On March 4th, President Donald Trump imposed 25% tariffs on goods imported from Mexico and Canada, the United States’ two largest trading partners.  Two days later, those tariffs were largely lifted as President Trump signed separate executive orders granting relief to goods from Mexico and Canada covered by the United-States-Mexico-Canada Agreement (an agreement signed into law by President Trump in July 2020).  The relief granted by recent Presidential Orders presently lasts until April 2nd.  While much uncertainty remains regarding the future of tariffs on the United States’ Northern and Southern neighbors, the short period in which the tariffs were imposed already foreshadowed potential impacts in the real estate industry.

According to the National Home Builders Association, in 2023 “roughly $183 billion worth of goods were used in the construction of both new multifamily and single-family housing” with roughly 7% of those goods originating in foreign nations.  Two key materials for homebuilders, lumber and gypsum, are primarily imported from Canada and Mexico, with roughly 70% of sawmill and wood imports originating in Canada and 71% of gypsum imports originating in Mexico.  With respect to lumber and wood products imported from Canada alone, the United States already imposes a 14.5% anti-dumping and anti-subsidy tariff.  Coupled with the 25% tariffs, the overall tariff on Canadian lumber could increase to nearly 40%.

On March 4th and 5th while the tariffs were in effect, lumber costs reached $658.71/1000 board feet, an all-time high.  By March 6th, lumber costs dropped to $631.18/1000 board feet, a decrease but a stark increase from as recently as July 2024 when lumber costs were $418.54/1000 board feet.  As the National Association of Homebuilders’ Chairman, Carl Harris, notes, “Tariffs on building materials increase the cost of construction, and consumers end up paying in the form of higher home prices.” Commercial real estate builders are not immune from the impact of tariffs either, as “[s]teel and aluminum tariffs would clearly feed into higher construction costs for the commercial real estate sectors.”  In a nation already facing a nearly 4.5 million housing deficit and an industry reeling from prolonged construction input prices, real estate developers across the board are bracing for the potential impact of President Trump’s proposed tariffs.

More cars on the road means higher carbon emissions, and studies have found that more road actually results in more cars. In an effort to reduce greenhouse gases, Governor Polis passed a bill in 2021 that, in part, tied transportation funding approvals to agencies’ emissions targets. As a result, the Colorado Department of Transportation has indefinitely paused its plans to widen I-25 and focused instead on transportation that doesn’t center around cars.

However, the success of robust public transit depends on land use reform that makes housing more dense, affordable, and available. In the words of Will Toor, the executive director of the Colorado Energy Office, “I think where we stand now is that the real frontier is around land use.”

Read the New York Times article here.

The Corporate Transparency Act (“CTA”) seeks to limit the use of shell entities to hide illicit activities and to increase transparency in corporate ownership by collecting identification information of the individuals that organize and own entities. While the CTA is generally applicable to all industries, it has a disproportionate impact on the commercial real estate industry, because of the complex ownership structures that are frequently used to hold, develop, and operate real estate assets. These ownership structures often consist of numerous tiered entities, many of which will be subject to the reporting requirements of the CTA. Although the CTA will increase the administrative burden of forming new entities, there are still significant benefits to using various entity structures to own and operate real estate assets, including limiting liability and maximizing tax advantages.

What is required by the CTA?

The CTA requires reporting companies to report beneficial ownership information (“BOI”) to the Financial Crimes Enforcement Network (“FinCEN”). A reporting company is an entity that is created or registered to do business in the United States by filing a document with a secretary of state or similar office. This includes corporations, limited liability companies, and limited partnerships, all of which are frequently used to hold and operate real estate assets. The CTA identifies 23 exempt entity types, however, many of these exemptions are not applicable to real estate entities, and even the exemptions that may be applicable are narrowly applied. Reporting companies are required to file reports with FinCEN that include information about the reporting company, its beneficial owners, and its company applicants.


A beneficial owner is any individual who either (1) exercises substantial control over the entity or (2) owns or controls at least 25% of the beneficial ownership interests in the entity. An individual exercises substantial control if they (i) serve as a senior officer of the reporting company (e.g., a president, chief financial officer, chief operating officer, etc.), (ii) have authority over the appointment or removal of any senior officer or a majority of the board of directors, or (iii) direct, determine, or have substantial influence over important decisions made by the reporting company. A company applicant is anyone that files, or directs or controls the filing of, the document that creates or registers the reporting company.


Entities created before January 1, 2024 have until January 1, 2025 to submit their initial report. Entities created after January 1, 2024, but before January 1, 2025 have 90 days to submit their initial report, and entities created after January 1, 2025 will have 30 days to submit their initial report. In addition to filing an initial report, reporting companies need to update reports whenever information that was initially reported to FinCEN changes. This requirement poses additional difficulties for real estate entities because changes in ownership and control of entities are common throughout the life cycle of a project.

What are the next steps to comply with the CTA?

Real estate businesses and investors should create a plan for how they will stay in compliance with the CTA. Those in control of existing entities and those that intend to form new entities should consider whether reporting is required for these entities, how they will collect and maintain the information required for initial and updated BOI reports, how they will track and report changes to ownership and control of these entities, and how to reflect these considerations in the deal making process. In many ways the process is not dissimilar to what many real estate companies must provide to lenders in connection with obtaining loans.


During the negotiation and agreement drafting process, sponsors and investors in a real estate deal should consider who will be primarily responsible for filing reports for applicable entities, how they will establish the right to collect and report BOI, how they will create an obligation for beneficial owners to supply updated information as it changes, and how they will protect confidentiality, while protecting their right to report information that is required to comply with the CTA.


Complying with the newly imposed reporting obligations should be a priority for real estate businesses and professionals because reporting companies and individuals that cause entities to fail to report the complete and accurate information called for by the CTA, may be subject to criminal and civil penalties.

In our December 2022 Otten Johnson Alert, we reported that the City of Denver planned to evaluate buildings in the downtown area that might be suitable for converting potentially underused office space to much needed residential space. The City recently completed its study, identifying a total of twenty-two buildings that it considered good candidates for conversion.


The primary categories that were assessed as part of this study included:
• Site Context: analyzing the walkability of surrounding area, access to public transportation, availability of natural light, amount of obstructed views in the vicinity, and whether the building would provide any south facing windows.
• Building Form: determining whether the building was of suitable shape to be converted to housing units as opposed to offices.
• Floor Plate: calculating the average distance between the core of the building and windows (often a key challenge with office to residential conversions) along with the number of existing elevators in the building.
• Envelope: examining how easily windows could be replaced to be suitable for residential use.
• Servicing: evaluating the loading, parking, and general structure of the building for compatibility with residential purpose.


The study evaluated each of these categories and scored the buildings on a scale of 1 to 10. The categories were also given weighted conversions for the scores, with building form and floor plate scores being more heavily weighted than site context or envelope, indicating that overall building structure was more critical for conversion compatibility. Of the top twenty-nine properties initially considered, twenty-two scored above an 80%, indicating a high compatibility with residential conversion. Sixteen of the twenty-nine candidates were provided an individual compatibility assessment that expanded on the scores in each category, providing further insight into why these buildings might or might not have potential to become residential spaces. The majority of the buildings identified as ideal candidates for conversion are located within the Central Business District, with some in the Union Station and Northern Capitol Hill neighborhoods.


While the study provides a starting point for the City of Denver in its journey to convert office buildings to housing, there are still many challenges ahead. The City will first need to approach building owners about their interest to either sell the building to the City for the City to convert or for the owner to consider pursuing conversion on its own. Inclusion in the study did not necessarily mean any of the buildings were actually considering conversion, but instead aimed to provide a comprehensive set of options for the City to pursue. Now the City will need to work with these building owners for the next steps.


Additionally, the study does not consider the individual cost of a conversion for each site, noting that renovation costs would need to be considered on a case by case basis. The study further indicates that while the zoning does not require a change in use, the residential use would have to “comply with all current regulatory instruments such as Design Guidelines, Current codes, and Zoning Requirements,” all of which add to the potentially steep cost of a renovation. As we discussed in our December 2022 Otten Johnson Alert, the cost of conversion is perhaps the steepest barrier to overcome when considering converting an office building to residential as these are often complicated, intricate renovations requiring specific expertise. As the City approaches building owners, it will have to navigate the cost conversation and work with building owners to ease concerns regarding regulatory and permitting obstacles.


Affordable housing remains a hot topic in the Denver Metro area. Converting the top sixteen candidates identified in the study to housing could add approximately five thousand units to Denver’s housing stock, which could help in easing some of the housing burden in Denver, which was estimated to be short roughly 70,000 units as of June, 2023.

As we originally reported in our June 2022 Otten Johnson Alert, in June of 2022 Denver’s City Council passed a number of amendments to the municipal and zoning codes in an effort to expand affordable housing in the City.  Denver’s Expanded Housing Affordability policy (the “EHA Policy”) included a period of time under which existing development projects could continue through the approval process under the prior regulations. On May 22, 2023, Denver’s City Council passed two bills extending certain approval process deadlines.  While the concept plan submission deadline remains unchanged (June 30, 2022), the site development plan (“SDP”) approval process dates for projects to be evaluated under the prior regulations have been adjusted as follows:

Continue Reading Denver’s City Council Extends Deadline Requirements for Developers While New Denver Mayor Pledges to Push for Affordable Housing