The Increasing Complexity of Owning and Renovating:
A Challenge For Not-For-Profits

by John E. Osborn, Esq.

PlaNYC 2030 has focused New Yorkers on the costs and challenges of capital and facility planning for an aging building inventory, almost all of which will still exist by the year 2030.

Now that the energy benchmarking, auditing and retro commissioning requirements passed by the New York City Council in the Greener, Greater Buildings Plan in early 2010 are beginning to take effect, there appears little question that developers will embrace and profit from these initiatives, as will others with the ability to market, upgrade uses and invest in the future of the City as it will look in 2030 and beyond.  

New York City looks to be a healthy place for real estate development and growth.  It is poised to accept an ever increasing population.  But the very core of the City, owned by not-for-profits and made up of museums, churches, synagogues, colleges, schools, and cultural institutions, faces a real challenge. The cost and complexity of keeping up with land use, energy, landmark, environmental and other regulatory requirements make it much harder for not-for-profits to renovate and keep their properties current for their intended uses. 

As John E. Osborn P.C. environmental attorney Mark Pennington observes, “For the 2030 vision to truly work, we need to respect, preserve and maintain the beauty of the not-for-profit properties in our urban centers with the same type of energy, focus and creativity we use to preserve open space in Westchester and elsewhere.  Not-for-profits are starting to develop a keen sense that the growing financial burden of complex environmental and building code requirements threatens the extinction of these majestic properties.  That would be a great loss.  To avoid these losses, not-for-profits need help from experienced advisors to navigate the regulations, assist with financing and raise a strong and reasonable voice for well-tailored regulations.”

As Barbara Nagel, Esq. of Perlman and Perlman, whose law practice concentrates on representing not-for-profits describes it, “Our clients are increasingly aware of and concerned with increasing regulations that affect their properties including the need to maintain their very valuable real estate tax exemptions.”

The Plan for Survival of Not-For-Profits and Their Real Estate:
In our practice of representing large owners in renovating, upgrading and addressing environmental and governmental issues, we see the following to be critical:

Engage a seasoned and committed team consisting of legal counsel, design professionals and contractors, on an ongoing basis, who understand how to minimize renovation costs while meeting  government requirements;

Make sure that the owner’s business interests are vigorously protected by legal counsel.  To avoid unintended consequences, have your own legal counsel prepare the terms of the architectural and construction contracts on each project, which can be, and must be, stacked in the owner’s favor.   Have the benefit of legal advice during the project; and