Ohio Opportunity Zone Law Amendments Being Considered

NAIOP Ohio’s Board hosted the Ohio Development Services Agency Director, Lydia Mihalik, for a Zoom session.  The Ohio Development Services Agency administers several programs that are of critical importance to the commercial real estate industry in Ohio, including Ohio’s Opportunity Zone Program and Ohio’s Historic Tax Credit Program.  Mike Sikora led a discussion with Director Mihalik on several proposed enhancements to Ohio’s Opportunity Zone Program that are being considered.

Our firm obtained for our Clients approximately 20% of all Ohio Opportunity Zone tax credits awarded during Ohio’s inaugural round of OZ awards.  We are now working on many Opportunity Zone Applications for Round 2 for our Clients, based upon their 2020 Opportunity Zone development activity.




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Transformational Mixed-use Development Bill Nears Passage

Last week, Senate Bill 39 – the Transformational Mixed-use Development Tax Credit Bill – was favorably voted out of the Ohio House Economic and Workforce Development Committee by a vote of 10-1. Yesterday, that Bill passed on the House floor by a vote of 82-1.  This extremely important Bill for the commercial real estate industry is now poised to move to the Ohio Senate for concurrence with the House amendments and then to the Governor’s desk for signature.

This Bill would incentivize mixed-use developments with $50,000,000 or more in total project costs (and 15 stories or 350,000 square feet) for developments in or around cities with a population of 100,000 or more, or smaller scale but still transformational mixed-use developments that are located more than 10 miles outside of a major city.

Our firm drafted portions of Senate Bill 39. Unlike any other commercial real estate economic development law – it includes a first of its kind, built-in return on investment calculation and methodology to ensure that additional state and local taxes generated by the development will exceed the amount of the tax credits awarded to the developer.

If this Bill becomes law, it will be help stimulate the economy and the commercial real estate business, in particular, by promoting additional commercial real estate development activity of significance – that is, by definition, transformative.

Landlord Evicts Tenant Following Expiration of Term, Despite Renewal Communications

Ohio’s Eighth District Court of Appeals recently decided a landlord-tenant case addressing the requirements for parties to reach an enforceable contract when discussing a lease renewal.  In Realty Trust Servs., L.L.C. v. Mohammad, 2020-Ohio-3736, the Plaintiff sought eviction of the tenant from property following the expiration of the lease term after the parties attempted but failed to reach a definitive agreement on renewal.  The parties then exchanged emails about renewal, but the parties never finalized definitive renewal terms.

Once the term expired, the landlord served a statutory three-day notice, and the tenant tendered rent payments, which the landlord refused.  The landlord then filed an eviction action.

On appeal, the Eighth District Court of Appeals ruled that the landlord never extended an offer of definitive terms to the tenant, that the parties’ email exchange was a mere “invitation to negotiate,” and that the parties never reached a “meeting of the minds” on terms of renewal.  The Court of Appeals noted that there was no holdover tenancy because the landlord refused to accept rent following the expiration of the term.

This case serves as a useful reminder to landlords to be as clear as you possibly can in communications about renewals, and don’t accept rent following the expiration of a term if you want to immediately regain possession of the property.

ALTA’s Title Insurance Law Newsletter Features Sikora Law Case

Another well-respected title industry publication has picked up our firm’s most recent case law appellate victory on title coverage and closing protection coverage.  That case law victory was covered well in the October 2020 issue of the American Land Title Association’s Title Insurance Law Newsletter.  That article recognized our firm and our lead attorney on that case, Alex Goetsch, for the outstanding result.   Check out that article “Loan Closer Owed No Duty to Borrower” in the October issue of ALTA’s Title Insurance Law Newsletter by clicking here.

Statute of Frauds Applies to Easement Modifications

Recorded easements are subject to the statute of frauds and cannot be modified without a subsequent writing, proclaimed Ohio’s Tenth District Court of Appeals in a recent Decision in a hotly contested commercial real estate dispute.  Tower 10 LLC v. 10 W Broad Owner LLC, 2020-Ohio-3554.  In Tower 10, the owners of adjacent Downtown Columbus high-rise buildings entered into a written Declaration that granted “easements and cross easements” through pedestrian skywalks and internal passageways, to facilitate access by tenants and guests of both buildings to an attached parking complex.  The written Declaration specified that the pedestrian pathways would “be maintained open at all times during normal business hours … or at such other times as agreed to by the parties.”  The building owners also verbally agreed to create a keycard system that allowed certain individuals to access the pedestrian pathways on a 24/7 basis, and that understanding was in place for over 30 years.  But in 2011, one of those buildings was sold, and the new owner limited the keycard holder access to “normal business hours” only.  The owner of the adjoining building sued to restore 24/7 access for its keycard holders, and obtained temporary and preliminary injunctive relief and summary judgment in its favor.  The trial court concluded that keycard holders had “an express easement” to 24/7 access, even though that was not specifically stated in the written Declaration.

The Court of Appeals reversed, instead deciding that the parties’ agreement on the keycard system only amounted to a license, and did not grant a permanent easement for 24/7 access.  Because the building owners’ agreement had never been reduced to writing or recorded as a modification to the written Declaration, it “could not modify the rights granted in the Declaration.”

The Tower 10 Decision serves as a reminder that any modification of real property rights and interests should be memorialized in writing, preferably with the help of legal counsel.  Even decades of joint performance under a verbal agreement might not be enough to satisfy Ohio’s legal standard for creating or modifying an easement or changing real property rights that are stated in some instrument in the public records.

Click here to learn how Sikora Law can help CRE Developers & Owners streamline their legal needs.