubordination.   

The fired employee ultimately was found to be entitled to reinstatement to his position, with an award of back pay. The decision by a federal appellate court breaks new ground for non-union employees and employers, because the basis for the ruling is a principle previously associated only with union workers. It is settled law that an employer commits an unfair labor practice under the National Labor Relations Act if it denies a union employee's request to have a union representative present at an investigatory interview that the employee reasonably believes might result in disciplinary action.   

The National Labor Relations Board has changed course several times on the question of whether this right also can be asserted by employees who are not in unions. In the case of the foundation employee, it answered that question in the affirmative, and the appeals court agreed.   

The impact of the decision could well mean that in most cases a company should either allow an employee to have a co-worker present at a meeting that could be perceived as leading to disciplinary action or not have the meeting at all.   

The right to have a co-worker present must be triggered by a request from the employee. Many employees, especially those not in a union, are unaware of this right and are unlikely to assert it. Managers and supervisors do not benefit from the ruling, as they are not "employees" as defined in the National Labor Relations Act. Non-union employees probably can only insist on being accompanied by a co-worker, rather than having a supervisor, manager, or outside representative present. The purpose of the right is to allow employees to engage in "mutual aid and protection." The rule applies only to a meeting that could lead to discipline, not a meeting whose purpose is simply to announce predetermined disciplinary action.   
   


  
A MATTER OF OPINION   
In a recent case, a claim of defamation was brought against the writer of a letter to the editor in a small-town newspaper. A news article in the paper reported on the upcoming closing of a downtown grocery that had been in business for 50 years. Three days later, the newspaper printed a letter to the editor that blamed the closing of the grocery store on the store's landlord. Calling him a "ruthless speculator," among other things, the writer accused the landlord of forcing the store out of business by charging "exorbitant rent." The letter stated that the landlord's "self-centered greed" caused the demise of the grocery.   

The landlord responded to the letter to the editor with a defamation action against its author. The lawsuit was dismissed because the state constitution's free expression clause shielded the letter writer from liability. To distinguish between statements of opinion, which are protected, and assertions of fact, which are not, the court looked at all the surrounding circumstances. In each instance, the offending parts of the letter were found to be opinions. The context of the letter as a whole showed it to be an exercise in venting frustrations and opinions about the loss of a valued downtown business. Finally, the fact that the letter was an expression of protected opinion was confirmed by its very location in the newspaper's opinion pages, a traditional forum for the robust exchange of viewpoints.   
 


FIRM NEWS 
Linda Alderman Appointed To Conservation & Environment Commission of West Hartford. This appointment will allow her to apply her 15 years' experience as an environmental attorney to help her friends and neighbors. Linda can be e-mailed at lalderman@alderman.com. 

Myles Alderman Teaches Creditors' Rights Under Revised Article 9. Mr. Alderman explored remedies and bankruptcy law issues under revised Article 9 at a seminar sponsored by Lorman Education Services on February 19, 2002. Myles can be e-mailed at malderman@alderman.com. 

Frank Browne Elected to Board of Representatives for the City Stamford. During the past general election, the people of the city of Stamford elected Frank Browne to their Board of Representatives. Mr. Browne enters his 11th year as of counsel to Alderman & Alderman. Frank can be e-mailed at fbrowne@alderman.com 

Morris Pollack Brings His Intellectual Property Expertise to Alderman & Alderman. We are pleased to announce that Morris Pollack has become of counsel. He brings with him over 30 years of experience with copyrights, patents, trademarks and other intellectual property. He formerly served as senior IP counsel for Litton Industries. Morris can be e-mailed at mpollack@alderman.com. 

Eric Gruber Becomes Of Counsel. Mr. Gruber brings with him to Alderman & Alderman over 15 years of experience representing creditors and other parties in interest in bankruptcy cases and creditors' rights proceedings in the Southern District of New York. Eric can be e-mailed at egruber@alderman.com 


PREPARATION FOR DISASTER   
Careful planning ahead of time can ease the stressful process of responding to and recovering from natural or man-made disasters. In the middle of an emergency, when time may be short and the stakes high, is not the time when individuals should be thinking about important papers and safety for the first time.   

Good recordkeeping makes sense any time, but becomes especially important in the aftermath of a disaster. Official documents and financial and estate planning papers should be kept together as a comprehensive file in a secure location. The following are some of the documents that should be easily retrievable:   

* birth, marriage, and death certificates;   

* identification records, such as driver's licenses and passports;   

* titles, deeds, and vehicle registrations;   

* insurance policies;   

* loan information and credit-card statements;   

* investment and bank account records;   

* income tax information;   

* wills and trust documents.   

For especially important and hard-to-replace documents, keep a set of originals in a safe-deposit box and a set of copies at home. Include in your central file the telephone numbers and addresses for the entities with whom you have accounts or policies. Other family members should know where the records are kept.   

Advance planning about personal safety means foreseeing the types of disasters your family may face and knowing the steps each person should take in a particular kind of emergency. Select a place in the home where everyone can come together. Confirm your fastest and safest evacuation routes. Identify the most important tasks to be undertaken and assign tasks to the most appropriate persons. Each individual should always have the telephone numbers for family members and emergency help. 



Reprint rights are available upon request.  For more information, please call us at 860.249.0090  



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