Expediting Bid Protests

Last week, the Rand Corporation, which just completed an analysis of the federal bid-protest system, announced that one thing the federal government has been doing particularly well is resolving bid protests quickly–the majority within 30 days.

As we’ve explained in a prior post, a bid protest is a proceeding where a bidder for a government contract can challenge the government’s selection process or decision.  Bid protests generally take place before the contract has been officially awarded by the government agency in order to give the government the opportunity to consider the issues raised and correct its course if required.  Although the government sometimes has the ability to award a contract before resolving the protest–such as in the case of a public emergency–in general, the protest must be resolved first.  That means that a prolonged protest delays the award, execution, and performance of the contract.

Unfortunately, delays in the award decision can be fatal to the final contract.  Because the cost of labor, materials, etc., can fluctuate, a bidder may not be able to hold its price firm for a prolonged period. In the public-private partnership (P3) context, the risk of a prolonged bid protest is even more severe, as the winning proposer will have financial commitments with firm expiration dates.  In the event that the financial commitment expires before the contract is awarded, the deal could fall apart.  As a recent example, the P3 procurement for the I-395/Signature Bridge project required private financing commitments, but the state took nearly a full year to resolve the protest filed by the second-place proposer. The hearing examiner ultimately upheld the agency’s decision, but renewing the financial commitments after the lengthy delay will surely be a challenge. Continue Reading

New Ordinance Proposed to Facilitate Mass Transit in South Florida

Regional mass-transit systems are often plagued by the permitting challenges associated with construction in multiple cities, each with its own priorities, regulations, and permitting processes.  For example, the cost of the first leg of the Los Angeles light rail system skyrocketed due to the design changes demanded by each of the several municipalities the system was required to traverse.  Because the recently proposed expansion of Miami-Dade County’s transit system (the SMART Plan) will similarly traverse multiple jurisdictions, the project would benefit greatly from consolidated permitting and decision making at the regional level. Continue Reading

Real Estate Tax Help for Vertical Subdivisions

For many years we have sought to address the problems faced by mixed-use developments where different uses in a single structure are carved up into separate fee simple parcels. The main problem has been the inability to obtain separate tax folio numbers for the separate parcels. This has resulted in a situation where it is either difficult or impossible to finance the separate parcels since they all share one tax folio number and there is only a single tax bill issued for multiple parcels. For reasons not clear, the Tax Assessor’s Office has refused to provide separate tax ID numbers arguing that a separation for tax billing can be achieved by creating a condominium structure. However, anyone knowledgeable in the condominium arena recognizes that using a condominium regime may frequently create more serious problems than the tax issue.

In the 2018 legislative session we were fortunate in having a tax bill that was originally prepared in 2014, and which languished for many years, inserted in the 2018 budget bill and passed as part of the budget bill CS/HB 7087. Continue Reading

O’Hare Express Train Showcases the Viability of P3s for Mass Transit

Yesterday, the City of Chicago selected two finalists in its procurement process for the planned O’Hare Express, a mass transit system that will connect downtown Chicago to O’Hare International Airport within 20 minutes–substantially faster than either existing mass transit service on the Blue Line or vehicular alternatives.  The two finalists are Elon Musk’s firm, The Boring Co., and a P3 consortium including experienced firms in the P3 market such as Meridiam Infrastructure and Mott MacDonald.

Whichever firm ultimately prevails in the competition, O’Hare Express is likely to jump-start the market for mass transit P3s in the United States.  Significantly, O’Hare Express is conceived as a revenue P3, which means that  the private developer and operator of the system will be repaid by the revenues (e.g., fares) that it collects from users of the system.  Continue Reading

Government Violated Developer’s Bert J. Harris Act Rights by Denying Site Plan, Finds Florida 4th District Court of Appeals

In a significant ruling, Florida’s Fourth District Court of Appeal in the case of Ocean Concrete, Inc. v. Indian River County ruled the government violated the developer’s Bert J. Harris Act rights by denying a site plan for the development of a project that had established a reasonable, investment-backed expectation.  The Ocean Concrete ruling is particularly important because Bert J. Harris claim is one of the only ways to protect development investment expectations against overstepping governmental regulations that fall short of a constitutional taking.

The Bert J. Harris, Jr., Private Property Rights Protection Act was codified in 1995, to provide protection to private property owners against burdens placed on their property rights by governmental entities.  Bert J. Harris claims provide an important recourse for private property owners when a regulation burdens their property rights, but still falls short of an actual constitutional taking.  Specifically, the action of a governmental entity is not required to reach the level of a taking, but only “inordinately burden” an “existing use” or a “vested right” in the private property. While the Act has been on the books since 1995, Florida courts still grapple with its interpretation. Continue Reading

Miami Micro-Units Solve for Both Tenant Affordability and Developer Profitability

Cities across America are facing an affordability crunch and housing in Miami is no different.  The short supply of affordable housing is even scarcer in proximity to Miami’s central employment districts with no single solution available.  Efforts to promote inclusionary zoning (mandatory affordable unit requirements) have populist appeal, but limited success and actually reduce land values for property owners.  Micro-units though, have the opportunity to create both affordable housing and also increase developer profitability.  In accomplishing both affordability and profitability, micro-units hit the perfect spot that incentivizes the private sector to build affordable housing because it is more profitable.  As a result, several municipalities in South Florida are exploring codifying micro-units.

Micro-units provide affordability for the simple reason that the units are smaller and cost less to build, while yielding a greater return for developers and landlords. Thus, they provide the unique dual benefit of affordability and profitability.  Reduction of minimum unit size increases unit density with the same building envelope.  Moreover, smaller units always rent for more per square foot than their larger counterparts.  Thus, the same building envelope can now contain more units and these units can rent at a higher price per square foot.  The units remain relatively inexpensive to rent simply due to their size.  In Manhattan’s Kips Bay neighborhood, micro-units ranging from 260 to 360 square feet were developed to test the viability of micro-units.  The Kips Bay units are fully leased, proving out the micro-unit model. Continue Reading

New Funding Source for Mass Transit under the SMART Plan

We have previously written about the need for new funding solutions for public transportation, including mechanisms that capture the added value of mass transit on adjacent properties.  Last week, consistent with our recommendation, Miami-Dade County adopted an ordinance that creates a “Transportation Infrastructure Improvement District” in order to capture the added value of new community assets (in this case, new mass-transit corridors) and invest those funds back into the assets.  Districts such as the Transportation Infrastructure Improvement District, remain innovative and appropriate ways of funding existing or new community assets without raising taxes.

The new ordinance is a form of tax-increment financing (TIF), which works by calculating the amount of new taxes attributable to a new development, and then earmarking that amount for a particular purpose. A TIF does not impose new taxes–there is no new millage. Nor does a TIF require the government to divert any pre-existing taxes for the new project–it utilizes only the taxes that would not exist, but for the new community asset, and is therefore a revenue-neutral financing mechanism.  In brief, the TIF operates by drawing an imaginary line around the new community asset and calculating the current real-estate taxes generated by property in the designated area–that amount is considered the base amount.  Going forward, the base amount is subtracted from taxes collected in the designated area, which will increase based on the positive impact of the new asset on property values.  The difference, or the “tax increment,” is attributed to the new community asset and is used to either fund operations or new capital improvements. Continue Reading

Bid Protests for Small Businesses

A bid protest is a method for a bidder for a government contract to formally challenge the government’s selection process or decision.  Bid-protest procedures vary from jurisdiction to jurisdiction, but there is generally an opportunity to submit a written petition that explains why the protestor believes the government made an unfair or unlawful decision, following by a hearing before an official authorized to decide the dispute (sometimes a judge or equivalent and sometimes an administrator).  In some situations, a bid protest resembles a civil trial and can take weeks or months to resolve, and in other situations it is far less formal and can be resolved rapidly.  The expense of a bid protest often increases with the formality and length of the proceedings.

Earlier this month, the RAND Corporation made public its comprehensive report commissioned by Congress on the federal bid-protest system.  Although the report overall concluded that bid protests were serving their intended function to find and correct errors in the procurement process (approximately 40% of federal protests yielded a change in the outcome), RAND did conclude that the system was too costly for small contracts and small businesses.  RAND recommended an alternative, expedited process for small contracts, as well as changes to make the system easier for small businesses.  Because the federal system requires essentially the same time and expense, regardless of the size of the contract or the resources of the protestor, protests can in some cases be too burdensome on both the governments and the protestor.  Continue Reading

South Florida Real Estate Industry Update

Begin the new year with essential guidance that will help prepare your real estate company or clients for a productive and profitable 2018.  The South Florida real estate community will come together on Thursday, January 18, to hear industry leaders discuss some of the most significant tax, accounting, and legal planning opportunities affecting their businesses today.

Bilzin Sumberg attorney Josh Kaplan joins professionals from Marks Paneth, Ward Damon, and Engineered Tax Services to discuss topics including:

•  The impact of tax reform on §1031 exchanges
•  Strategies for Joint Venture structuring
•  The tax benefits of cost segregation studies
•  The value of Real Estate Investment Trusts (REITs) Continue Reading

Miami-Dade County Adopts New P3 Legislation

We previously wrote about Miami-Dade County’s proposed new P3 legislation, both when it was initially proposed, and prior to it being considered by the subcommittee of jurisdiction, the Government Operations Committee.  Last week, the Board of County Commissioners unanimously approved the new ordinance, which will help the County implement a variety of planned and potential P3 projects in the near future, including the planned Civil Courthouse P3.

The ordinance generally tracks and implements the State of Florida’s procedures for procurement of P3 projects, but with some notable additions.  An unsolicited P3 proposal to the County under the new ordinance requires significantly more detail than under the State of Florida’s process, including information on how the project will utilize community-based subcontractors and otherwise benefit the community.  The new ordinance also provides deadlines for the administration to take action on an unsolicited proposal, which helps address the concern of many proposers that their proposal will remain in limbo for an indefinite period of time, and a number of other provisions designed to help move P3 projects forward.

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