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Cannabis tinctures - cannabis packaging and labeling

Cannabis Control Board releases regulations related to branding, advertising, packaging & labeling of adult-use cannabis

Earlier this summer, the Cannabis Control Board (CCB) released draft regulations for public comment pertaining to the marketing, packaging and labeling of adult-use cannabis. These regulations contain guidelines for advertising adult-use cannabis, including limitations on signage for retail dispensaries and sustainability requirements for packaging.

Packaging & Labeling

The draft regulations require specific detailed information to be included on the labels of adult-use cannabis products, including but not limited to:

  • Quantity of THC
  • List of active ingredients
  • Number of servings
  • Weight
  • Mandatory warnings (advising the product contains THC, health hazards, and child safety warnings)
  • Expiration and use-by dates
  • Universal symbols for cannabis
  • A scannable QR code

Detailed minimum standards for tamper-proof and child-proof packaging are also included in the draft regulations. Further, product labels cannot include content or images attractive to people under age 21, like bright colors, imitation food, cartoons or commercial mascots. Additionally, any reference to the terms “craft” or “organic” will be prohibited on labeling for adult-use cannabis products.

Cuddy & Feder’s cannabis law attorneys have a wide range of experience with complex permitting and and can assist adult-use cannabis license applicants with all aspects of the business planning, real estate and licensing process.

Sustainability Planning & Reporting Requirements

Adult-use cannabis license holders must develop and implement an environmental sustainability program for packaging, as applicable. The environmental sustainability program should detail how the licensee will attempt to reuse packaging and use compostable or recyclable material instead of plastic. Adult-use licensees that package products for retail sale will be required to submit annual metrics reports for their business to the Office of Cannabis Management that detail the total amount of packaging material sold and the cost of that material.

Marketing & Advertising

Signage for retail dispensaries will be limited to two outdoor signs per business. These signs must be affixed to a building or other permanent structure and comply with numerous restrictions related to location, content and size. Billboard-type signs will be prohibited. Several examples of the signage restrictions are as follows:

  • Must not be within 500 feet of a school, playground, park, library, recreation center or daycare
  • Content must be limited to the name, location, and type of cannabis business
  • Signs must not depict cannabis, cannabis products or images of the action of smoking
  • Signs must be a maximum of 1,600 square inches in size
  • Prohibition of:
    • Images attractive to youth
    • Commercial mascots
    • Price reductions, discounts, or pricing information
    • Colloquial references to cannabis
    • References to “organic” product

Advertising of cannabis products or a cannabis business at stadiums, malls, fairs or arenas will be prohibited unless the sign is located at an adult-only facility. Additionally, a licensee can only sponsor a charitable or sporting event if 90% of the audience is reasonably expected to be over 21 years of age.

It is important to note that these draft signage requirements will be applied in addition to existing local zoning and sign regulations that apply to commercial signage within the municipality where the cannabis business is located. Therefore, applicants designing a cannabis facility should review both the State regulations and local codes for a complete understanding of the outdoor signage requirements, as well as the applicable municipal permitting process for signs.

Further clarification and possible modifications to the requirements enumerated above is expected as the public comment period closes and final regulations are adopted. Compliance with the packaging, labeling, advertising, and sustainability regulations must be demonstrated in businesses’ New York State adult-use cannabis license application materials, as well as municipal applications for local permitting and approvals. Cuddy & Feder’s cannabis law attorneys have a wide range of experience with complex permitting and and can assist adult-use cannabis license applicants with all aspects of the business planning, real estate and licensing process.

Battery Energy Storage Systems, or BESS, and Their Role in Achieving New York’s Renewable Energy Goals

In 2019, New York State adopted the Climate Leadership and Community Protection Act (“Climate Act”) which sets the State’s ambitious goal of generating 70% of its electricity from renewable resources by the year 2030. This goal seeks to rely on new energy sources such as solar, hydroelectric, and wind generation to address the significant increase in the State’s demand for energy.

One of the key components to achieving this goal and facilitating the transition to cleaner energy is the State’s need to increase electric storage capacity. Traditionally, electrical energy distributed through the grid would need to be used immediately after being generated if there are no storage alternatives. In such situation, the capacity to generate electricity would need to be increased during peak times when demand is high, often times requiring the use of supplemental or “peaker” generating plants. The requirements that power must be used immediately and that electrical generating sources be ramped up, or down, to accommodate real-time demand has hindered the transition to renewable energy sources that rely on temporal resources, such as sun and wind.

The BESS facilities address the growing electric power needs rendering the grid more resilient without needing to expand its on-demand capacity.

Expanding the timing when electrical energy is available for use allows the grid to rely more on renewable energy sources. Storage provides a method for accessing solar energy at times when it is not being produced, thereby facilitating the storage of energy so that it need not be used immediately, and may be stored for later use when there is greater demand. This creates a more efficient, resilient electrical grid reducing energy waste and curbing the demand to generate supplemental power during high peak times, which likely would rely upon fossil fuels.

Energy can be stored in battery energy storage systems (BESS). These BESS deployments range in size from small structures affixed to the wall of a single-family home to larger facilities consisting of several structures – each about the size a tractor trailer. These BESS systems store energy for several different purposes, including redistribution to the grid when needed, or back-up power for private usage, or supplemental power for electric car charging stations. The BESS facilities address the growing electric power needs rendering the grid more resilient without needing to expand its on-demand capacity.

As BESS installations become more common, additional challenges may arise related to the zoning and siting of this equipment, especially when deploying larger facilities. The members of the experienced Land Use, Zoning & Development team at Cuddy & Feder are available to assist with navigation of the intricate local land use processes. We can help streamline the approval processes to facilitate the deployment of BESS technology in efforts to strengthen the ability of the grid to be more efficient, resilient, and affordable.

Agriculture in the Hudson Valley: Start-Up Farm Operations and Receiving the Benefits of the Agriculture and Markets Law

This is the third blog in a series discussing the ins and outs of Article 25-AA of the Agriculture and Markets Law (AML). This blog covers “start-up” farm operations and what is required to receive the benefits of the AML.

Article 25-AA generally provides benefits to agricultural enterprises that (1) meet the state definition of a “farm operation” and (2) are located in a county adopted, state certified “agricultural district.”

What is a Farm Operation?

A “farm operation” is a commercial enterprise that consists of the land and on-farm buildings and practices which contribute to the production, preparation and marketing of crops, livestock and livestock products, including commercial horse boarding operations, among others. However, one cannot simply maintain a back-yard vegetable garden and receive the benefits provided by the AML. There are three important qualifying characteristics:

  1. At least seven acres of land must be used for the production of crops, livestock or livestock products or as part of the commercial horse boarding operation;
  2. The farm must generate an average gross sales value of ten thousand dollars or more; and
  3. The farm operation must have consisted of at least seven acres of land and have generated an average gross sales value of ten thousand dollars or more for the previous two years. 1

Notably, too, a farm operation may consist of one or more parcels of owned or rented land which may or may not be contiguous to each other.

It is the Department’s position that municipalities should allow a reasonable period of time for a farm to be established and achieve the level of production required to process, market and sell its crops/livestock/livestock products.

What is an Agricultural District?

An agricultural district is a county administered program designed to protect and promote farming. To add a farm to an agricultural district, there is an annual thirty-day period, usually in the spring, when a landowner may apply to the county for inclusion in a district. The months-long application process will also require a referral and recommendation from the county agricultural and farmland protection board, a noticed public hearing and approval by the county legislature, and certification by the NYS Department of Agriculture and Markets. Your local county website should be consulted for the annual inclusion dates and application requirements.

If a “farm operation” is included within a county adopted, state certified agricultural district, some examples of the benefits that can be provided include:

  • Zoning: AML § 305-a prevents municipalities from unreasonably restricting or regulating farm operations;
  • Taxes: AML § 305 provides an agricultural assessment (i.e., reduced property tax bill). AML § 306 also provides an agricultural assessment for farmland outside an agricultural district but imposes a stricter tax penalty if the land is taken out of agricultural production; and
  • Right-to-Farm: AML § 308 protects sound agricultural practices from private nuisance claims based on odor or noise complaints, for example.

Additional AML Support for “Start-Up” Farm Operations

The NYS Department of Agriculture and Markets has issued guidance to support start-up farm operations in recognition of the challenges confronting new agricultural enterprises. It is the Department’s position that municipalities should allow a reasonable period of time for a farm to be established and achieve the level of production required to process, market and sell its crops/livestock/livestock products.2 Additionally, the Department permits start-up farmers to import a portion of its product from other farms to assist the new farm in attracting potential customers and establish itself as a viable commercial enterprise in the community.3

Conclusion

Agriculture remains an important economic engine of many local communities and the state as a whole. The experienced Land Use, Zoning & Development team at Cuddy & Feder is available to assist start-up farm operations in applying for and securing local zoning approvals, agricultural assessments, and agricultural district designations.

Read Part 1: Agriculture in the Hudson Valley: Understanding Your Right to Farm

Read Part 2: Agriculture in the Hudson Valley: When State and Local Policies Conflict

Municipal cell tower leases to wireless infrastructure providers New York – telecom tower lease

Telecommunication Providers’ Access to Municipal Land

Telecommunication providers in New York may at times be wary of municipal leasing, purchasing, or public property use requirements when it comes to constructing wireless infrastructure on municipal lands. Providers and municipalities alike nevertheless have numerous opportunities under the law to undertake such projects on municipal lands, and should explore them as part of expediting the deployment of wireless services to local communities.

Municipalities have always had the ability to lease and sell property to providers. This right is rooted in Article IX of the New York State Constitution,1 which states that municipalities have the ability to dispose of land not devoted to public use. This right is further incorporated into Village Law,2 General City Law,3 and Town Law4 provisions related to municipal authority over public lands.

Some municipalities’ charters and codes may have additional requirements, including the need for a lease of public lands to incorporate a public benefit.5 The sale or lease of municipal property, particularly that not located in a public right of way, is considered a discretionary action under New York’s State Environmental Quality Review Act, which can add some additional review processes.6 In towns, such a disposition is also expressly subject to a permissive referendum under Section 64(2) of Town Law.7

We are at a point in time where municipalities should appreciate the public benefits of wireless telecommunication infrastructure. Steps are being taken at the federal and state levels right now to expand accessibility and funding for telecommunication infrastructure, particularly in rural and/or underserved areas of New York.

Another nuance to these transactions is to evaluate any “parkland” considerations. In Friends of Van Cortlandt Park v. City of New York 8 the New York Court of Appeals noted that alienation of parkland requires legislative approval from the State, and held that long-term non-park uses of public parkland must provide a public benefit. While providers have in some cases been able to leverage how their services promote economic development, increase public safety, and improve service – the New York State Office of Parks, Recreation, and Historic Preservation has advised that leases of parkland to telecommunication providers should have a 25-year cap; have a condition that if use ends, the tower be removed, and land restored; and that the fair market value of the lease be dedicated to capital improvements to existing park facilities or the purchase of additional parkland. These “requirements” can create significant limits on the disposition of parkland.9

Notably, under the Telecommunications Act of 1996,10 the FCC’s 2018 Small Cell Order,11 the New York State Constitution,12 and the New York Transportation Corporations Law,13 municipalities have very limited non-proprietary regulatory authority to manage access and use of public rights-of-way for wireless facilities. As a result, municipalities cannot deny access – they can regulate the reasonable time, place, and manner of small cell installations in accordance with federal law, and these regulations must incorporate clearly-defined and ascertainable standards that do not materially impact the deployment of wireless facilities (particularly in comparison to cable and other wireline broadband infrastructure).

We are at a point in time where municipalities should appreciate the public benefits of wireless telecommunication infrastructure. Steps are being taken at the federal and state levels right now to expand accessibility and funding for telecommunication infrastructure, particularly in rural and/or underserved areas of New York. The Treasury Department has issued a Final Rule regarding the use of funds under the American Rescue Plan Act (“ARPA”) for broadband infrastructure;14 the NTIA is in the process of finalizing new broadband maps to guide where federal funding may be utilized;15 the recently-passed federal infrastructure bill allocated $65 billion to expand high-speed internet access to rural and underserved areas;16 and Governor Hochul has recently announced the $1 billion Connect All Initiative to expand broadband connectivity.17 Municipalities that want to address local broadband connectivity for their constituents need to, at a minimum, consider rolling back prohibited regulations, leverage public lands where viable, and open up their rights-of-way to new technologies. Municipalities such as New York City, with its 2020 Internet Master Plan18 and a related RFP for Open Networks;19 and Yonkers, with its Y-Zone Initiative utilizing citizens broadband radio service (“CBRS”) technology;20 are strong regional examples of communities taking such important steps.

Cannabis Business Opportunities NY - Cannabis Business Licensing in New York

Leveraging Opportunities In New York’s New Cannabis Market

In March, New York legalized adult-use cannabis, opening the door for entrepreneurs to set up shop in local communities. But with new opportunities come new laws and regulations. In this series, Cuddy & Feder’s Cannabis Law practice offers helpful tips and best practices for prospective New York cannabis applicants.

Part 1: Where to Locate Your Retail Cannabis Business

The New York Marihuana Regulation and Taxation Act (MRTA) requires applicants seeking a retail license to have identified the location for their business at the time the license application is submitted. Specifically, the applicant must either own the property, have a valid lease in place or provide proof that they will possess the property within 30 days of being granted a license for a term that equals the license period (which is renewed every 2 years).

The majority of local municipalities in New York have not yet amended their local ordinances to address cannabis uses, but it is anticipated that they will do so over the next 6 months before the State releases license applications.

This requirement leaves applicants in the risky situation of securing a location at a potentially significant cost and outlay of capital without even being granted a license and leads to many unanswered questions about where they should purchase or lease property. These concerns are compounded by the fact that a handful of communities have already opted out of allowing retail dispensaries and on-site consumption sites within their jurisdiction, with more communities expected to opt-out before the end of the year when the deadline to do so expires.

Aside from the challenges under federal law related to financing or leasing property to operate a business that involves a plant that is fully legal under state law but still not legal under federal law, applicants face another obstacle: onerous and restrictive local zoning provisions. The MRTA delegates to local municipalities the ability to regulate time, place and manner of the operation of retail dispensaries and onsite consumption sites, as long as such regulation does not render the business unreasonably impracticable.

The majority of local municipalities in New York have not yet amended their local ordinances to address cannabis uses, but it is anticipated that they will do so over the next 6 months before the State releases license applications. A survey of other states with similar adult-use cannabis statutes indicates several popular local zoning restrictions that can be expected. These restrictions could include:

  • Limiting the distance between cannabis businesses;
  • Minimum setbacks from specific uses such as parks, playgrounds, athletic fields, daycare facilities and alcohol and drug treatment facilities (the MRTA has minimum setbacks from houses of worship [200 feet] and schools [500 feet]);
  • Limiting the total permitted gross floor area for a cannabis business;
  • Enacting cannabis-specific off-street parking requirements that differ from parking requirements for other uses;
  • Minimum setbacks from adjacent properties for a building with a cannabis business;
  • Limiting the time, place and manner of the business, such as restricting the hours of operation and hours that deliveries can be received; and
  • Exterior façade requirements that balance security with street activation.

Interestingly, municipalities may make exceptions to these requirements for dispensaries owned by social and economic equity applicants, as defined in the MRTA, for businesses owned by individuals from communities disproportionately impacted by cannabis enforcement (with extra priority to those who have been convicted of cannabis offenses), minorities, women, distressed farmers and service-disabled veterans. This is one unique approach to furthering social justice and encouraging small businesses owned by such applicants within a municipality.

Another common and significant local zoning requirement seen in municipalities in other states with legal adult use cannabis programs is a provision that prohibits retail cannabis businesses from being located within a pre-existing nonconforming building. Essentially, this provision prevents cannabis businesses from operating in a building that pre-dates zoning restrictions and does not conform with the applicable dimensional requirements, such as maximum height, setback, lot size and floor area. The objective of such a provision is to minimize impacts to adjacent properties and the surrounding area. Since it may not be readily apparent whether a building is fully zoning-compliant, applicants should engage zoning counsel to complete a zoning analysis on a parcel before entering into a lease or contract to purchase.

Further, some municipalities choose to enact a restriction that prohibits a cannabis business from operating on a parcel with any other uses. Applicants should be aware of this limitation when considering potential locations since many options for both lease and purchase may have residential units or office space above the ground floor or may be in building with other retail tenants, such as space in a shopping center or strip mall.

With the race to secure property for a cannabis business, it is critical that potential applicants be familiar with existing zoning regulations and perform a comprehensive zoning analysis on a proposed location. Cuddy & Feder’s land use and zoning attorneys have experience working with cannabis license applicants to analyze potential business locations, perform the requisite due diligence and begin the municipal entitlement process.

Stay tuned for Part 2- the municipal entitlement process.

The Commission Escrow Act - NY Real Estate Commission Law

The Commission Escrow Act — A Broker’s Tool to Resolve Residential Real Estate Commission Disputes

In residential real estate transactions, sellers and buyers frequently rely on the expertise of licensed real estate brokers to show properties, negotiate terms of a sale, attend inspections and otherwise bring deals to closing. The services – and the payment of the commission due – are typically memorialized in a contract between the seller and the broker (who, when applicable, splits the commission with the buyer’s agent). The commission is generally paid at the closing by the seller. Occasionally, however, the situation arises where the seller fails or refuses to pay the commission despite having closed on the sale of the property.

In New York, a broker is not entitled to file a lien against the property in order to ensure payment. The State, however, does provide brokers with a mechanism to make recovery of their commission a bit easier in the event a payment issue arises. The broker may file an affidavit of entitlement to the commission in the county clerk’s office in the county where the property is located pursuant to Section 294-b of the Real Property Law, also known as “The Commission Escrow Act” (the “Act”). Under certain circumstances, the Act also requires a seller to deposit the lesser of the net sales proceeds from the sale or the unpaid commission with the county clerk. The broker must take the steps identified below in order to benefit from the deposit requirement. First, the Act requires that the broker have a written brokerage agreement with the seller that includes the following provision:

At the time of closing, you may be required to deposit the broker’s commission with the county clerk in the event that you do not pay the broker his or her commission as set forth herein. Your obligation to deposit the broker’s commission with the county clerk may be waived by the broker.

Next, the broker must file the affidavit of entitlement with the clerk of the county where the property is located before the deed is delivered to the buyer. The affidavit must include the name and license number of the broker; the name of the responsible party for commission; the name of the seller or the person authorizing the sale; a copy of the agreement; description of the property involved; the amount of the commission earned; description of the broker’s services; and the dates services were provided. The affidavit, though not a lien, is placed in the lien docket for that property. Once the broker files the affidavit of entitlement with the county clerk and pays the fees associated with such filing, the broker must notify the seller and seller’s attorney (if the broker has the attorney’s contact information) of the filing within five (5) business days. The seller must then deposit the amount demanded in the affidavit with the county clerk.

If the seller is required to make the aforementioned deposit and fails to do so, then, in any action brought by the broker in which it is determined that the broker is entitled to compensation, the broker will also be awarded costs and reasonable attorneys’ fees. This serves as an incentive for the seller to comply with the deposit requirement of the Act.

Once the deposit is made, the Act requires that the broker commence an action within sixty (60) days from the date of the deposit. If neither the broker nor the seller commences an action within such time period, then the seller is entitled to an order directing a return of the deposit. However, this order does not impact the broker’s claim for commission.

The Commission Escrow Act serves to provide some leverage to a broker whose commission was wrongfully withheld by temporarily diverting a portion of sales proceeds due to the seller to the county clerk’s escrow account. However, to be entitled to utilize this remedy, the broker must have a well-drafted agreement with the seller. The transactional team at Cuddy & Feder can provide sellers and brokers with guidance to help promote a successful broker-seller relationship.

What to Make of the SEC’s ESG and Climate-Related Focus

Perhaps the hottest buzzword—or buzz acronym—in the world of asset management is ESG (Environmental, Social, and Governance). By any measure, the demand for and size of ESG products is rapidly increasing. For example, in the 30-month period ending June 30, 2020, “socially conscious”-registered investment products grew 6-fold and since the start of 2020, the total amount of assets invested in US-exchange traded ESG portfolios has more than doubled.

Investors’ voracious appetite for ESG products has led to demand for data regarding individual issuers’ ESG policies and practices and fund and asset managers’ ESG strategies. This, in turn, has drawn the attention of regulators, and particularly the Securities Exchange Commission.

This all begs the questions of whether companies face increased risks regarding ESG disclosures, what are those risks, and who bears them—asset managers and investment advisors working with ESG products or issuers more broadly?

In the first several months of this year, the SEC has issued multiple statements, reports, and risk alerts emphasizing the Commission’s focus on disclosures relating to ESG and climate-related risks.1 These pronouncements raise questions about the Commission’s examination and enforcement regime and its rule making moving forward. Here, we examine some of those questions in the context of SEC examinations and enforcement actions.

Recent SEC Statements

The SEC has commented on ESG disclosure issues in the past, but never with the frequency or focus that it has in the past few months. On February 24, 2021, Acting Chair Allison Herren Lee issued a Statement on Review of Climate-Related Disclosure2 in which she directed the Division of Corporate Finance to enhance its focus on climate-related disclosures in company filings with the intention of ultimately updating the Commission’s more than decade-old guidance regarding such disclosures.3 Approximately a week later, on March 3, 2021, the Division of Examinations identified reviewing the consistency, adequacy, and accuracy of disclosures about ESG processes and practices as one of its 2021 examinations priorities.4 The following day, the Commission announced the creation of a Climate and ESG Task Force in the Division of Enforcement,5 which was tasked with identifying material gaps or misstatements in issuers’ disclosure of climate-related risks under existing rules and analyzing disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.

Most recently, on April 9, 2021, the Division of Examinations released a Risk Alert6 regarding its review of ESG investing, in which the Division stated that it had observed deficiencies, internal control weaknesses, and potentially misleading statements regarding ESG investing processes.

ESG Disclosure Risks Under Current Rules

This all begs the questions of whether companies face increased risks regarding ESG disclosures, what are those risks, and who bears them—asset managers and investment advisors working with ESG products or issuers more broadly? In fact, the SEC’s two republican commissioners have made several statements criticizing the SEC’s focus on ESG disclosures as nothing more than public relations spin, which leads to confusion in the investing community.

Chairman Gary Gensler’s testimony at his confirmation hearing may provide some guidance. Chairman Gensler explained that in assessing ESG and climate-related disclosures, he would apply the historical materiality standard—i.e, what a reasonable investor would consider material in making investment and voting decisions. He went on to note, however, that this analysis could be guided by the investor community, which has demonstrated support for ESG-related disclosures. Accordingly, asset managers and investment advisors are unlikely to be saved from exposure for misrepresentations regarding ESG practices and policies by arguing that the misrepresentations are immaterial since the ESG strategy itself—not only the performance implications of it—is material to many investors’ investing and voting decisions. This is consistent with the SEC Investor Advisory Committee’s observation in May 2020 that information regarding ESG strategy “is material to investors regardless of an issuer’s business line, model or geography.”7

For now, at least, it appears that the focus of the Divisions of Examinations and Enforcement will be on disclosures from investment advisors and funds regarding ESG strategies. But issuers generally will face scrutiny as well, particularly with respect to climate risk disclosures or where issuers make representations about ESG practices.

How the Commission will deal with the inherently thorny nature of ESG disclosures in a complex world involving cross border supply chains where “green” technologies often require the environmentally damaging mining of rare earths remains to be seen. But the Commission’s repeated pronouncements to start this year about its ESG focus cannot be disregarded.

Proposed Statewide Zoning Mandates Could Promote Smart Growth Throughout Connecticut

Several proposed Connecticut state legislative amendments are being considered which would enact statewide zoning mandates upon municipalities. These mandates are intended to combat discrimination and address disparities in housing needs while also creating opportunities for smart growth and increased development potential throughout Connecticut.

The Planning and Development Committee Raised Bill Number 1024 and Housing Committee Bill Number 804 each contain proposed legislation mandating all municipalities permit four or more residential unit developments (or mixed-used developments containing same) as-of-right in at least 50% of the area within a one-half mile radius of a municipality’s primary transit station. Transit station in both instances includes rail stations, bus rapid transit stations, ferry terminals, and bus terminals. Similar statewide provisions would mandate zoning provisions for “middle housing” (duplexes, triplexes, quadplexes, cottage clusters, and townhouses) and accessory dwellings while also controlling certain bulk restrictions such as the minimum density that local zoning can permit and the maximum number of parking spaces that can be required.

TOD proposals are attractive to many young professionals or “empty nesters” looking to downsize.

Similar bills also presented during this year’s legislative session include Proposed Bill Numbers 551 and 554 which would, respectively, require “fifty percent of the land within one-half mile of transit stations and commercial corridors be zoned for multifamily housing and that accessory dwelling units be permitted on such land as of right, provided such units conform to applicable health and building codes” and “require that a municipality’s zoning regulations permit a greater density of housing within one-half mile of a public transit station than is otherwise permitted by such municipality.” Draft legislative language has not yet been made available for Proposed Bill Numbers 551 and 554.

In addition to increasing housing potential, such mandates permitting multi-family developments, accessory dwellings, and/or increased density around public transportation hubs promote the core tenet of Transit-Oriented Development (TOD) and helps capitalize on investments in public transportation.

TOD proposals are attractive to many young professionals or “empty nesters” looking to downsize so they present little strain on school systems while directing commuters away from streets and onto alternative modes of transportation. The additional housing stock permitted by the bills could also promote the growth and accessibility of affordable housing throughout the state. While the specifics of these proposed mandates and any strings that may be attached are yet to be seen, the potential benefit to communities and landowners throughout the state is certainly apparent.

These bills have a long journey ahead of them before becoming law including public hearings during which legislators, state agency representatives, and the public will be permitted to comment. One area that is certain to receive attention is the state’s willingness and authority to pre-empt local authority under home rule delegation which grants local municipalities sole legislative authority “relative to the powers, organization, and form of government of such political subdivision.” This home rule delegation has long afforded municipalities broad authority to regulate “local concerns” which includes specific local zoning regulations and controls while the state retains regulatory authority over areas that touch matters of “statewide concern.”

So while these concepts could be beneficial to the public and development community, it is still to be seen whether these proposed bills will gain enough support to be advanced and, if so, whether a sufficient matter of “statewide concern” can be demonstrated.

Time is of the Essence Clause in Real Estate

Time is of the Essence Clauses in New York and Connecticut Contracts for the Sale of Real Property

Contrary to what many people may believe, the closing date in a contract is usually only a target date. Generally, absent a “time is of the essence” provision, both New York and Connecticut laws give each party the right to adjourn the date set forth in the contract as the closing date for a reasonable period of time.

Parties to a contract may decide to put a “time is of the essence” provision in the contract when setting the closing date. In both New York and Connecticut, a “time is of the essence” clause in a contract indicates that the failure to close the transaction by the time specified will be considered a material breach under the contract.

If the contract does not contain a “time is of the essence” clause, either party may unilaterally make the closing date time of the essence by giving the other party “clear, unequivocal notice” that the failure to close the transaction by the date specified in the notice will be considered a default under the contract. Both New York and Connecticut law requires that the date specified in the notice as the “time is of the essence” date must provide the other party with a “reasonable” period of time to close in order for the notice to be effective. Generally speaking, courts have interpreted a “reasonable” period of time as thirty (30) days after the date of the notice. However, whether a period of time is reasonable under the circumstances is a fact-specific determination.

In New York, a time is of the essence notice must be delivered after the original closing date identified in the contract, otherwise it is not effective. On the contrary, in Connecticut, a time is of the essence notice may be sent before the closing date identified in the contract. However, both New York and Connecticut law requires that the date of closing set forth in the “time is of the essence” notice must be after the original closing date set forth in the contract.

The Real Estate and Transactional Department at Cuddy & Feder is available to address any questions you may have regarding closings and the sale of real property.

Cuddy and Feder Law Firms New York

New York State Enacts COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020

On December 28, 2020, Governor Cuomo signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the “Act”) into law in an effort to stabilize the housing situation for tenants and qualifying borrowers during the pandemic. The Act suspends certain evictions of residential tenants and certain mortgage and tax lien foreclosures from proceeding until May 1, 2021. In order to be eligible for a stay of a mortgage or tax lien foreclosure, the borrower cannot own more than ten residential dwellings, including their primary residence.

In order to receive relief under the Act, a tenant or borrower must complete a “Hardship Declaration”, in the form set forth in the Act, under penalty of perjury, and illustrate that the reasons behind the tenant or borrower’s inability to meet its payment obligations was the result of COVID-19. These reasons include financial hardship due to significant loss of income during the pandemic; increase in out-of-pocket expenses as a result of the pandemic; childcare or the care of elderly, disabled or sick family members during the pandemic negatively impacting the ability to earn income; moving expenses and difficulty obtaining alternative housing; reduction in household income or significant increase in household expenses. For eligible borrowers, a default by tenants in payment of rent also counts as financial hardship. Once the Hardship Declaration is submitted by a tenant or a borrower, an eviction or foreclosure proceeding, as applicable, may not be initiated until May 1, 2021.

In addition to the relief referenced above, the Act actually imposes an obligation on landlords and lenders to provide the Hardship Declaration to their tenants or their borrowers. A landlord must provide the form of Hardship Declaration to its tenants together with every written demand for rent and with every written notice required to be provided prior to the commencement of an eviction proceeding. Similarly, lenders are required to provide their borrowers with the form of Hardship Declaration together with every written notice required by law in connection with a foreclosure. The Hardship Declaration must be translated to the tenant’s or borrower’s primary language.

The COVID-19 Emergency Eviction and Foreclosure Prevention Act 2020 provides a way for tenants to maintain their current living situations during the pandemic and also provides qualifying borrowers with the opportunity to work out loan extensions or other relief made necessary due to their own inability to pay their loan or the inability of their tenants to pay rent due to the impact of COVID-19.

The Real Estate and Transactional team at Cuddy & Feder will continue to monitor and advise of changes in the law in response to COVID-19 and stands ready to assist in navigating through these issues.