Save Small Business Fund

The U.S. Chamber of Commerce is rolling out an interesting new program for small employers. The program offers $5,000 grants to small businesses (employing between 3 and 20 people), located in an economically distressed community, and that has been harmed by the COVID-19 pandemic.

The application is coming out on April 20, 2020. It appears it will be an ongoing process, with awards made weekly (but a business need only apply once).

The website for the program, Save Small Business Fund, provides a tool for plugging in your zip code to determine if you are qualified by location. The application is not out yet, but they provide an email list signup for further information as it rolls out on Monday.

The grants may have tax consequences that should be discussed with a business’s attorneys/accountants.

Tim Lynn
315-766-2118
tim@ldts-law.com

Coronavirus: Will Signing and Witnessing in New York During the Pandemic

One issue that is likely to pop up for people affected by COVID-19 is getting their Last Will and Testament signed or updated.  With mandatory quarantines for affected individuals, who are the people most in need of immediate assistance with their Wills, execution of a proper Will in accordance with EPTL 3-2.1 is almost impossible.

We had our first experience with that situation this week.  In the midst of completing planning for a high-risk occupation individual, the person tested positive for coronavirus and entered a mandatory period of isolation.  Fortunately, Governor Cuomo has provided an executive order to help deal with this situation.

As part of Executive Order 202.14, a substitute procedure is provided for remote witnessing of wills (to go along with the prior Executive Order 202.7 that allowed remote notarization).  Although difficult to get the technology to work with a testator homebound and remote witnesses and notary, the procedures worked.  Both our testator and witnesses were tech-savvy enough to perform their tasks.  

Tim Lynn
315-766-2118
tim@ldts-law.com

PREVAILING WAGES IN NEW YORK FOR PUBLICLY SUBSIDIZED PROJECTS

The FY2021 New York State Budget adopts provisions requiring prevailing wages on certain construction projects receiving public benefits.  The law, codified at Section 224-a of the Labor Law, applies to construction work on projects with total construction costs over $5 million with public funds providing at least thirty percent of the total construction costs.  If subject to this section, the project is subject to prevailing wages rules under Sections 220 and 220-b of the Labor Law.  It is generally effective on January 1, 2022.


Public Funds.  Public funds has a broad definition, including:

• Payment of money that is not subject to repayment 
• Below market rate fees, rents, interest rates, other loan costs, or insurance costs
• Loans that have contingent repayment obligation or that have credits against repayment
• Savings from reduced taxes by reason of tax credits, tax abatements, tax exemptions, or tax increment financing (TIF financing)
• Savings from PILOT agreements
• Other savings from reduced, waived or forgiven costs that would have been at a higher cost but for the involvement of a public entity

If thirty percent or more of constructions are subsidized by one of the above with respect to a construction project of $5 million or more, the law may be triggered.


Exempted Projects.  Certain types of projects are exempt from the new law:

• Certified historic rehabilitation projects
• Restore NY projects
• Downtown Revitalization Initiative projects
• Renewable energy projects with a capacity of 5 MW or less
• Construction work on one or two family dwellings where the property is the owner's primary residence, or construction work performed on property where the owner of the property owns no more than four dwelling units
• Not-For-Profit corporations organized under Section 102 of the NY Not-For-Profit Law that (1) have gross annual revenue and support of less than $5 million and (2) that is not formed exclusively for the purpose of holding title to property
• Specific exclusions for certain affordable housing, supportive housing and subsidized housing projects
• Certain manufactured home parks
• Projects that are subject to a collective bargaining agreement, project labor agreement or similar agreements with a bona fide building and construction trade labor organization
• A handful of exceptions for narrow categories of projects in New York City

Incentives that are not treated as Public Funds.  The statute excludes certain incentives from inclusion in the definition of public funds.  Several are very specific, but three could have broader impact:

• Funds that are not provide primarily to promote, incentivize, or ensure that construction work is performed
• Tax benefits provided for projects the length or value of which not able to be calculated at the time the work is to be performed
• Brownfield Cleanup Program tax credits

Covered Agencies.  Public entities that may provide public funding, as defined in the statute, include, but are not limited to, the following:

• The State
• Local Development Corporations
• Industrial Development Agencies
• Municipal Corporations
• Any state, local, interstate or international authority under the Public Authorities Law

Minority Owned Businesses, Women Owned Businesses and Service-Disabled Veterans Businesses.  It is not clear what the requirements are, but owners and developers subject to Section 224-a “shall comply with the  objectives and goals of minority and women-owned business enterprises pursuant to article fifteen-A of the executive law and service-disabled veteran-owned businesses pursuant to article seventeen-B of the executive law.”  The law does permit the Commissioner of Labor to require that owners and developers provide information on the participation of minority and women-owned business enterprises and the diversity practices of contractors and subcontractors involved in the project.

Tim Lynn
315-766-2118
tim@ldts-law.com

Coronavirus: Downtown Syracuse’s biggest apartment construction project halted

From Syracuse.com:

Coronavirus: Downtown Syracuse’s biggest apartment construction project halted

Tim Lynn 

315-766-2118 

tim@ldts-law.com

CARES Act: Emergency EIDL Grants

CARES Act: Emergency EIDL Grants
Under Section 1110 of the CARES Act, Congress authorized certain advances in the amount of $10,000 to small businesses to assist with the impacts of COVID-19.  These $10,000 payments are more in the nature of a grant and are not expected to be repaid by the recipient.

Eligible Entities:

• Businesses with not more than 500 employees
• Sole proprietorships, with or without employees or independent contractors
• Cooperatives with not more than 500 employees
• ESOPs with not more than 500 employees
• Tribal concern or business with not more than 500 employees

Advance:

The payment is a $10,000 advance on a 7(b)(2) loan – disaster relief loans for small businesses under Section 7(b)(2) of the Small Business Act.

Repayment:

The $10,000 advance does not need to be repaid even if the business is turned down for the 7(b)(2) loan.

Use of Funds:

The funds may be used for any purpose allowable under Section 7(b)(2) including:

• Providing sick leave to employees unable to work due to the direct effect of COVID-19
• Maintaining payroll during business interruption or substantial slowdowns
• Meeting increased costs to obtain materials unavailable due to interrupted supply chains
• Making rent or mortgage payments
• Repaying obligations that cannot be met due to revenue losses

Impact on Payroll Protection Program Loan:

The amount of the $10,000 advance is subtracted from the forgiveness available under a 7(a) loan made under the Payroll Protection Program.

Applications are submitted directly to SBA at SBA Emergency EIDL Grant


Tim Lynn
315-766-2118
tim@ldts-law.com

April 5th Update on COVID-19, Rent and Evictions in New York

Effective at 8:00PM on March 22, 2020, Governor Cuomo issued a moratorium on the enforcement of either an eviction of any tenant residential or commercial, or any foreclosure of any residential or commercial property for a period of 90 days.  This moratorium has caused a lot of fear for landlords of both residential and commercial properties that tenants would not make April rent payments.  Now that we are in April, every landlord is seeing the reality of their rent roll for the time-being.


The CARES Act provides no relief for most landlords.  The only relief being provided for landlords comes in the form of lender deferrals.  Many lenders, understanding the scope of the problem and responding to calls from government officials to permit mortgage payments to be deferred, have granted two or three month deferrals to landlords.  However, not all mortgage holders are providing this relief. 


The Governor’s order did not relieve tenants of the obligation to pay rent.  It only defers any action landlords can take for a period of 90 days.  As yet, there is no legal guidance for what will happen when the moratorium expires.  Governor Cuomo’s public statements indicate that he views his action as not abrogating the obligation to pay rent.  It remains to be seen what will happen with respect to tenants who do not pay their April rent, either because they could not or because they merely took advantage of the moratorium on evictions.


In the New York Senate, Senate Bill S8125A would provide for suspension of rent for certain residential tenants and certain small businesses.

• For any residential tenant or small business commercial tenant in the state that has lost income or has been forced to close their place of business as a result of government ordered restrictions in response to COVID-19, all rent payments would be suspended for 90 days.  The language refers to a suspension, but it is really a cancellation – the tenant would never have to pay the suspended rent. 
• The bill goes further and provides for an automatic renewal of any lease that expires during the 90 day period on the same terms as were in effect under the current lease.
• The bill also provides for mortgage relief for landlords affected by the law, but that relief would only apply to mortgages over which New York has authority to issue such relief – a narrow category of mortgages.  Similar to action already taken by the Governor with respect to state-charted institutions, the impact of this relief would be limited.

Another proposal would require landlords to offer tenants the option to use paid security deposits in place of April rent payments.  Tenants would have 30 days to start paying back their security deposits.  This proposal might be limited to New York City.  And tenant advocates continue to press for an across-the-board rent forgiveness. 


It is unclear at this point in time what will happen with unpaid rent.


Tim Lynn
315-766-2118
tim@ldts-law.com

Paycheck Protection Program Application Released

The Treasury Department has released the application for 7(a) loans under the Paycheck Protection Program.  The application is available at:


https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf


Based upon further information provided by the Treasury Department, note the following:

• Due to the expectation that a high number of companies will participate in the program, forgiveness is likely to be capped at 25% for non-payroll costs (e.g., rent, utilities, mortgage interest)
• Deferral of payments of interest and principal will be for only 6 months
• Applications can be submitted beginning Friday April 3^rd.
• The date for applying as an independent contractor or self-employed individual is delayed to Friday April 10^th.
• Applications can be made through any SBA lender or federally insured depository institution.  We advise caution in proceeding with any lender that is not a preferred or express SBA lender.
• Payroll documentation is required to be provided to the lender.

Confirmation has been provided regarding layoffs and compensation cuts made through April 26^th – provided the jobs or compensation is restored by June 30^th, loan forgiveness is unaffected.  Note that this exception does not apply to layoffs after April 26^th.


Perhaps most significant: Interest rate is a fixed 0.50% rate.




Tim Lynn
315-766-2118
 tim@ldts-law.com