It’s typical for a broker or agent to negotiate the business terms of a commercial lease with input from prospective tenants. But as commercial leases become lengthier and more complex, it’s important that real estate practitioners retain an attorney to review lease provisions before clients enter into an agreement.
As an attorney experienced in the areas of business and commercial law, Yasir Billoo can help you get a leg up on current trends in commercial leases. In this Broker to Broker Q&A, Billoo discusses potential ramifications from certain provisions, from personal guaranty to relocation.
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First Regular Session of the 98th General Assembly Concludes
Friday, at 6pm, the First Regular Session of the 98th General Assembly drew to a close. Now that session is over the Governor will begin to take action on bills. The legislature will reconvene for a veto session on September 16 and may be called back for a special session before that.
House Speaker Resigns, New Speaker Elected
Wednesday morning, news broke accusing the Speaker of the House, John Diehl, of sending inappropriate text messages to a college freshman who had been interning in the House. After both initially denied the claims, the Speaker issued an apology Wednesday evening, saying he took responsibility for his actions. Thursday, the House never went in to session and at around 2pm the Speaker announced he would be resigning both his post as Speaker and his position as State Representative, effective as soon as the House elected a successor.
The Republican Caucus met on Thursday evening to select his replacement, and unanimously voted for Majority Floor Leader Todd Richardson to assume the position. He was confirmed Friday morning, by a unanimous voice vote of the entire House, even getting the unusual distinction of Minority Leader Jacob Hummel speaking in support of Richardson’s election. After giving a very short speech, the new Speaker moved the body to their usual business, saying it was time to get back to work. Richardson was already considered a shoo-in to be Diehl’s successor in 2017. He will have to be elected again in 2017, but his ascension now makes him likely a three-year Speaker. Assuming he serves the full three years, Richardson will be the first Speaker to serve more than two years since the term-limit era began.
Right to Work Passes
One of the state’s most divisive issues, Right to Work, brought the Senate to a grinding halt this week. After the House passed HB 116 in mid-February, there had been speculation about how the Senate would respond. On Tuesday, the Senate took up HB 116, adding an amendment to include paycheck protection, meaning the bill would have to return to the House before it was Truly Agreed and Finally Passed. Eight hours were spent debating the bill before resorting to the rarely used Previous Question motion. Unlike the House, this move is rare in the Senate because it ends Senators’ ability to filibuster – a sacred tradition in the Senate.
Democrats attempted to stop the bill’s passage by offering substitute motions, and attempts to adjourn the Senate immediately. After also two hours of procedural motions, the bill as passed by a vote of 21-13 with four Republican Senators (Dempsey, Romine, Silvey, and Wieland) joining the Democrats in opposition. The bill was returned to the House and taken up for final passage on Wednesday, with 21 Republicans voting against it. The bill was declared Truly Agreed and Finally Passed and was sent to the Governor, who had made his veto intentions very clear.
As the votes were cast this week, the bill was passed without a veto-proof majority in either chamber. The legislature would need to pick up 17 votes in the House and 2 votes in the Senate to override the Governor’s pending veto. While some votes could potentially change in the House to override, the loss of a Republican seat this week and doubt about the Senate’s ability to override makes it unlikely this will become law. Additionally, the Senate Democrat Caucus retaliated by preventing the Republicans from completing passage of every other bill, but one, during the session’s final week – a time when the majority of bills pass each year. The Senate, which usually works in a flurry of activity until the constitutional deadline of 6pm, adjourned today almost three hours early. The statement in the Senate, coupled with the scandal in the House and their subsequent leadership change, has made for possibly the least productive final week of session in state history.
No Solution for Transportation Funding Crisis
None of the legislative proposals to raise enough funds to match all of the available federal dollars were able to clear the Senate, once again, leaving Missouri’s transportation funding in a state of crisis. Even though this is a vital and immediate issue, it is doubtful that the Governor will call a special session to address this issue.
Even though the session had hurdles to overcome, the legislature was able to pass several essential pieces of legislation. Some of the marquee issues that were adopted were municipal court reform, student transfers, tort reform, and authorization of tax increment financing for both the redevelopment of the old Chrysler assembly plant in Fenton and the potential retention of the National Geospatial Agency on the Missouri side of the Mississippi River. The Governor has already signed tort reform, but the other three issues still await his action. While he is likely to sign the municipal court reform bill, SB 5, and the tax increment-financing bill, HB 514, there is a likelihood that he will veto the student transfer bill – which he did last year.
TIF EXPANSION APPROVED FOR FENTON LOGISTICS PARK AND NATIONAL GEOSPATIAL AGENCY
Representative Mike Leara’s bill, HB 514, expands the state TIF program’s annual cap to by $4 million to allow KP Development and the City of Fenton to develop the Fenton Logistics Park at the site of a former Chrysler assembly plant. Senator Ron Richard also amended the bill to include an additional $12 million cap increase that could be utilized if the National Geospatial Agency chooses one of three sites in Missouri for the location of their new facility. The NGA currently employs 3,100 people at a site in south St. Louis City that they have occupied since shortly after the Civil War. The NGA is currently evaluating four sites for their new facility: north St. Louis City, Mehlville, MO, the Fenton Logistics Park, and a site in Illinois adjacent to the Scott Air Force Base. Gov. Nixon has made the retention of the NGA facility a top priority, so his signature on this bill is imminent.
MUNICIPAL COURT REFORMS APPROVED BY GENERAL ASSEMBLY
Bill sponsor Sen. Eric Schmitt and Speaker John Diehl reached a compromise this week on a bill limiting the amount of revenue municipalities can collect from court fines and traffic violations. The Senate version of this bill, would have reduced the amount of annual revenue municipalities can collect from traffic fines from the current 30%, to 10%. The House version would have reduced it to 15% for cities within St. Louis County and 20% for all other cities in the state. Meeting in the middle, they agreed on 12.5% for St. Louis County and 20% everywhere else, with money in excess of these limits being distributed to local school districts. They also agreed to cap fines for traffic violations not involving an injury at $300. This bill is in response to a report by the Department of Justice in the wake of the Michael Brown shooting that found that many municipalities, such as Ferguson, were using their police departments as revenue generators. The system was creating a form of debtors prison that trapped low income residents in a downward spiral of court violations, fines, and warrants.
GAS TAX INCREASE DIES IN THE SENATE
A Senate filibuster this week ended any hopes for increased road funding this year. The bill, which received initial approval in the Senate at the beginning of the week, was filibustered on Thursday by Sens. Rob Schaaf and Ed Emery. After the bill was laid over, Majority Floor Leader Ron Richard said that the bill would not receive additional floor time this year. The bill would have raised Missouri’s tax on diesel fuel 3.5-cents and on other fuel 1.5-cents. If passed, Senate projections were that it would have raised $54.6 million a year for transportation infrastructure. Transportation officials had said that the bill would generate enough to match $160 million federal transportation dollars in the fiscal year that begins July 1, 2016, but additional state money would still have been needed to avoid losing federal dollars in years after that.
STATE LEGISLATURE PRE-EMPTS LOCAL CONTROL
A bill that started as a prohibition on municipal ordinances banning plastic grocery bags was expanded in the Senate to also pre-empt local minimum wage ordinances. HB 722 was initially a response to an ordinance in Columbia preventing stores from using plastic bags. The Senate, however, expanded the bill to prevent municipalities from setting a minimum or “living” wage or stipulating specific employment benefits that exceed the minimum requirements of the state or federal government.
GOV. NIXON RELEASES SOME FUNDING FOR WORKFORCE TRAINING
State Budget Director Linda Luebbering announced on Monday that 2015 fiscal year-to-date net general revenue collections increased 7.7 percent compared to 2014, from $6.70 billion last year to $7.22 billion this year. In response, Gov. Nixon released several funding items that he had withheld for the first 10 months of the current fiscal year. Gov. Nixon released $4 million in the Missouri Works Training Program. This program, administered by the Division of Workforce Development, is used to help companies train employees for highly technical jobs that are created within Missouri. The Governor has now released a total of $7.1 million for the program in the current fiscal year. The previous legislature appropriated a total of $15.2 million for the year. The Governor also released $200,000 to administer the Certified Work Ready Communities test at high schools and community colleges. This test assesses the skills of those entering the workforce so that employers may make informed decisions about locations for job creation within our state.
STUDENT TRANSFER BILL SENT TO GOVERNOR NIXON
Lawmakers have approved a plan aimed at fixing Missouri’s troubled student transfer system, and it now rests with Gov. Jay Nixon, who early on voiced support for the measure but also vetoed a proposed remedy last year. At the heart of the proposed fix is a provision to accredit schools by building, in addition to by the district. The bill would require students to first transfer to those better-performing schools in their district before other schooling options would be available to them. That could stem the outpouring of tuition dollars and keep students close to home, rather than busing them on longer commutes. The bill also expands the use of virtual schools and allows for the expansion of Charter schools. The bill was brought up in the House on Thursday, where strong opposition to the expansion of Charters was voiced. The bill barely passed, with a vote of 84-73; just two votes above the required amount. After passing out of the House it was sent to the Senate where it was promptly taken up and similar objections were raised. Jackson County senators objected to the allowance for Charter expansion in their jurisdictions. Senator Holsman, a member of the bill’s Conference Committee, voiced his objection to some of the transfer provisions. After several hours of debate, the Senate Truly Agreed and Finally Passed the bill, sending it to the Governor’s desk for review. It is unclear if the Governor will sign it or not, although the legislature accounted for transportation costs in this year’s bill, a major requirement for the Governor, he has previously objected to using public money for expanding Charter schools. Both chambers also approved the emergency clause on the bill, meaning if the Governor does sign it, the bill will immediately go in to effect, instead of the standard August effective date.
MGA Legislative Alert – Dentons Lobby Team Report – Week 15
2016 BUDGET AND SUPPLEMENTAL BUDGET SENT TO GOVERNOR
The 2016 state budget, HB 1 through 13, had been in conference for almost two weeks by the time the conference committee finally decided to convene and reveal its negotiations late Wednesday evening. On April 8th the two chambers had announced that they would conference to work out their differences on the thirteen budget bills, and listed which members from each chamber would be a part of those negotiations. Since then, several Conference Committee hearings were canceled as a compromise proved hard to reach. Some of the most contentious issues include Appropriations Chair, Kurt Schaefer’s lump-sum strategy to cut welfare spending in HB 10 (DMH and DHSS) and HB 11 (DSS) and language surrounding the payment of bonds by the Office of Administration in HB 5. The concern members from both parties had with the OA budget related to the Governor’s payment of bonds for the purpose of funding a new NFL stadium in St. Louis. Appropriations Vice Chair Senator Ryan Silvey led the debate, to include language prohibiting the Governor to pay bonds for this explicit purpose without a vote to the people or the legislature. On the opposite side of the issue were Speaker John Diehl, House Budget Chair Representative Flanigan, and Budget Vice Chair Representative Fitzpatrick. In the end, Silvey’s proposed language was not included. In HB 10 and 11, Schaefer’s lump-sum strategy was abandoned and the two bills were lined out as the House had originally proposed. However, this did not come without cost. The compromise lies in two new provisions: the expansion of managed care to TANF recipients and children, and keeping the proposed 4-6% overall cuts for the departments, both championed by Budget Chair Kurt Schaefer. By the early hours of Thursday morning, the Conference Committee Reports received the necessary amount of signatures to hit the House and Senate Floors Thursday morning. Both chambers then approved the Conference Committee Reports for the 2016 budget sending it to the Governor’s desk for signature.
This week the Senate Appropriations Committee unanimously voted HB 14 “Do Pass,” which appropriates supplemental funds for the state’s 2015 budget. While each year the legislature is required to draft and pass a state budget for the next fiscal year by early May, a supplemental budget is an opportunity to return to the previous budget and add any extra funds when necessary. HB 14 lists the additional funds necessary for the state of Missouri to function through December 2015. During the Appropriations committee’s Tuesday meeting no amendments were offered to change the line items proposed by the House. On Thursday, the Senate Third Read and voted on the supplemental budget. With a 33-1 vote, HB 14 was declared “Truly Agreed to and Finally Passed” and will hit Governor’s Nixon’s desk for an anticipated quick signature.
ST. LOUIS TAX POOLING CHANGE ADVANCES
There are several pieces of legislation this session that seek to alter the way municipalities in St. Louis county distribute their sales tax revenue. This week, a committee substitute was adopted on SB 221 that not only changed the way sales tax revenue is distributed, but would also allow the county to implement a law enforcement tax. Senator Schatz sponsors the bill, but the changes were made under the supervision of House handler Rep. Hinson. If implemented, this bill would let “B” cities keep at least half of the sales tax revenue they generate, but this could cause some cities to lose significant amounts of revenue. It is also estimated that the county government will lose around $800,000, but that could be made up with an additional law enforcement sales tax. The bill was Third Read and Passed out of the House this week and will now go to the Senate where they can accept the Committee changes, or more likely, go to conference committee to find a compromise.
MUNICIPAL COURT REFORM GETS BIPARTISAN SUPPORT
Municipal court reform received bipartisan support as the Committee Substitute passed out of the House on Wednesday. This legislation, sponsored by Senator Schmitt, is to prevent municipalities from abusing municipal courts as a revenue source. Currently, municipalities are allowed to derive 30% of their revenue from court fines and traffic violations. The legislation in its most current form would limit that to 15% in St. Louis County and 20% in the rest of the state. Originally, the bill dropped the threshold down to 10% and 20% for smaller counties, but it was amended in the House Committee. The bill has now been reported to the Senate and it will likely go to conference to find a compromise between the House and Senate versions.
RIDE SHARING REGULATIONS PASS OUT OF HOUSE
Ride sharing companies have gained traction in many cities, but regulations have been a major roadblock to their success. Another set of regulations for the transportation network companies passed out of the House this week in HB 781, sponsored by Rep Gosen. This bill adds specific regulations about how drivers in these companies must be vetted and regulations about insurance for the transportation network companies and their drivers. This legislation has been moving very slowly through the House, taking over two months to move from the Property, Casualty and Life Insurance Committee to the House floor. With only three weeks remaining in session, this legislation may not have moved quickly enough to successfully pass. Two other bills regulating Transportation Network Companies, HB 792 and SB 351, are waiting to be reported out of committee.
RESOLUTION TO LIMIT STATE SPENDING AMENDED IN SENATE
As state revenue has grown, so has the Missouri Budget. Republican legislators are seeking to manage budget expansion and save money for when the state is struggling financially. HJR 34, sponsored by Rep. Burlison, would limit the amount that the state budget is allowed to grow each year and require the remaining money to be put aside. This resolution was passed out of the Senate Rules, Joint Rules, Resolutions and Ethics Committee this week, and was also amended to require tax credits be subject to appropriations to regulate their impact on the budget each year. This goes hand in hand with the legislature’s trend towards trying to limit growth, and the Senate Appropriations Committee’s attempt to prevent growth of the Health and Mental Health budgets. The bill is now waiting to be heard in the Senate Governmental Accountability and Fiscal Oversight Committee.
BRINGING INTERNATIONAL TRADE TO MISSOURI
Representative Anne Zerr introduced HB 1122 to establish the Missouri Export Incentive Act. This incentivizes foreign trade through Missouri’s international airports by creating a tax credit. The Missouri Export Incentive Act, if enacted, would create an air export tax credit equal to 40 cents per chargeable kilo for shipment of cargo and/or passengers on aircraft that pass through Missouri airports. The amount of these tax credits available each year would be adjustable, dependent on the fluctuation of fuel costs from year to year. HB 1122 comes complete with a July 1st, 2015 start date, 2023 sunrise, application process to receive the tax credits and caps. A hearing for HB 1122 was conducted in the House committee on Economic Development and Business Attraction on Tuesday, but the Committee has yet to take a vote.