Last week the U.S. House of Representatives passed a bill that seeks to delineate what causes a commercial real estate loan to be classified as a “high volatility commercial real estate loan,” or, as it’s more commonly referred to, as a “HVCRE loan.”  Since the rule regarding HVCRE loans was promulgated, there’s been much debate and confusion around that fundamental question.  A synopsis of HVCRE loans and the implications of HVCRE classification can be found here.

The bill, H.R. 2148, the Clarifying Commercial Real Estate Loans Act, defines an HVCRE loan as a loan that is secured by land or improved real property and meets the following criteria:

(1)          it primarily finances, has financed, or refinances the acquisition, development, or construction of real property;

(2)          it has the purpose of providing financing to acquire, develop, or improve such real property into income-producing real property; and

(3)          it is dependent upon future income or sales proceeds from, or refinancing of, such real property for the repayment of such credit facility.

Additionally, H.R. 2148 details which commercial real estate loans do not constitute HVCRE loans—that is, which loans are exempted from HVCRE classification.  These include, but are not limited to, loans that finance the acquisition or refinance of real property producing cash flow sufficient to service the contemplated debt and the property’s expenses.  Loans financing improvements to real property producing that level of cash flow are also exempt.  The bill keeps the existing exemption for a loan that meets both the applicable loan-to-value ratio requirement and the 15% borrower capital contribution requirement but modifies it in two respects.  First, when calculating a borrower’s capital contribution, the value of land will be based upon a recent appraisal rather than its purchase price.  Second, until the loan is reclassified as a non-HVCRE loan, only an amount equal to that 15% contribution must stay in the project; in other words, any equity in excess of that 15% amount may be withdrawn by the borrower.

Importantly, H.R. 2148 also addresses when a HVCRE loan may be reclassified as a non-HVCRE loan.  That reclassification occurs when (1) completion of the development or construction of the real property being financed by the loan occurs, and (2) cash flow being generated by the real property is sufficient to support the debt service and expenses of the project.

The bill will now go before the Senate.

California Investor Buys former StorageTek/ConocoPhillips Campus in Bid for Amazon

In a bid to have Amazon select Boulder County as its much-ballyhooed second headquarters, California’s Bancroft Capital recently went under contract to purchase the 432-acre property (depicted below) in Louisville that is the former home of StorageTek.  The property is currently owned by ConocoPhillips. Bancroft also developed the Peloton project in Boulder.

Google Buys Property

As it nears completion on the first phase of its new 4-acre campus at 30th and Pearl in Boulder, Google has purchased land and two buildings at its campus for just under $131 million. Google originally intended to lease the buildings.  “The acquisitions make sense fiscally, but also demonstrate our commitment to Boulder,” said Scott Green, the Boulder site lead for Google.  “In our 11 years operating here, Google has come to value the community, its talent base and its quality of life.”

County Adds Senior Housing at Record Rate, Creating Concerns for Some Areas

By 2030, baby boomers are forecasted to comprise roughly 20% of Boulder County residents. Developers have taken note: since 2012, a dozen senior housing developments have been constructed, and three more are under construction or in planning. Together, these projects will add nearly 1,000 units to the county’s senior housing product. But some areas are expressing concerns about providing such an ample supply of senior housing—at least within their limits.  Lafayette, for example, will be home to one third of the new senior housing units and is already reporting that the existing senior population is overwhelming the city’s emergency services.  The city is so concerned, in fact, about the effects of attracting such a large baby boomer population that it’s considering a temporary moratorium on baby boomer-focused construction.  Senior housing experts counter that such a moratorium could exacerbate the county’s growing housing crunch, especially for low- and middle-income elderly who are already under-served.

Tuesday evening the Boulder City Council unanimously approved the $9.5 million purchase of the 615-acre parcel located at 4536 N. 95th St. (pictured below) to add to the city’s 45,000-acre open space network.  The parcel is the fourth most expensive open-space parcel purchased by the city, will be one of the largest, and will become the easternmost piece of the city’s open-space network.  Because of its 1.5 miles of Boulder Creek frontage, eight ponds, mountain views, and abundant wildlife, the city believes the parcel has tremendous potential for recreational and agricultural purposes.  The city will spend approximately 18 months evaluating the parcel after acquiring it before opening it to visitors.

Image result for boulder valley farm

Last week, the Colorado Senate passed a bipartisan bill—House Bill 1375—requiring school districts to either develop a plan by the 2019-2010 academic year to equitably share mill levy override funds with charter schools of their districts or to distribute 95% of the per pupil amount of the revenue to those charter schools.  The bill further requires charter schools to post certain tax documents on their websites and to limit their financial waivers.

As reported in the Denver Post, roughly one-third of Colorado’s 178 school districts share mill levy override revenue with charter schools, and approximately $34 million in local tax increases are not being shared equitably with charter schools.  This is juxtaposed with the fact that, as further reported in the Denver Post, charter school enrollment in Colorado has grown by 30% since 2013, with more than 108,000 enrolled in the 2015-16 school year, and charter school students earn higher scores on state tests than their district peers.

The bill’s proponents say the bill is the first of its kind in the United States and that it “provides equitable funding for all Colorado’s children no matter what type of school they attend” while “also improve[ing] our education system by requiring additional transparency and accountability from charter schools without creating additional burdens for schools.”

After passing the House and Senate, the bill now awaits the Governor’s signature.

The bill can be found here.

In Denver on Wednesday, a federal court ruled for the first time that refusing to rent a dwelling to someone because the prospective renter does not conform to gender stereotype norms (e.g., because a person dresses or acts in a way, or is attracted to, married to, and/or has children with someone, that does not conform with stereotype norms associated with that person’s biological gender) constitutes sex discrimination under the Fair Housing Act (“FHA”).

In 2015, Tonya and Rachel Smith (pictured left) were looking to move from their home in Erie, Colorado. The Smiths are a same-sex couple with two children, and Rachel is a transgender woman (meaning that Rachel is biologically a man but identifies as a woman). They found a rental property on Craigslist located in the Boulder County mountain town of Gold Hill. Tonya responded to the advertisement and emailed the owner. In her email, Tonya discussed her family, including mentioning that Rachel is transgender. The Smiths met with the owner that evening. In emails to Tonya after the Smiths visited the Gold Hill property, the owner stated that she would not rent to the Smiths because of concerns regarding their children, noise, and because their “uniqueness” and “unique relationship” would become the town focus and would jeopardize the owner’s “low profile” in the community.  The owner continued to attempt to rent the Gold Hill property.   The Smiths sued the owner, claiming, among other things, discrimination based on sex in violation of the FHA.

The FHA prohibits refusing to rent or to negotiate for the rental of a dwelling space on the basis of certain characteristics, including sex, as well as statements indicating such discrimination.  To this point, the Tenth Circuit has declined to extend FHA protections to discrimination based on a person’s sexual orientation or a person being transgender. But the Smiths did not bring their sex discrimination claim under these theories; instead, their claim was brought under the theory of sex stereotyping.  In their motion for summary judgment, the Smiths contended that discrimination against women for not conforming to gender stereotype norms concerning to or with whom a woman should be attracted, should marry, and/or should have children is sex discrimination in violation of the FHA. They also contended that discrimination against a transgender person because that person does not conform with the stereotypical norms ascribed to that person’s biological gender (e.g., how a biological male should dress or act) constitutes sex discrimination in violation of the FHA. The Smiths’ motion was unopposed.

Judge Raymond P. Moore of the U.S. District Court for the District of Colorado agreed with both contentions and granted the Smiths’ motion for summary judgment. The court was careful to state, however, that it had not ruled that discriminating against Rachel solely because she is transgender or against the Smiths solely because they’re a same-sex couple violated the FHA, as the Smiths’ sex discrimination claim did not include such allegations, and the Smiths’ motion for summary judgment was not based on those theories.

The case is Smith v. Avanti.