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29 Nov 2017
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New Development in Brooklyn

Broadway Junction, home to several subway lines, will be the center of the next wave of economic and housing development in Brooklyn. What makes Broadway Junction so appealing to city officials and developers? It is in “a prime location at the cross roads of six neighborhoods and serves as the unofficial welcome center in a fast-growing part of New York City.”[1] The combination of access to public transportation, low property costs and its proximity to Manhattan have attracted developers and investors. In addition, Brooklyn has the largest population in New York City with roughly 2.6 million residents, which provides “a strong local community that could serve as both workforce and customer base”.[2] However, up until now the areas surrounding Broadway Junction have been overlooked due to the “long [struggle] with unemployment, poverty and crime.”[3]

City officials (such as Brooklyn borough president, Eric Adams, and City Councilman Rafael L. Espinal Jr.) and NYC’s Economic Development Corporation (NYCEDC) have collaborated to incentivize development in the neighborhoods surrounding Broadway Junction. NYCED, determined to expand economic growth in East New York, are accepting proposals for the 300,000 square foot commercial office space, anchored by the Human Resources Administration. Through the Office Anchor Strategy, City agencies will be the tenants in these new developments to attract other businesses, while also spurring job growth. The President and CEO of NYCEDC, James Patchett, explains that “[b]ringing modern office space to East New York will help drive its continued growth as a job hub and bring hundreds of new private sector jobs to the neighborhood”. [4] These future developments will potentially create 100,000 “good jobs” in the next ten years.[5]

The idea is to shift Broadway Junction from a transit hub to a business hub for both Brooklyn and New York City. As property prices increase in Manhattan, developers are hoping that the evolving neighborhoods attract residents and businesses, especially once the L train shuts down in 2019. City officials, cautious about gentrification, have rezoned 200 blocks for affordable housing. The City has also invested $267 million for parks, surrounding infrastructure, public schools, and $16 million to attract businesses and incentivize job growth. East New York’s greatest asset, which Manhattan lacks, is unused land. The collaboration of city officials, the NYCEDC, and developers is a promising sign that new development will spur economic growth and investment in the neighborhood. A local explains to the New York Times, “This neighborhood is ready for change. People are expecting it.”[6]

[1] Hu, Winnie. (Nov. 27, 2017) “A Tried Brooklyn Transit Hub is Finally Getting Attention.” New York Times. Available at: https://www.nytimes.com/2017/11/26/nyregion/a-tired-brooklyn-transit-hub-finally-getting-attention.html?_r=0. Accessed on Nov. 29, 2017.

[2] NYCEDC. (June 22, 2017) “New York Works: NYCEDC Seeking Proposals for Commercial Office Space in East New York. Press Release. Available at: https://www.nycedc.com/press-release/new-york-works-nycedc-seeking-proposals-commercial-office-space-east-new-york. Accessed on Nov. 29, 2017.

[3] Op. Cit. n1.

[4] Op. Cit. n2.

[5] Ib.

[6] Op. Cit. n1.

16 Nov 2017
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New Developments in International Waters

As developers in New York City continue to design new buildings that are environmentally friendly and produce less greenhouse emissions, other innovators have decided to use international waters as a building ground. The Seasteading Institute, founded by engineer and political economic theorist, Patri Friedman, and technology entrepreneur and investor, Peter Thiel, is implementing start-up societies in international waters.

What is seasteading? The term was coined in 1998 by the engineer Wayne Gramlich who defined it as “Home-steading on the High Seas”[1] – essentially cities that float. The Seasteading Institute, made of a diverse team of biologists, engineers, researchers and maritime attorneys, sets out to create these cities to “host profitable aquaculture farms, floating healthcare, medical research islands, and sustainable energy powerhouses.”[2] Why the sea? To create a new dynamic in society where there is a separation between government and land. After centuries of war regarding land, advocates argue that by taking out one variable (land), then the other (conflict) will dissipate.

The idea of seasteading gained traction over the years, which led to the current collaboration between the Seasteading Institute and French Polynesia to create the first prototype. Not only is the idea innovative, but they will be funding parts of the project through an initial coin offering. The Seasteading Institute signed a Memorandum of Understanding with French Polynesia to develop a floating city off Tahiti and are expected to begin development in early 2018. For the city to be in a special economic zone, the memorandum set out the following requirements:

  • Conduct a study of the economic impact [the] endeavor would have on French Polynesians,
  • Prepare an environmental framework report and integration plan to require that [the] floating islands are a positive contribution to the environment, and
  • Conduct legal research and prepare a legal framework for the innovative Seazone, a legal regime incorporating the best practices of over 4000 Special Economic Zones around the world. [3]

These floating cities need to be designed in shallow calm waters that are safe with “seafaring culture”.[4] Governments also need to be willing to relinquish a certain amount of autonomy for these cities to be in special economic zones. The idea of seasteading is to incentivize innovation and combat climate change (particularly rising sea levels). Will seasteading be the future of development? We will have to wait and see how the first floating city off Tahiti evolves. Experts believe it can be a viable solution on a small scale, but it is unrealistic to expect a mass exodus of people moving from land to sea in the near future.

[1] Quirk, J. (Aug, 23, 2017) “Milestones of Seasteading.” The Seasteading Institute. Available at: https://www.seasteading.org/2017/08/milestones-of-seasteading/. Accessed on Nov. 15, 2017.

[2]The Seasteading Institute. “About”. Available at: https://www.seasteading.org/about/. Accessed on Nov. 15, 2017.

[3] The Seasteading Institute. “Floating City Project.” Available at: https://www.seasteading.org/floating-city-project/. Accessed on Nov. 15, 2017.

[4] Op. Cit. n1.

10 Nov 2017
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What You Need to Know About Initial Coin Offerings

“Regulators have never seen a new financial product explode with the speed and velocity [of ICOs].”[1] As we discussed last week, the SEC has started to regulate matters relating to Initial Coin Offerings (ICOs), such as setting out specific guidelines for celebrities who endorse ICOs and how investors should make informed decisions on the market. In the past year “$3.3bn has been raised in more than 200 ICOs” – but what are ICOs and why have they become so popular? The Financial Industry Regulatory Authority (FINRA) has published a comprehensive explanation for individuals looking to invest in trendy ICOs.[2]

In an Initial Public Offering (IPO), a company offers its shares of its stock to the public and investors receive ownership rights of that company. However, an ICO is substantially different as investors do not obtain ownership rights and instead of a prospectus they typically receive a white paper that sets out the details of the ICO. “In an ICO, a company creates a new virtual coin or token that they offer for sale and disseminate to purchasers using blockchain technology”.[3] Blockchain technology is a digital, decentralized ledger which can record any type of transaction on a peer-to-peer basis. These tokens are purchased using fiat or virtual currencies (such as bitcoin) and are subsequently recorded on the ledger.

FINRA explains that an ICO “involves the creation of a new virtual coin or token by a company looking to raise money.”[4] In a sense it is a type of high-tech crowdfunding. However, this is different than a bond since investors are not lending the money and there is no guarantee on the gains or losses. Can an ICO be a securities offering? Yes. As we noted last week, if the ICO is a securities offering, the company must adhere to U.S. federal securities laws and register with the Securities and Exchange Commission. As an investor, it is important to verify that the ICO offering securities meets SEC guidelines, unless it is exempt and therefore limited to accredited investors. There is a fine line between tokens on a blockchain platform and securities – the “SEC, for instance, argues that the technology is irrelevant: when tokens are used to raise funds, they are securities.”[5] However, advocates for ICOs argue that these tokens have a greater and more complex purpose. Many companies to avoid scrutiny from the SEC have offered options and futures for tokens, which “[dodges] the problem posed by projects that do not yet use the tokens.”[6]

Before purchasing tokens in an ICO, it is imperative to read the company’s business literature, terms and conditions, and white paper. These will set out the investors’ rights and benefits, how the tokens can be sold or exchanged, and whether reselling on a secondary market is permissible. Typically, ICO’s differ from IPOs as they do not grant ownership rights and therefore “token holders may not have any voting rights or influence on a company, its governance and how funds are used.”[7] It is key for investors to do their due diligence before making investment decisions so that they are aware of their rights.

The encryption methods used in blockchain technology make it secure, reliable and transparent. However, as the use of virtual exchanges are still new investors should ensure that companies take the necessary steps to “protect their platform and products” from cyber security threats. FINRA has published a list of scams and red flags to look for before investing in ICOs.

[1] The Economist. “regulators begin to tackle the craze for initial coin offerings.” The Economist. Available at: https://www.economist.com/news/finance-and-economics/21731157-they-raise-difficult-legal-questions-regulators-begin-tackle-craze. Accessed on Nov. 10, 2017.

[2] FINRA. (Aug. 31, 2017) “Investor Alerts. Initial Coin Offerings: Know Before You Invest.” FINRA. Available at: http://www.finra.org/investors/alerts/initial-coin-offerings-know-before-you-invest. Accessed on Nov. 10, 2017.

[3] Ib.

[4] Ib.

[5] Op. Cit. n1.

[6] Ib.

[7] Op. Cit. n2.

10 Nov 2017
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What To Do With A/C Window Units

As the temperature drops, New Yorkers have the decision of leaving their window air-conditioning unit in or taking it out. There is nothing attractive about A/C window units. In the summer they are definitely worth it to combat the grueling heat, but in the fall and winter they are simply aesthetically unpleasing, take up precious window space, obstruct natural light and views, and tend to cause a draft.

For larger apartments with an abundance of natural light, it is less of a burden to live with. Others might live in very warm buildings during the winter and may either appreciate the draft or even want to use the A/C to cool down their apartment.  If a draft is your concern however, simply insulate the area by covering the A/C unit and line the space around it.

For those who decide to take their units out as the temperature continues to drop, it is best to ask for professional help, such as a member of staff in your building who is permitted and has experience with removing A/C window units. It is advised for people to seek professional help when removing their unit because if something goes wrong, such as the unit falling out of the window, you can be held liable for any damage or injury.

“[I]f, despite your best efforts, the A/C still falls out your window? … such an occurrence falls under the personal liability portion of most renters insurance policies, which typically covers at least $100,000 worth of damage” as long as the A/C was not intentionally pushed out.[1] “All it takes is one air-conditioner dropping out the window and killing someone”.[2] Every couple of years there will be a report of someone being injured from a falling A/C unit, however, it is very unlikely the injury will cause death. The easiest option is to hire an insured company who checks all the boxes by removing the unit in the fall, cleaning and storing it in their facilities, and then reinstalling it in the spring.

What are the rules and regulations governing the safety of A/C units? These units fall under the ambit of Local Law 11 (1998),[3] which deals with requirements, examinations and safety measures of exterior walls and appurtenances thereof. NYC Buildings has also published guidelines for purchasing and installing A/C units, which can be found here.[4]

[1] Hochbaum Rosner, L. (June 2, 2016) “It’s A/C Season: Here’s what you need to know now.” Brick Underground. Available at: https://www.brickunderground.com/blog/2013/05/summer_s_coming_what_you_need_to_know_as_ac_season_nears. Accessed on Nov. 10, 2017.

[2] Kaysen, R. (Nov. 3, 2017) “The Window Air-Conditioner: Should It Stay or Go?” New York Times. Available at: https://www.nytimes.com/2017/11/03/realestate/window-air-conditioner-should-it-stay-or-go.html?rref=collection%2Fsectioncollection%2Frealestate&action=click&contentCollection=realestate&region=rank&module=package&version=highlights&contentPlacement=10&pgtype=sectionfront&_r=0. Accessed on Nov. 10, 2017.

[3] Local Law 1998/011. Available at: http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=430651&GUID=CBDD1499-69BF-47D6-9BE0-CD562575BBBE&Options=ID%7CText%7C&Search=building. Accessed on Nov. 10, 2017.

[4] https://www1.nyc.gov/site/buildings/homeowner/installing-air-conditioning-unit.page

08 Nov 2017
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New Developments in Bryant Park

Bryant Park, formerly known as Reservoir Square, has a long history in New York City from the square General George Washington’s troops “raced across” during the Revolutionary War, to New York’s Croton Distributing Reservoir and an “encampment for Union Army troops” during the Civil War.[1] The Landmarks Preservation Commission made Bryant Park a Scenic Landmark in 1974 and today it is a sought after neighborhood for both businesses and residents.

Residential space around Bryant Park is becoming more popular. The area is seeing a significant shift as developers build new co-ops, condos and rental units. To meet the demand of more people in the area, there has been an influx of grocery stores (notably Whole Foods), restaurants, and amenities in the area. This is a substantial change from the abundant quick lunch spots and cafes for businesses in the neighborhood. The biggest attraction for new residents however is that they can typically walk to work and avoid traffic, while those who have to commute have access to the B, D, F and M lines.

Unlike the blocks around Gramercy Park, Tompkins Square Park or even parts of Central Park, the area surrounding Bryant Park, a nearly 10-acre spread at West 42nd Street, between Fifth Avenue and the Avenue of Americas, has for a century been mostly a business district.[2]

Although Bryant Park is in Midtown amongst an ample amount of businesses, tourists, and currently Bank of America’s Winter Village, residents comment on the area’s tranquility. “When everybody goes home, and everyone takes their trains, there’s something really nice about the quietness of this neighborhood”.[3] Developers predict that the neighborhood’s population will continue to grow due to its proximity to businesses and shops. Many businesses are in beautiful pre-war buildings, which will likely be converted into more residential units. This means that the value of property surrounding Bryant Park can see an increase over the next few years as development continues and demand strengthens. Today, the average price for a new apartment is $3.01 million.[4]

So what should potential buyers expect in this flourishing neighborhood? The Bryant, located at 16 West 40th Street, has 57 residential units starting on the 16th floor of the hotel, with views looking out onto Bryant Park. The Bryant “is the first ever residential condominium built on Bryant Park and the first ground-up residential tower in the United States” designed by David Chipperfield.[5] The condos are known for their floor-to-ceiling windows and luxury amenities. Although the area can be busy, the building advertises that its location has “the very best that NYC has to offer” from the arts to dining.[6] Skyline Developers have also ceased an opportunity in the neighborhood and are developing ML House, a 62 unit apartment complex on 1050 Avenue of the Americas, which will be completed by next summer.[7]

[1] Bryant Park. “History”. Available at: http://bryantpark.org/blog/history. Accessed on Nov. 8, 2017.

[2] Hughes, C.J. (Nov. 8, 2017) “Bryant Park: A Growing Neighborhood in Central Manhattan.” New York Times. Available at: https://www.nytimes.com/2017/11/08/realestate/living-in-bryant-park.html?rref=collection%2Fcolumn%2Fliving-in. Accessed on Nov. 8, 2017.

[3] Ib.

[4] Ib.

[5] The Bryant. “Overview”. Available at: https://www.thebryantnyc.com/the-bryant/#overview. Accessed on Nov. 8, 2017.

[6] The Bryant. “Neighborhood”. Available at: https://www.thebryantnyc.com/neighborhood/. Accessed on Nov. 8, 2017.

[7] Op. Cit. n2.  

03 Nov 2017
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You’ve Got Mail

As we are currently living in the age of technology, is it possible for individuals to rely on an email to be a legally binding real estate contract? Email is one of the most effective and common communication tools in business. It allows people to instantly send new ideas, terms for an agreement, or offers quickly in writing. New York Statute of Frauds General Obligations Law § 5-701 sets forth that all agreements must be in writing and signed by all parties, and § 5-703 goes further to require all conveyances and contracts concerning real property to be in writing[1] (also see Scheck v Francis, 26 NY2d 466, 469—70 [1970], parties to an agreement “are not bound and may not be held liable until it has been written out and signed”). But can a chain of emails make up a legally binding agreement if there is an agreement, contractual intention and consideration?

In 2013, Justice Sgroi of the New York Appellate Division shed light on this issue in Forcelli et al. v. Gelco Corporation et al. 2013 NY Slip Op 05437.[2] The court was asked “whether an email message can satisfy the criteria of CPLR 2014 so as to constitute a binding enforceable stipulation of settlement.”[3] The Court affirmed the previous decision that when:

“an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement.”[4]

If parties do not wish for an email chain to accidentally be held as enforceable, it is important to provide a disclaimer stating the lack of intention to enter into an agreement. More recently in Stonehill Capital Management v. Bank of the West, 28 NY3d 439 (2016), New York’s Court of Appeals held that, in an online auction for syndicated loans, the acceptance of a bid via email “that communicated the terms of the purchase and the date and instructions for the closing … indicated the sale was moving ahead and included references to documents necessary for closing the transaction” was sufficient in demonstrating the parties’ intent to enter a binding agreement.[5]

So can the same decision be applied to real estate contracts? It is already established in Crabtree v. Elizabeth Arden, 305 NY 48 (1953), that for a real estate agreement the memorandum signed can consist of multiple documents “connected with one another either expressly or by the internal evidence of subject matter and occasion”[6] if at least one of the documents of the same transaction, “the one establishing a contractual relationship between the parties”, provides the “signature of the party to be charged”.[7] The same principles apply to real estate agreements over email. If the email satisfies the requirements of the New York Statute of Frauds (see Naldi v. Grunberg, 80 AD3d 1, 908 NYS2d 639 (1st Dept. 2010), all the terms of the contract have been agreed upon, and none of the provisions are open for future negotiations (see Saul v. Vidolke, 2017 NY Slip Op 04485), then it can be binding.

An issue that commonly arises is whether the signature of an email constitutes as a signature of the agreement. In Williamson v. Delsener, 59 AD3d 291, 874 NYS2d 41 (1st Dept. 2009), the First Department held that the attorney’s printed name at the end of the email was sufficient, but in Naldi v. Grunberg, 80 AD3d 1, 908 NYS2d 639 (1st Dept. 2010), the Court failed to elaborate whether an attorney’s automatic “signature block” at the bottom of the email satisfied the subscription requirement for the purposes of the Statute of Frauds. However, in Jimenez v. Yanne, 2017 NY Slip Op. 05677, the First Department clarified that typing the name at the end of the email did satisfy CPLR 2104’s subscription requirement. To avoid confusion, parties should add electronic signatures to agreements to distinguish it from the signature block at the end of an email.

[1] General Obligations Law § 5-701 and 5-703. Available at: https://law.justia.com/codes/new-york/2010/gob/article-5/title-7. Accessed on Nov. 3, 2017.

[2] Forcelli et al. v. Gelco Corporation et al. 2013 NY Slip Op 05437 [109 AD3d 244]. Available at: http://www.nycourts.gov/reporter/3dseries/2013/2013_05437.htm. Accessed on Nov. 3, 2017.

[3] Ib. at 245.

[4] Ib. at 252.

[5] Stonehill Capital Management v. Bank of the West, 28 NY3d 439 (2016). Available at: https://law.justia.com/cases/new-york/court-of-appeals/2016/191.html. Accessed on Nov. 3, 2017.

[6] Crabtree v. Elizabeth Arden, 305 NY 48 (1953) at 55.

[7] Ib. at 55 -56.

03 Nov 2017
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Celebrities and Cryptocurrencies

Cryptocurrencies have become increasingly popular over the past year, especially Bitcoin which has increased over 800 percent in value.[1] Today, the cryptocurrency is worth over $7,300 per bitcoin. Bitcoin’s value has jumped this week due to the Chicago Merchantile Exchange’s (CME) statement that they are planning to launch Bitcoin futures in this year’s fourth quarter.[2] Providing futures, which are contracts setting forth the time and date an asset must be purchased or sold, will “provide investors with transparency, price discovery and risk transfer capabilities.”[3] Reuters explains how this is “a major step in the digital currency’s path toward legitimacy and mainstream financial adoption”[4] if this plan receives approval from regulators. However, offering bitcoin futures to promote cryptocurrencies is not what is troubling regulators.

The Securities and Exchange Commission (SEC) published a statement on November 1, 2017 regarding the potential unlawful promotion of celebrity endorsements of cryptocurrencies.[5] The SEC explains that investments in Initial Coin Offerings (ICOs) can include securities, therefore individuals who offer and sell these securities must comply with U.S. federal securities laws or they will be violating the anti-touting and anti-fraud provisions. The SEC states that:

“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws.”[6]

As the use of cryptocurrencies becomes more popular, the SEC wants to ensure that individuals are making strategic and safe investment decisions rather than making investments based on a celebrity endorsement. Typically these celebrities do not have the “expertise to ensure that the investment is appropriate and in compliance with federal securities laws”, therefore it is essential that the details of the promotion are clearly disclosed.[7] Even the U.S. Federal Trade Commission warned ninety celebrities, “influencers”, and brands that endorsements for products on the market must disclose to the public whether there was a paid deal.[8] The SEC notes that investors should always do independent research before investing and has provided an Investor Alert guideline available here.

[1] Kelly, J. (Nov. 1, 2017) Reuters. Available at: http://www.reuters.com/article/us-global-markets-cryptocurrencies/cryptocurrencies-total-value-hits-record-high-as-bitcoin-blasts-above-6500-idUSKBN1D14BM. Accessed on Nov. 3, 2017.

[2] CME Group ( Oct. 31, 2017) “CME Group Announces Launch of Bitcoin Futures.” CME Group News Release. Available at: http://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html/. Accessed on Nov. 3, 2017.

[3] Ib. per Terry Duffy, CME Group Chairman and Chief Executive Officer.

[4] Kelly, J. (Nov. 1, 2017) Reuters. Available at: http://www.reuters.com/article/us-global-markets-cryptocurrencies/cryptocurrencies-total-value-hits-record-high-as-bitcoin-blasts-above-6500-idUSKBN1D14BM. Accessed on Nov. 3, 2017.

[5] U.S. Securities and Exchange Commission (Nov. 1, 2017) “Statement on Potentially Unlawful Promotion of Initial Coin Offerings and Other Investments by Celebrities and Others.” SEC Public Statement. Available at: https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos. Accessed on Nov. 3, 2017.

[6] Ib.

[7] Ib.

[8] Fair, L. (Sept. 7, 2017) “Three FTC Actions of Interest to Influencers.” Federal Trade Commission. Available at: https://www.ftc.gov/news-events/blogs/business-blog/2017/09/three-ftc-actions-interest-influencers. Accessed on Nov. 3, 2017.

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