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Mitigating Environmental Risks in Life Science Leases

Dangerous chemicals and infectious diseases are among the many hazardous materials that are handled inside life science facilities. Getty Images
By Michael Pollack

A lot of hazardous material passes through these facilities, so caution is necessary.

Life science industries span a range of uses — clinical research and trials; biologics; medical devices; pharmaceuticals; vaccines research, development, manufacturing, and distribution; plant and animal technology; and veterinary products, to name just a few. Leases for life science facilities can present unique challenges and considerations for building owners. Besides the particular demands life science uses place on electrical capacity, HVAC, floor loads, and waste removal, the activities within these facilities can pose many other risks.

Inherent in many life science facilities is the utilization, storage, and/or distribution of hazardous or toxic materials under applicable environmental laws. Of course, most common leases will contain standard indemnification clauses allocating responsibility to the tenant for losses resulting from its activities. 

When it comes to environmental issues, though, there are unique concerns for owners of life science properties. These include the ecological indemnity the principal owners provide to their lender (which typically comes from a well-funded source other than the property owner). There’s also the strict liability imposed under federal law on anyone in the chain of title for additional cleanup costs, whether or not they caused the contamination. 

Also, another lingering fact involves the owner would typically only have recourse from the tenant for a breach of the lease’s environmental restrictions.

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UDO: Planning Committee to Review and Recommend

Compiled from REBIC, staff reports

REBIC’s Rob Nanfelt reported Tuesday that the City’s Planning Committee is taking up the matter of the proposed Unified Development Ordinance. Next month, committee members will take any additional recommendations before the third/final draft.

Last week, the Charlotte City Council received comments from the community during a public hearing on the proposed UDO. Click here to view the resolution. The entire hearing is available to view here – beginning approximately at the 2:51:30 mark.   

Next is a review and recommendation from the City’s Planning Committee scheduled to begin Tuesday, July 19, at 5 p.m. Those interested can view it on the City’s Planning Department YouTube Channel. The complete agenda and meeting packet is available here.

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UDO Meeting Set For July 11; CLT Water Plan Review Back On

REBIC's Rob Nenfelt and his team put together this week's Two For Tuesday and UDO takes center stage early next week.

UDO - Public Hearing Scheduled for Monday

The Charlotte City Council has scheduled a public hearing on the proposed Unified Development Ordinance (UDO) for Monday, July 11. The Council Action Review begins at 5:00 pm followed by the Public Forum/Business meeting at 6:30 pm. An agenda should be available here by Friday afternoon. Click here to sign up to speakRebic Logo

Also, Planning Staff has just released responses to public comments submitted prior to last Thursday's deadline. Additional changes will be reflected in the next and likely final draft when it is released which will occur prior to the expected vote on adoption in late August. Here's a link to the page containing the Second Draft Public Comments - With Staff Responses.

For additional UDO resources, please visit Charlotte's Unified Development Ordinance (UDO) - (charlotteudo.org).

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Permit Reform Legislation Advances Following NAIOP’s N.C. Advocacy Day

BY TOBY BURKE,   

Members from NAIOP’s three chapters in North Carolina traveled to Raleigh last week to advance the priorities of the commercial real estate development industry in meetings with state lawmakers. The top priority for NAIOP of North Carolina, the state alliance of NAIOP chapters, is the passage and enactment of House Bill 291, permit reform legislation sponsored by State Representative Jeff Zenger.

Local building permits are an essential and fundamental requirement for the development and improvement of commercial and residential properties. However, the processes for obtaining these permits can vary by city and county in North Carolina. These variations lead to uncertainties and delays in projects moving forward, which can impact the costs, financing and contractional relationships with contractors and providers of construction equipment and materials.

The enactment of House Bill 291 would bring reforms to the permitting process similar to those advocated by our local chapter in Georgia which were ultimately enacted into law in that state. These reforms to the local permitting process bring more predictability and accountability, reducing uncertainty and unnecessary delays. Core elements of the bill include:

  • A local permitting entity has 21 days in which review the plans.
  • During the 21 days, the local entity shall resolve issues associated with the application and may seek additional information from the applicant.
  • If additional information is needed or the application must be resubmitted, the permitting entity has 15 days from receipt of the additional information to issue a permit.
  • If the local permitting entity is unable to meet the time parameters, the applicant or inspections department may seek approval from a certified third-party (engineer) or the Department of Insurance.

The North Carolina House of Representatives passed House Bill 291 in May of 2021 on bipartisan vote of 79-33, sending the bill to the state Senate. The legislation was eventually sent to the commerce and insurance committee in March for their consideration. Our meetings last week focused on urging Senate leadership and the committee chairs to move this important legislation forward before adjourning for the year as early as the end of June. NAIOP of North Carolina’s advocacy played a key role in HB 291 being scheduled the following day for a hearing before the insurance committee the subsequent week.


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Measuring the Impact of Smart Building Technology Investments

Originally published by Marta Soncodi for NAIOP's Spring 2021 Issue.

A new ratings system quantifies how effective they are across several important criteria. 

Investing in smart building technology may not be seen as a priority after commercial real estate investments were hit especially hard in 2020. However, if improving tenant experience was being considered before the pandemic, it’s now an imperative.

Why should commercial real estate owners consider investing in smart building technology upgrades? Based on research and industry analysis, fully integrated smart systems can increase building efficiency, optimize facility operations, improve occupant safety, security and wellbeing, and enhance end-user preferences. And, in light of the pandemic, stakeholders — commercial real estate companies, building owners, managers, and tenants — should examine the competitive advantages of smart building technology. 

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General Assembly Winds Down, with Both Wins & Some Unfinished Business for Real Estate Industry

Posted June 27, 2018

As the North Carolina General Assembly winds down an unusually short Short Session in Raleigh, Realtors®, home builders, property managers and developers are looking at some legislative victories — along with some unfinished business.

First, the wins …

  • HB 948 – Building Code Regulatory Reform — Clarifies existing language allowing licensed architects and engineers to certify components or elements of a building, without the need for a city or county inspection; gives builders the ability to request inspections from a state program in the event a local inspection can’t be provided within 48 hours; and, provides greater flexibility to the State Qualifications Board to grant provisional licenses to code enforcement officials. Thanks to Representative Mark Brody for his leadership in sponsoring this bill!
    Status: On Governor’s Desk
  • SB 224 — Landlord Recovery Expenses — Allows landlords to recover legal fees and other out-of-pocket expenses in summary ejectment cases. The legislation was introduced in response to a recent Superior Court decision that required a landlord to reimburse a tenant nearly $200 in eviction expenses after he paid his past-due balance.
    Status: On Governor’s Desk
  • HB 826 – Clarify System Development Fees — Clarifies and streamlines the water/sewer capacity fee authority approved for local governments in 2017. Thanks to Senator Paul Newton for his work on this important legislation.
    Status: On Governor’s Desk
  • SB 99 — Appropriations Act of 2018 — The state budget includes a crucial provision that allows contractors who pay tax on materials covered under the Repair, Maintenance & Installation (RMI) sales tax provision to pay those taxes at the retail level and receive credit from the Department of Revenue.
    Status: Session Law 2018-5

Now the unfinished business …



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General Assembly Approves Building Code Reform Legislation

Posted on June 25, 2018

The North Carolina General Assembly approved last week's legislation that would make substantive reforms to local building permitting and inspection processes both Mecklenburg County and statewide.

HB 948 – ‘Building Code Regulatory Reform‘ was sponsored by Rep. Mark Brody (Union), and makes some very beneficial changes to the permitting and inspection process that would benefit both home builders and commercial developers. They include:

  • Clarifies existing language allowing a licensed architect/engineer to certify a component or element of a building, without the need for a city or county to inspect and approve that component.
  • Gives the State Department of Insurance the statutory authority to assign Marketplace Pool inspectors to conduct an inspection in the event the local officials cannot provide one within 2 business days of a request.
  • Provide greater flexibility for the State Q-Board to grant provisional licenses to Code Enforcement officials who are certified and in good standing in other states, which will help address the growing issue of inspector vacancies across North Carolina.

HB 948 is now awaiting Governor Cooper’s signature. Thanks to the North Carolina Home Builders Association (NCHBA) for their leadership on this critical piece of legislation.

Energy Code Exemption for Industrial Buildings Took Effect March 1

Posted on March 2, 2018

An Energy Code exemption championed by REBIC and NAIOP will finally take effect this week, after the Rules Review Commission set an effective date of March 1, 2018, for N.C. Session Law 2017-10, formerly known as SB131.

Language in the bill, which was signed into law during the 2017 session of the General Assembly,  excludes from state Energy Efficiency Code requirements any buildings with the following use classifications:

  • Factory Group F
  • Storage Group S
  • Utility & Miscellaneous Group U

Furthermore, language in the legislation introduced by Representative Bill Brawley ensures that the energy code exclusion ‘shall apply to the entire floor area of any structure’ included in the provision. This language was intended to prevent the office or showroom portion of a warehouse, industrial or manufacturing building from having to meet energy efficiency code requirements, when the majority of the structure does not.

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