Monthly Archives: May 2020
Two new Interim Final Rules (IFR):
- Provides borrowers and lenders guidance on requirements governing the forgiveness of Paycheck Protection Program (PPP) loans
- Informs borrowers and lenders of Small Business Administration ‘s (SBA) process for reviewing PPP loan applications and loan forgiveness applications. This IFR supplements the aforementioned IFR on loan forgiveness released contemporaneously with this IFR
The two new IFRs are the most recent authoritative guidance and expands upon the loan forgiveness application and instructions released May 15th
The IFR loan forgiveness guidance answers questions related to the loan forgiveness process, indicates payroll and nonpayroll costs eligible for forgiveness and provides scenarios affecting the amount of loan forgiveness for which a borrower qualifies. The rule highlights:
An alternative method for determining when the eight- week period begins for employers with biweekly or more frequent pay cycles. These borrowers can elect an alternative payroll covered period, which is the eight- week period starting the first day of the pay period after they received the funds. Previously, the only starting date allowed was the day the SBA lender disbursed funds to the borrower — which remains the requirement for all businesses with pay periods less frequent than biweekly e.g. semimonthly.
Bonuses and hazard pay are eligible for loan forgiveness, as are salary, wages, and commission payments to furloughed employees. The payments cannot exceed the pro-rated amount of a $100,000 annual salary.
Establishment of caps on the amount of loan forgiveness available for owner-employees and self-employed individuals’ own payroll compensation. Specifically, the amount requested can be no more than the lesser of 8/52 of 2019 compensation or $15,385 per individual in total across all businesses. For self-employed individuals, including Schedule C filers and general partners, no additional forgiveness is provided for retirement or health insurance contributions.
Clarification on when non-payroll costs must be incurred or be paid to qualify for loan forgiveness. Specifically, the costs must be paid during the eight -week period or incurred during the period and paid on or before then next regular billing date, even if that date is after the eight weeks. The guidance also states that advance payments on mortgage interest are not eligible for loan forgiveness.
Restating the rules for when employers can exclude from loan forgiveness calculations employees who refuse to be rehired.The new guidance reiterates that in calculating any reduction in full time equivalent employees, employers can exclude any employees who decline a good faith offer to return at the same pay and hours as before they were laid off or furloughed. The guidance released Friday includes a requirement for borrowers to notify the state unemployment office of an employee’s rejected offer within 30 days of that rejection.
Definition of full-time equivalent as 4o hours, and two methods for calculating FTEs for non- full-time employees.
Clarified that borrowers can restore forgiveness if they rehire employees by June 30 and reverse reductions to salaries and wages for FTE employees by June 30. The guidance said loan forgiveness totals would not be reduced for both hours and wage reductions for the same employee.
The IFR on PPP review procedures and related borrow and lender responsibilities covers procedural details. The rule highlights:
Establishes that the SBA may review any PPP loan, regardless of size, to determine if the borrower is eligible for PPP loans under the CARES Act, whether the borrower calculated the loan amount correctly and used the funds for eligible costs, and whether the borrower is eligible for the amount of loan forgiveness it requests.
Declares that borrowers may appeal SBA determinations within 30 days of receipt. The guidance also says an appeal process will be established, with the specifics coming in a later interim final rule.
Requires lenders to decide on loan forgiveness within 60 days of receipt of the complete application from the borrower. The SBA then has 90 days to review the loan forgiveness application.
Clarifies that borrowers may be asked questions by lenders and the SBA
Confirms that lenders will not be paid their fees for any PPP loans the SBA deems ineligible. This includes a 1-year clawback provision on bank fees for those loans.
The Philly region will move to Gov. Tom Wolf’s “yellow” phase of reopening on June 5. This phase loosens some restrictions, but it won’t be business as usual. Most, but not all, businesses can reopen, limitations on public gatherings will remain, and dine-in service will still be closed. Here’s more on what will and won’t be open during the yellow phase. Meanwhile, several other counties in the state will move to the “green” phase, which is the least restrictive. Have a question about the coronavirus and how to live right now?
Governor Murphy announced Tuesday that his May 22 executive order makes it possible for professional team sports, which train or play in New Jersey, to return to training camps or competitions if their leagues move in that direction.
The Murphy Administration has been in conversations with these leagues about the protocols they will have in place to protect the players, coaches and team personnel.
Las Vegas is set to reopen casinos following its coronavirus lockdown, but guests should not expect a return to business as usual.
Nevada Gov. Steve Sisolak set a tentative date of June 4 to reopen casinos statewide following two weeks of continued decreases in both new cases and hospitalizations. Should the decline continue through the weekend, Sisolak will hold a press conference on Tuesday to reveal further rollbacks as part of the next phase to reopen the state.
The New Jersey Economic Development Authority formally approved the roll out of another $50 million from the federal government toward a grant program meant to prop up small businesses that have taken economic hits from the COVID-19 pandemic and ensuing recession.
The $50 million comes out of the landmark federal stimulus bill approved in March – the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. It includes $5 million toward a second round of a small business grant program.
Dr. Anthony Fauci, in a CNBC interview Friday, said now is the time to reopen the economy, but& states should still take “very significant precautions” with social distancing. States continue to chart a path forward, reopening nonessential businesses and easing restrictions on movement. Even the hardest-hit states in the country, New York and New Jersey, are reopening beaches for Memorial Day weekend.
Gatherings of up to 25 people will now be allowed outdoors — including for church gatherings — as well as for outdoor recreational businesses like charter and fishing boats, driving ranges, and outdoor batting cages, under an executive order Murphy said he’s signing. It takes effect immediately.
The governor added that this does not apply to outdoor dining or graduations. But church gatherings can now be 25 people are fewer, his office said.
Those waiting for a haircut — and to go back to work — in New Jersey may have some hope.
Gov. Phil Murphy said Thursday morning that more indoor businesses such barbershops, salons, and gyms in the Garden State may be allowed to reopen, with restrictions, in “a matter of weeks, not months,” as he continues to gradually lift near-lockdown restrictions he installed to fight the coronavirus pandemic.
Governor Tom Wolf has signed a bill Thursday which allows the temporary sale of cocktails-to-go from bars, restaurants, or hotels with a liquor license. Act 21 of 2020 takes effect immediately.
“This new temporary rule creates more business for bars and restaurants when they need it, helps to meet customer demand and supports social distancing,” Wolf said in a release from his office. “As we approach the holiday weekend, I encourage all Pennsylvanians to remember to drink responsibly.”
The governor’s office said the law applies to bars, restaurants and hotels that have lost 25 percent of average monthly total sales during the COVID-19 emergency.
The prepared beverages and mixed drinks must be sold in containers with a secure lid in quantities from 4 oz. to 64 oz. An additional seal is required on the straw opening of a lid.
Establishments can sell the drinks from 7 a.m. to 11 p.m., Monday through Saturday, and from 9 a.m. to 11 p.m. on Sundays, if they have a Sunday Sales Permit. Payment may occur at curbside.
People often ask me, Does going solar in 2020 still make sense? There are three (3) significant changes that will impact solar for commercial real estate in the mid-Atlantic in 2020:
1. NJ SREC Certainty – TREC
2. NJ Big Rooftops – Valuable
3. PA Solar – On The Upswing
In February of 2020, we published an article asking “Does Going Solar in 2020 Still Make Sense ?”. We now revisit and update some of the conclusions to help you determine if solar could add incremental value to your commercial property.
1. NEW SOLAR PROGRAM IN NJ – TREC
The new incentive program for solar in NJ was released on May 1, 2020. The name of the incentive has been changed from SREC to TREC (Transition Renewable Energy Certificate) , but the underpinnings have not changes significantly. This program offers two very positive enhancements for solar on commercial property: 1) it extends the lifetime of the TREC from 10 years to 15 years and 2) it offers a fixed price of $152 per TREC for that 15-year term. The buyer of your TREC will be an entity or fund supported by the state’s NJ Clean Energy Program.
In many cases, the new TREC program can add $1.00 – $1.50 psf of incremental income. In addition, this new fixed pricing structure offers greater certainty around the ongoing revenue streams from solar. Solar projects are now more favorable to debt and there are more lenders offering project-based only recourse. This structure now makes it much easier to finance a commercial solar project.
Keep in mind that the letter “T” in TREC standards for Transition. This new incentive is only intended as a temporary stopgap measure to keep the solar industry viable until a new permanent solar funding program is implemented. This new permanent program will arrive around June 20210 and will not likely have the same level of incentive. If you are interested in this new solar program, it does make sense to start the process now.
For more information on the new solar TREC program, see the link below to the NJ Clean Energy Program or contact Independence Solar.
2. CAN BIG ROOFTOPS WITH LITTLE ELECTRIC USAGE TAKE ADVANTAGE OF THIS NEW TREC PROGRAM ?
In our February 2020 article, we insinuated that yes, large rooftops (> 100,000 sf) with limited or no electric usage could leverage the new TREC program. The state had published a line in their December 2019 press release enumerating how “direct-to-grid” projects would be treated. Potentially, this would have opened up solar to many more properties that are either vacant or occupied by smaller electric users.
Unfortunately, when NJ launched the new TREC program in April, they clarified that they would not allow any new rooftop projects to connect directly to the grid and qualify for TRECs. The line in the Dec 2019 press release pertained only to projects that had been previously approved in a 2018-2019 solicitation known as Subsection r. At this time, there are no further solicitations open for Subsection r.
However, there are still opportunities for large commercial buildings under another solar program – the Community Solar Program. Under this program, there is an annual solicitation for solar projects where the solar electricity is fed directly into the grid and credited to residential accounts. In many cases, this Community Solar program could offer commercial landlords $0.25 – $0.50 psf as rent for use of their rooftops without any investment into the solar projects itself.
3. HOW ABOUT PENNSYLVANIA ?
Pennsylvania does not yet offer the same strong incentive for solar as NJ. However, there is currently proposed legislation in the PA Senate that would enhance the value of the solar SREC in PA. This bill would stimulate the solar market in PA and create significant jobs. The cost of commercial solar continues to fall dramatically every year, so projects that may not have penciled out in the past may now be feasible in PA.
For More Information about going solar in 2020, Contact:
President & Founder
1008 Astoria Boulevard
Cherry Hill, NJ 08003
Keith Peltzman is president and founder of Independence Solar with offices in Cherry Hill, NJ and Essex, CT.
Independence Solar is a turnkey installer of commercial solar energy. Since 2007, the team has developed and built over $200 million of solar projects, including the largest rooftop solar array (9 MW) in North America at the Gloucester Marine Terminal in NJ. Independence Solar forges long-term partnerships to maximize returns on our customers’ solar energy investments.
On May 19th, Governor Tom Wolf announced that businesses and employees in the real estate industry may conduct limited business-related activities statewide and provided guidance for this industry to operate in red phase and yellow phase counties.
Previously, businesses and employees in the real estate industry were permitted to conduct limited in-person activities in counties in the yellow phase of the commonwealth’s phased reopening plan.
The real estate guidance requires businesses and employees to follow all applicable provisions of the Guidance for Businesses Permitted to Operate During the COVID-19 Disaster Emergency to Ensure the Safety and Health of Employees and the Public, which includes provisions requiring that every person present at a work site, business location, or property offered for sale, wear masks/face coverings, and provisions requiring the establishment of protocols for execution upon discovery that the business has been exposed to a person who is a probable or confirmed case of COVID-19.
All in-person activities are supposed to be scheduled and limited to no more than the real estate professional and 2 people inside a property at any time, exercising appropriate social distancing.
When conducting settlements/closings the guidance suggests utilizing remote notary, powers of attorney or the exchange of contract documents electronically or by mail wherever possible. Where it is not possible to conduct settlement/ closing via remote notary or POA, attendance in-person is required to be limited to required signatories and their legal counsel or real estate professional only, and steps to preserve social distancing must be followed to the maximum extent possible.
Businesses and employees are also encouraged to provide sellers with relevant safety information and protocols for cleaning and sanitizing properties; utilize electronic marketing as much as possible; provide all individuals at an in-person activity with a verbal health screening; stagger scheduling of property showings; avoid physical contact with the property by staging in advance to prevent the need for interaction with items like lights, interior doors, drapes and blinds; and minimize time spent in the property by having discussions away from the property via remote means.
The Governor also vetoed House Bill 2412, stating that the Bill did not provide enough safety protocols for the COVID-19 public health crisis. Further, the legislation would have placed restrictions on municipalities related to property transfers; specifically, it would have eliminated a municipality’s ability to issue use and occupancy permits and conduct safety inspections, which are conditions of a property transfer.
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
Gov. Phil Murphy on Monday outlined a multi-stage reopening plan for businesses, offices and activities ordered closed to slow the coronavirus outbreak in New Jersey and said the state has entered “Stage 1,” though no timeline for future stages was included.
Murphy, speaking to reporters at his daily coronavirus press conference, said “Stage 1″ allows for relaxed restrictions on low-risk activities, like enjoying parks, beaches and lakefronts, but calls for residents to “stay at home as much as possible.” The five-stage plan includes “Stage 0” when the maximum restrictions of near-lockdown orders were in place, and a final stage he referred to as a “new normal” when a vaccine is widely available.