Has your business continuity plan changed for 2021?

A business continuity plan helps protect your business both today and into the future in a way consistent with your goals and culture. But it’s not just about planning for contingencies this time. The pandemic has changed the way businesses need to approach their plans, says Attorney Donald C. Bluedorn II, managing shareholder at Babst Calland.

“Things are much different than a year ago, and along with business and operational contingencies, companies should review their legal and regulatory risks and opportunities as well,” he says.

Smart Business spoke with Bluedorn about how to ensure your business continuity plan moves your business seamlessly forward.

What changes during the pandemic are now either beneficial or detrimental to Business operations?

Businesses need to reimagine how they operate and create a proactive mindset around challenges the business or industry is facing. Are there any advantages or savings in how you operated last year that are sustainable or should be adopted?

Concerns with significant legal and contractual commitments are likely to emerge. And as people re-enter the physical workplace, or not, there may be employment issues. In addition, new leadership at the federal level could pose legal challenges and create evolving tax issues. In the Western Pennsylvania region, this could result in changes to energy regulations, a risk for some but an opportunity for others. Environmental compliance and regulatory obligations are also likely changing, and trusted advisers can help you navigate these challenges and incorporate them in your plan.

It’s an opportune time to review your plan from a business risk or legal and regulatory perspective. Are vendors fulfilling their commitments and are you fulfilling your own contractual obligations? Look at your real estate needs going forward. Will you need as much space? Will it be configured the same way? If you need to change your footprint, begin reviewing your leases now.

Audit your environmental and regulatory obligations to see if you can reduce spending while maintaining the same level of compliance. It goes without saying that your inside or outside legal counsel is integral to this entire process. In addition, litigation has changed dramatically. With court closures, re-evaluate litigation to determine whether there is an opportunity to change your strategy with a more cost-effective, faster way to achieve your goals.

What should you be thinking about with your business continuity plan?

Think about the impacts on the business, as well as your employees, that were prompted by the challenges of the pandemic. Revisit and reanalyze your plans in light of the pandemic and its impact on achieving your business goals. Consider your challenges and opportunities, keeping one eye on protecting people and the other on positioning and maintaining and growing the business.

How should a business continuity plan address technology issues?

It should address whether you have enough licenses and sufficient infrastructure to have everyone work at the same time and whether you have protocols to address issues, making sure you have the capability to seamlessly transfer work and recover data.

The second concern is data and cybersecurity. The pandemic has created new risks for companies — and new opportunities for cyberhackers. Rethink and aggressively address security. Keep an eye on potential risks and continue assessing the need to make changes relevant to legal, regulatory and insurance matters that may have greater costs and risk to the business if they aren’t promptly addressed.

How should a plan incorporate the importance of people?

Be aware of your employees’ concerns and be sensitive to ways to protect them. Then think creatively about how to safely re-enter the workplace while achieving your business goals, incorporate what you will do if people get sick and be flexible on schedules.

Remember that, as uncertain, fearful and anxious as you may be about the future of your business, your people are just as fearful. If you can help them through it, you will emerge with a much better culture.

Insights Legal Affairs is brought to you by Babst Calland

Virgin’s hyperloop project highlights region’s emerging technology capabilities

West Virginia scored a huge win when it landed the contract for the high-tech Virgin Hyperloop Certification Center in October. Now the state — and the region, including Pittsburgh — are looking to build on that success.

“We’re hoping this is going to be a jumping off point,” says Moore Capito, a shareholder at Babst Calland who also serves in the West Virginia House of Delegates. “Any time you can lend a huge name like Virgin, it certainly gives the region an increased amount of credibility.”

Smart Business spoke with Capito about what the project means for the region and how its success could attract other big projects — and jobs — to West Virginia and Pennsylvania.

What is the Virgin Hyperloop Project?

In general, a hyperloop is an experimental, next-generation mode of transportation that will transport passengers through a network of under- and above-ground tubes, capable of reaching speeds of 670 mph. The goal is to transform transportation, and the broader economy, so that travel that previously took hours will instead take minutes.

More specifically, the Virgin Hyperloop Project, with substantial investments from Sir Richard Branson and DP World Ports, is headquartered in Los Angeles and has been primarily testing the technology in Las Vegas. As part of its growth, Virgin sought a location for a certification center to serve not only as a venue for moving the technology forward but as a place where they could create a regulatory framework.

Regulations cover other modes of transportation — air, rail, sea, cars, trucks — but hyperloop is a grey area. This center will build out that regulatory framework around this new mode of transportation to certify that it is viable for commercial use.

What does the project entail?

The project is located on 800 acres where, in addition to the center, Virgin plans to build a six-mile hyperloop track. The undulation of the West Virginia landscape made it an attractive location to test how robust the pods must be to traverse such terrain.

At this point, the timeline is very broad, with 2021 focused on design, planning and feasibility of facilities. The goal in 2022 is to begin construction on the facilities. That construction will be rolled out in phases, with an end goal of certification by 2025.

How will this project benefit not only West Virginia, but the entire region?

Directly, the project is expected to create somewhere between 150 to 200 engineering and technician jobs, with thousands of additional indirect jobs in areas that could include maintenance, construction and manufacturing. It allows firms that have expertise in emerging technology — including businesses in the Pittsburgh area — to showcase that expertise and focus on mobility.

It’s been such an uplifting dialogue. There have been conversations, for instance, on how to increase regional entrepreneurship to modernize the economy to attract and retain new talent. We want people who want to jump in, but they need a pool to jump into.

This project gives people another reason to talk about the region’s capabilities. This is a fertile region for developing emerging technologies, and it’s exciting to see it move in this direction and to see more eyes on our region.

West Virginia is showing its commitment to modernizing and growing and engaging. Its technology movement is on the march.

This is a sign of more things to come as West Virginia continues to grow in this emerging technology, benefiting not just the state, but the greater region, as well.

Insights Legal Affairs is brought to you by Babst Calland

Corporate venture capital funds can give companies an edge

Corporate venture capital (CVC) funds are gaining in popularity as established companies seek a competitive advantage in the marketplace.

“More large public and private companies are investing in startups, frequently with an end goal of making an acquisition,” says Sara Antol, a shareholder at Babst Calland PC.

Smart Business spoke with Antol about the rewards — and challenges — of these investments.

What is the difference between a venture capital fund and a CVC fund?

With a venture capital fund, the fund is formed with the sole purpose of investment and is looking for a positive financial return within a relatively short period of time.

With a CVC fund, an operating company puts funding into a startup, generally in its market space or a space the company wants to enter. It still seeks a financial return, but the investment is more likely strategically driven. The end goal is frequently to eventually acquire the startup, but the CVC fund can hedge its bets by first making an investment.

CVC investors want to know the startup’s strategy and be involved, and they may want a bigger voice than a typical venture fund would expect. The CVC fund generally avoids legal control — it wants the ability to make a difference but not to affect the company’s overall growth curve.

Recent reports have shown that CVC funds have accounted for almost 25 percent of all venture investments in 2020. It could be because technology companies have rebounded during the pandemic, giving them more access to capital. It may be that private equity has pulled back, creating more capacity for CVC investment.

Whatever the reason, it’s becoming more common for forward-thinking companies to make these types of investments as part of their strategy.

What are the challenges of this type of investment?

There can be a struggle between operating a larger business and being a startup. The investing companies have to understand how startups operate and the risks that go with that, without the controls in place that a large corporation will have.

Because of that gap, the investing companies should work with seasoned professionals who understand the ecosystem of startup financing, who can help them navigate the playbook of what their equity investment entitles them to. Larger companies tend to be risk-averse, and they have to understand there is a greater risk of losing their investment in this context. The investment must be small enough that it’s not a game-changer and that they are willing to risk losing it.

In addition, larger companies may face strict regulations on the kinds of investments they can make, and there may be issues with board representation. If the investment is large enough that the investor wants a board seat, it runs the risk of learning something that could benefit its business. You need to be aware of your fiduciary responsibility, and it needs to be very clear what information can be used by the investing company, if any.

How important is due diligence?

It is critical. Even with a very small investment, the larger company can face risks that can seem like a minor issue to the startup but that can have big impacts on the overall compliance of the larger company. It is imperative to do adequate due diligence, and an outside professional can help before you move ahead.

What advice would you give to companies considering a CVC fund-type investment?

Really think through working with another company and what it’s going to mean for the longer term. It can get ugly when a startup fails, so understand what that would mean for the investing company.

The key is to get experienced advisers. If you decide to engage in these types of investments — and more companies are doing so as part of their day-to-day strategy — understand the process and consider what issues it could create for the overall business.

Insights Legal Affairs is brought to you by Babst Calland

Leveraging with GRATS as a pertinent, timely estate planning option

A Grantor Retained Annuity Trust (GRAT) freezes and discounts the value of larger gifts at their current discounted values rather than at their date of death values. GRATS work particularly well under two circumstances, both of which are currently present due in part to the COVID-19 crisis: (i) depressed values of businesses and other investments and (ii) very low IRS interest rates that are used to value gifts.

Smart Business spoke with Wilbur D. Dahlgren, an attorney at Semanoff Ormsby Greenberg & Torchia, LLC, about how a GRAT works and why employing one now as part of your estate and business succession planning may make sense.

How is a GRAT created and funded?

With a GRAT, the grantor — the person creating the trust — transfers certain assets to a trust while retaining an annuity interest in the trust for a term of years. After the term expires, the trust terminates and the trust fund is paid to the trust’s remainder beneficiaries.

A GRAT splits the ownership of the assets put in the trust. The grantor retains an annuity interest but irrevocably transfers the future ownership of the gifted property. This irrevocable transfer of the future ownership of the trust fund is considered a taxable gift for federal gift tax purposes.

The gift valuation process starts with determining the current value of the assets placed in the trust, usually publicly traded or closely held stock. If the stock is for a closely held business, the IRS usually allows a 20 percent reduction in the value because of the lack of marketability and lack of a controlling interest. The value of the gift is further reduced by the present value of the grantor’s annuity interest, calculated using IRS tables, currently at favorable lower interest rates.

The key is that the value of the remainder interest is ‘frozen’ as of the date the trust is created, as reduced by the discounts and the present value of the grantor’s annuity. The value of any growth in value after the gift will not be subject to federal estate or inheritance tax.

The catch with GRATS is that if the grantor dies before the term of years expires, the entire amount of the trust assets will be brought back into the grantor’s estate for estate tax purposes.

What might GRAT benefits look like?

Let us assume that a closely held business owner, age 60, desires to transfer a 40 percent interest in his corporation to his children using a GRAT. Because of market conditions, the value of the business is comparatively depressed (let’s assume it’s worth $2 million); however an increase in demand for the products and services it provides may significantly increase the value of the business over the next three years. A GRAT is created with a three year term to shift the anticipated appreciation out of his estate for gift and estate tax purposes. If the business is currently valued at $2 million, the starting point for the 40 percent interest is $800,000.

The next step in the discounting/freezing process is to reduce the $800,000 by the lack of marketability/minority interest discounts. Usually 20 percent is the safe discount accepted by the IRS. After these discounts, the gifted stock is considered to be worth $640,000.

Let’s assume that the gifted stock will generate annual dividends of $40,000 — we will make this the annuity amount payable back to the grantor over the three year term of the GRAT.

Using IRS tables, and the September 2020 interest rate of .4 percent, the present value of the grantor’s annuity interest is $103,895. The present value of the remainder interest given to the grantor’s children is therefore $536,105 ($640,000 minus $103,895).

Let’s assume that at the end of the three-year term the stock in the GRAT actually appreciated in value to $1,500,000. So the grantor transferred an asset valued at $1.5 million, but for gift tax purposes the gifted value was only $536,105. That is what is referred to as ‘leveraging.’

To determine if a GRAT makes sense, business owners should consult with a knowledgeable estate planning attorney to review circumstances and, if a GRAT makes sense, assist in the creation, funding and proper reporting of the GRAT to the IRS.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Considerations when making generational ownership transitions

Some firms owned or dominated by family have achieved monumental success. Others have found the transition process difficult. Relentless competition, caused in part by the internet, and struggle for customer loyalty, combined with the thorny issues of family dynamics, are challenging.

Smart Business spoke with Howard N. Greenberg, managing member of Semanoff Ormsby Greenberg & Torchia, LLC, about making generational ownership changes in a family business.

How should owners prepare to transfer control of a family business?

The first step is making certain each potential successor is fully committed. Talk to them well in advance and explain the benefits and pitfalls of ownership and control. Evaluate their interest, qualifications and commitment. All three are required. Performance in college, grades and choice of major are important signs.

Prior to joining the family business, outside employment in a related field is extremely beneficial. Working for an accounting, finance or legal firm can provide the younger generation with confidence, stature and valuable knowledge. Performance on the outside likely will evidence future performance with the family business.

You shouldn’t, however, staff your business based on family. Staff it based on talent. Perhaps your family has talented managers, or people knowledgeable in finance. If not, you need to fill the gaps with non-family members. Similarly, if the third generation isn’t ready to take the reins, bring in interim managers as caretakers until the younger generation is ready.

How do generational mindsets affect success?

Typically, entrepreneurial founders do not have significant resources, but they do have lots of resourcefulness, drive and passion for the business, as well as talent and willingness to work very long hours with little pay. These characteristics and an intense drive to succeed help an entrepreneur create something that hopefully can be passed on to the next generation.

The second generation watched parents exert their efforts into their business venture, witnessed their passion and hopefully it rubbed off on them. They feel the responsibility to further the business and want to impress their parents. Though they might not have quite the same drive, they may have the privilege of greater resources and education. They are often successful at maintaining, growing and managing the business.

The next generation is where problems may arise and where outside help may often be required. The third generation usually has more resources, more education and more alternatives than the founding patriarch/matriarch had. But they may have other interests, lack the same drive and abilities, and there are usually more of them.

What should be done for non-participating family?

It may be better to provide the people not actively running the business with other assets from the founder’s or second-generation member’s estate. To reward long-term performance for successor generations running the business, it’s advised that the company recapitalize to lock in the current value with preferred interests. This provides the members of the next generation ceding control and those who choose a different career path with the value of their interests and provides the next generation who will run the business with the value of their future contributions. Include these provisions in wills, shareholder and operating agreements, as well as employment agreements and continuation plans.

It’s extremely difficult for the first or second generation to objectively evaluate the talents and value of their children and grandchildren. And if the second generation comprises more than one sibling, there will be arguments concerning rewarding the third generation and picking leaders. Trying to make things equal for everyone is a mistake. People are not equal. Their talents differ. Outside advisers and consultants can help make these decisions objectively. They can assist in preparing the comprehensive agreements that are carefully tailored to the particular family business. Doing this in advance of the generational transition is imperative.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Be prepared before buying property together

There are many issues for prospective property owners to consider before owning property with another party. From the form of ownership of the property, to agreements on use and cost sharing, the parties should make sure they have reached an agreement on all issues and that agreement has been memorialized in writing, as early as possible in the process of buying a property.

“The earlier the parties discuss the issues of joint ownership, the better,” says Catherine Marriott, a member of Semanoff Ormsby Greenberg & Torchia, LLC.

Smart Business spoke with Marriott about helping buyers make informed decisions about joint ownership of property to avoid major trouble down the road.

What are the main types of joint ownership of real property?

When there is more than one party who will be an owner of a property, the parties can own the property as tenants in common, joint tenants with a right of survivorship or tenants by the entirety. In a tenancy in common, each party owns an undivided interest in the whole of the property, either in equal ‘parts’ or as designated by a percentage in the deed. In the event of the death of a tenant in common, the decedent’s interest passes to the party or parties named in the decedent’s will. When property is owned as joint tenants with a right of survivorship, upon the death of one of the owners, the decedent’s interest passes by operation of law to the surviving owner or owners. Only married couples can own property as tenants by the entirety, which provides that the couple, together, owns an undivided interest in the entire property. Upon one spouse’s death, their interest passes by operation of law to the surviving spouse.

How do property owners decide which is the best form of ownership for them?

Intent of ownership upon the death of an owner is a major consideration in the form of ownership. Another major consideration is access to a party’s interest in the property by the owners’ creditors. Depending on the form of ownership, creditors may have more or less success in attaching to a party’s interest in the real estate, or forcing the sale of the property, when seeking to collect a judgment. Most married couples own property as tenants by the entirety. There are reasons beyond the scope of this article why a married couple may not want to own property as tenants by the entirety. Similarly, most unrelated parties choose to own property as tenants in common, which is the presumed form of ownership for unmarried individuals if no form of ownership is designated in the deed.

What else should be discussed?

One of the biggest issues that the parties will need to figure out is how the costs of acquisition and ownership will be shared. How much will each party contribute in order to buy the property? If the purchase will be financed, will both parties be personally liable? Will the parties set up a bank account and each put money into the account on a regular basis? What if a party doesn’t pay? How will the parties determine if improvements and repairs are needed? What if they don’t agree? The list goes on and on.
The parties also need to determine who can use the property and when, especially in the case of a vacation home. Will the property be rented? Can the parties have guests and how will that work?

Another major consideration involves a party’s desire to sell his or her interest in the property. Most agreements restrict the ability of a party to sell to a third party or require an offer to sell to the other owner or owners, and many agreements include a formula for determining the purchase price. The same consideration should be given to what happens when a co-owner dies. The agreement should address if the surviving owner can or must purchase the interest and on what terms.

There are many issues that parties need to work through before buying property together. Once buyers locate a property, there will be a flurry of activity — the parties will negotiate the terms of an agreement of sale, apply for financing, complete inspections and prepare for closing. Timetables will vary. The more prepared buyers are up front, the smoother things will go as closing approaches.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

How recent changes to unemployment benefits affect employers

The Commonwealth of Pennsylvania has made adjustments to the unemployment compensation requirements that employers need to know, including compelling employers to provide newly laid-off employees with information regarding unemployment benefits.

At the same time, the federal government has incentivized employers to retain employees through the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act with Paycheck Protection Program (PPP) loans, which includes a provision that grants employers repayment forgiveness if they meet certain criteria, including maintaining a high percentage of their workforce.

Smart Business spoke with Joseph Wendell Fluehr, an attorney at Semanoff Ormsby Greenberg & Torchia, LLC, about what employers need to know about these laws and programs to stay in compliance.

How has eligibility for unemployment benefits in Pennsylvania changed?

The recent federal laws, including the CARES Act, have expanded Pennsylvania citizens’ access to benefits, including gig workers like Uber and Lyft drivers, independent contractors and self-employed individuals. Employers who are making the difficult decision to reduce employees’ hours or even layoff or furlough employees, whether or not caused by COVID-19, can recommend to their employees to apply for unemployment benefits with the Pennsylvania Office of Unemployment Compensation.

What responsibilities do employers have?

Governor Wolf recently enacted Act 9, which provides that each employer, whether or not the employer is liable for the payment of unemployment benefits, must provide notice to employees of the availability of unemployment compensation. The Office of Unemployment Compensation has created form UC-1609 for employers to use to satisfy this notification requirement. The form provides employees with information in the event they decide to apply for unemployment benefits.

What if an employer is able to offer reemployment?

If an employer submits a bona fide written return to work offer for employees laid off or furloughed due to COVID-19 and the employee refuses to return to work, the employer may, but is not required, to submit Form UC-1921W – Refusal of Suitable Work available to the Office of Unemployment Compensation to avoid an employer’s unemployment compensation contribution from increasing. Pennsylvania is currently not increasing contribution rates for employers based on an increase in employees requesting unemployment compensation due to COVID-19. Before filling out and sending Form UC-1921W, it is important for the employer to consider any refusal based on its given set of facts. A former employee may rightfully refuse reemployment, or accept a position but not return to work, and be protected by federal and/or state laws, including the Families First Coronavirus Response Act. Further, former or current employees may require a reasonable accommodation based on a medical need or need to care for family members before returning to work. In these scenarios, employers should work with employees to determine if the work or job duties can be reasonably altered to accommodate an employee’s needs.

How might a borrower’s PPP loan forgiveness amount be affected?

The U.S. Department of Treasury guidance requires employers to document the written offer of rehire and the employee’s rejection of such an offer. Submitting Form UC-1921W will assist employers in abiding by the documentation requirements to exclude such employees from the PPP loan forgiveness calculations. Some of the new laws enacted to help employers and employees during the pandemic are set to expire by the end of 2020. Employers should be sure to act reasonably in these times in both operating their business and assisting employees who seek benefits. That being said, the laws and guidance are regularly being updated as the pandemic continues. Employers can contact their attorney with any questions or concerns related to operating or reopening during COVID-19, including maximizing forgiveness on PPP loans.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Keep proprietary information safe with remote employees

When the economy started shutting down in March as a result of COVID-19 and employees began working remotely, keeping intellectual property and proprietary information safe didn’t top the list of companies’ concerns.

“Some businesses didn’t put procedures in place or have appropriate training classes because no one really thought the pandemic would extend as long as it has,” says Carl Ronald, shareholder at Babst Calland. “They didn’t instruct employees on how to identify important confidential information or safeguard certain proprietary documents when working from home.”

Smart Business spoke with Ronald about how to keep your company’s proprietary information safe when employees are working outside the office.

What approach should employers take to protect proprietary information?

There are different levels of confidentiality with different information, so I like to begin by identifying the information you have and classifying it accordingly. Some things are sensitive and you’d prefer them not to be disclosed, such as manufacturing schedules, production forecasts, or discounts for specific customers. But while those are things you don’t want your competitors to know, it isn’t going to be disastrous to the company if they are inadvertently disclosed.

Other information, such as a trade secret or the development of a new process that gives you a competitive advantage can devastate your business if it gets out. So, the first step is to identify the information you have and label it appropriately.

Second, businesses should train employees on the different categories of information and make sure they are treating each properly. Make sure everyone understands the importance of keeping information safe and reiterate basic steps to create barriers to access, such as not sharing passwords and using privacy screens when laptops are used in public.Third, identify employees who have access to confidential information and make sure they are bound by confidentiality agreements. While those may not ultimately prevent someone from disclosing, it makes it easier to claw back information that was improperly disclosed and it does strengthen your defense to allegations that you didn’t properly safeguard your trade secrets.

How does having employees working remotely change the equation?

Leadership should consider where employees are working and who may have access to proprietary information of the company. If an employee shares a computer at home with a child — whether a work-issued device or an employee-owned device — it is possible the child could accidentally install a key logger or some other malware that could compromise the security of the company’s infrastructure and information. Employees should use a dedicated work computer and family members should not use it without adequate safeguards.

For example, if an engineer is working from home and developing new technology on behalf of the company, who has access to that workspace? If the product may be patentable, it’s vital to keep that work from being disclosed, because disclosure could jeopardize a potential patent. It’s harder when employees are working remotely to monitor them, and you need to ensure information is treated appropriately.

It’s important to consistently remind employees to protect information and reinforce basics such as being cautious about printing documents, not leaving screens open and ensuring sensitive information isn’t shared on unsecured networks.

What other steps can companies take to protect IP?

Have a VPN connection to a secure server maintained by the company. If employees are working in a public place, have them use their phones to create hotspots that no one else can access. Involve your IT staff in talking about device use. And designate a point person for employees if they have questions about how a document should be treated.

Good information hygiene requires diligence on the part of both management and employees. It’s really important to consistently identify information you want to protect, determine how it should be protected and communicate that to employees, both through written guidance and virtual training.

Insights Legal Affairs is brought to you by Babst Calland

Challenging your Notice of Valuation to decrease your tax burden

The Philadelphia Office of Property Assessment determines the fair market values of properties throughout Philadelphia. These values are the basis of real estate taxes for such properties. When assessments are changed, the changes are reflected in Notices of Valuation, which inform property owners of the changes to the values of their properties and, therefore, the new assessment on which their taxes will be based.

“It’s not a bill,” says Jeffrey G. DiAmico, a member at Semanoff Ormsby Greenberg & Torchia, LLC. “It doesn’t tell the property owner how much their taxes are changing. It tells the property owner the change in the assessed value of their property, which is most likely an increase.”

Unfortunately, he says, property owners commonly disregard the Notices. This disregard leads to fewer options for the property owner, and dwindling time to challenge the assessment, which would potentially lower their annual tax bill.

Smart Business spoke with DiAmico about Notices of Valuation, what they mean and how property owners in Philadelphia can challenge them to reduce property taxes.

When property owners receive their Notice of Valuation, what should they do?

Historically, a Notice of Valuation has been issued from the Office of Property Assessment with respect to a property after a new structure is built or when assessable improvements have recently been completed; assessable improvements being enough of an improvement in the property that a change in the assessed value of the property is required. New construction of any kind was generally the triggering event for a new assessment on a property. More recently however, Philadelphia has been reevaluating market values and issuing Notices of Valuation for all properties in Philadelphia, not just new construction and those with recent improvements.

Property owners who receive a Notice of Valuation have a limited amount of time to appeal the updated value. When property owners receive the assessment change, they should review it and immediately contact their tax advisers or attorney to see if the value is accurate based upon the current market value of the property.

What options exist for property owners who believe the valuation is incorrect?

Those who want to challenge the valuation can seek an appeal. In Philadelphia, there is a First Level Review allowing a property owner to informally appeal a Notice of Valuation within a certain number of days of receipt, typically 45 days. If a property owner did not submit a First Level Review; was unsuccessful at the First Level Review; or did not receive a timely decision, such owner can file a formal appeal of the real estate market value of the property by filing an application with the Board of Revision of Taxes, typically no later than the first Monday of October of the year preceding the tax year for which the revision is requested. Unfortunately, the First Level Review decision is rarely provided before the annual appeal deadline, so quite often the property owner will also have to file the appeal application with the Board of Revision of Taxes to preserve their right to an appeal.

Following a determination by the Board of Revision of Taxes after a formal hearing, if the property owner doesn’t agree with the ultimate decision, an appeal can be filed with the Philadelphia Court of Common Pleas.

Why should a property owner work with a lawyer to address an incorrect valuation?

Property owners should work with an attorney to make any legal arguments on their behalf either as part of the application process or at the formal hearing. Only specific people may appear before the Board of Revision of Taxes on a property owner’s behalf: the property owner or an attorney representing the property owner. A property owner cannot just send an appraiser or a realtor to testify on their behalf.

Real estate values generally lag behind changes in the overall financial markets. Although property values may not have adjusted just yet, there may be forthcoming revisions to property values over the next six to 18 months because of the current COVID-19 pandemic. Accordingly, property owners should take a look at their current assessment to see if it warrants an appeal this year for reduction of their taxes next year.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Pittsburgh’s space industry is thriving

As Pittsburgh and the surrounding region continue to attract and grow companies that support the space industry, a space collaborative is gaining ground to bring stakeholders together.

“If we do things right, Pittsburgh is well-positioned to be recognized as a center for research and commercialization of space-related technologies and innovation,” says Justine Kasznica, an attorney at Babst Calland.

Smart Business spoke with Kasznica about the growing number of local companies and regional stakeholders supporting space exploration.

How did the space collaborative begin?

In 2019, Astrobotic Technology Inc., a Pittsburgh-based space robotics company building lunar delivery capabilities, made national news when it was awarded an $80 million NASA grant for a mission to develop a lunar lander to deliver payload to the lunar surface. This year, Astrobotic was awarded an additional $200 million NASA grant for an historic mission to deliver a NASA rover to drill for water ice on the South Pole of the Moon. A group of individuals representing industry, academia, local and state government, as well as regional economic development organizations — all passionate about space — saw this as a unique opportunity to coalesce a broader network of existing regional assets to establish a space industry group in Pittsburgh.

What role have other institutions played in bringing Pittsburgh to the forefront of space-related industries?

Pittsburgh has been involved in space history since the Apollo era, having manufactured much of the steel and glass hardware, as well as communications technology, for the Apollo 11 mission. Today, the region’s advanced manufacturing capabilities and world-class expertise in artificial intelligence, robotics, and space transport and logistics can propel Pittsburgh to an even more dominant seat at the table.

Local universities, in partnership with industry and the federal government, are actively engaged in planetary science research, space navigation, mobility and robotics programs. Life science companies are researching how tissue reacts, grows and interacts with other factors in a zero-gravity environment.

Other stakeholders are working on advanced technologies that are optimized for an extreme space environment and are developing experiments to send to the International Space Station and beyond. Still others are building business, legal and policy capabilities designed to support a growing global space industry.

What is the collaborative’s goal?

The goal is to become a space economic development organization committed to supporting the emerging global commercial space industry by attracting and growing the next generation of space industry businesses and workforce talent in Pittsburgh and the region.

What is the space collaborative currently doing?

The group is engaging in four distinct ways.

  • Sponsorship and partnership opportunities. The collaborative is looking for and identifying sponsors and partners to support regional programs and events and to identify research and funding opportunities for the region that align with the collaborative’s mission.
  • Ecosystem mapping. The collaborative is building a regional map of key participants in the space industry and identifying relevant cross-disciplinary skills in the region that can be leveraged by the space industry, as well as skills gaps that need to be further developed to enable a robust space ecosystem.
  • Government relations/policy. The collaborative is committed to securing strong partnerships with local, state and federal governments, with the goal of driving the development of policies and laws to support the rapid development of a commercial space industry, on and off-Earth, within the existing Outer Space Treaty framework.
  • Education. The collaborative will develop educational materials, networking opportunities, industry events and speaker series to introduce the public to the regional space ecosystem and drive broad cross-sector collaboration.

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