Tag Archives: Ed Rubacha

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Real Estate Law Guide: Abiding Time

When things are good, what is there to fight about? According to some legal construction experts, not much.

“Contractors are not willing to litigate any longer; They don’t want to pay attorneys to fight,” says Ed Rubacha, attorney at Jennings Haug & Cunningham.

When there were disputes between contractors, people relied on the option to sue people. Now, Rubacha says, companies have learned that doesn’t always yield a payout.

“From a construction perspective, we have seen a tremendous drop off in our business,” says Rubacha, who has been practicing law for 26 years.

There is some hope with increased construction coming through the pipeline. The more projects there are, the higher the chances are that lawyers will be needed, Rubacha says.

“I don’t get a call from a lot of my clients,” whom Rubacha says learned hard lessons and got smarter with the recession about how they do business.

“They either don’t have projects or the ones they’re on they have carefully worked them. Those relationships (between contractors) have led to a decrease in litigation.”

Rubacha says this emphasis on education over litigation has led to his involvement in more education work, such as holding seminars.

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“I’ve seen more activity in the business side, including real estate and corporate, and a little less activity in litigation and cleanup work…when a project fails and something goes wrong,” says Don Miner, director at Fennemore Craig. “I’ve seen a little less work there and in the bankruptcy areas. Both of which point to good things down the road. In the law firms, we’re starting to see law firms wanting to be active in bringing on new people. What we’re still struggling with is whether those new people are laterals, or people who are moving from one firm to another versus people who are new and coming out of law school. The number of people being hired is still relatively low.”

Since Rubacha says construction lawyers are about two years behind real estate lawyers, he expects an uptick in the near future. Economic Modeling Specialists Intl., a CareerBuilder company, reported that for every law job opening there were two to four graduates. In Arizona, the numbers weren’t as stark, though the state did see a drop-off of 3 percent of available positions at the time of the 2013 study.

“One of the things the great recession taught us, including bankruptcy lawyers, is sometimes you need to be able to adjust to the marketplace,” Miner says. “Bankruptcy is now helping with turnaround management and equity financing development for troubled projects. A broader scope of services are being provided.”

Proof is in the Quitting

Even though there isn’t a whole lot of work out there, Jennings Haug & Cunningham attorney Julianne Wheeler says an indicator of changing times start in HR.

“We’re not seeing the typical legal issues,” she says. “Instead, we’re seeing anticipation.”

Part of this anticipation is the movement of high-level and project management employees seeking roles at different companies.

“Many (contractors) hadn’t positioned themselves to have much in terms of legal rights if a high
level employee leaves and goes to a competitor,” Wheeler says. “The best advice for the contractors is to make sure there isn’t any one employee who has sole ownership of a relationship with a client.”

While there is no shortage of lawyers, there is a shortage of contractors.

“The entire industry is concerned of the shortage of available talent,” Wheeler says. “(Contractors) left us in droves…as we’re ramping back up, (companies are) scrambling.”

Organizations such as Arizona Builders Alliance and Arizona Subcontractors Association are among many that are seeking to foster and encourage high schoolers to pursue careers in contracting.

Meanwhile, construction lawyers who aren’t advising on distressed projects or employee issues are going back to whatever they worked on before they specialized, Wheeler says.

“It’s the tail wagging the dog,” she says of her workload during the recession. “In the recession, you’re busier than ever because of disputes, now that the economy is rising you’re not nearly as busy.”

In 2014, Forbes reported more lawyers were moving their practice to a side-job while holding another profession full- or part-time.

“It’s so nice not to come into work everyday and feel depressed after speaking with your clients about their outlook for the future,” she says.

From this guarded excitement, Wheeler is seeing more joint ventures that keep companies from putting all their eggs in one basket as well as allowing companies to exercise their specialties.


Laws of the land: Navigating development in Indian Country

Gerrit Steenblik, Polsinelli

Gerrit Steenblik, Polsinelli

Anyone who has tried to develop on one of the 22 federally recognized Indian tribes’ land in Arizona has probably encountered the patchwork of land ownership that can sometimes make it difficult to build. Land on reservations can be owned by the tribe, held in trust and owned by an individual (both allotted property and non). Recently, Polsinelli’s Gerrit Steenblik and Anne Kleindienst shared that to negotiate a 55-year land lease for the development of the Noah Webster school on the Salt River Pima-Maricopa Indian Community, they had to work with many departments of the Salt River Pima-Maricopa Indian Community, including the general counsel’s office, the economic development division, the treasurer’s office, the education administration and the community’s public relations office, as well as the Bureau of Indian Affairs and the allotted land owners.

Each tribe functions as a sovereign nation and provides a variety of governmental services to tribal members.

Roxann Gallagher, Sacks Tierney

Roxann Gallagher, Sacks Tierney

“Because few tribes tax their members, many tribes engage in commercial activities to generate sufficient revenue to provide these services,” says Roxann Gallagher, attorney at Sacks Tierney. “As a result, we have traditionally seen a mix of bonds, either tax-exempt or taxable, issued to acquire, construct or improve both governmental and commercial facilities.”

With the introduction of the American Recovery and Reinvestment Act of 2009, came $2B meant to broaden the reach of tax-exempt funding for commercial development. A significant portion of that $2B volume cap for tribal economic development bonds are still available.

Native American communities can issue tax-exempt bonds to finance construction projects that will benefit their own community, such as government and community buildings. Various departments also offer federal grants to fund schools, pre-school programs, health care, and infrastructure, including water systems and roads in Indian country.

“Keys to success [with regards to building in Indian country] included the personal relationships, long-range planning to avoid last-minute glitches and the fact that the new Noah Webster School responded to a genuine need of the community, leading to a win-win result,” says Steenblik, who was the borrower’s counsel for the Noah Webster School being constructed on the Salt River Pima-Maricopa Indian Community. The construction of the new Noah Webster Schools-Pima project within the Salt River Pima-Maricopa Indian Community is being funded by a tax-exempt bond issued by the Industrial Development Authority of Pima County that is only available to tax exempt, nonprofit and non-Indian owned business.

“Construction financing undertaken by a tribal government or tribal governmental entity has many of the same challenges as any other governmental financing in terms of timing, structure, respect for political processes, and adherence to regulatory requirements,” says Gallagher. “Most notably, however, there are some additional legal and business issues that must be considered if certain tribal real property or restricted revenues are intended as security for the indebtedness. For instance, there are federal restrictions on the alienation of tribal property, potentially complicated title issues, and limitations on recourse against some potential sources of repayment.”

Ed Rubacha, Jennings, Haug & Cunningham

Ed Rubacha, Jennings, Haug & Cunningham

Though Jennings, Haug & Cunningham’s Ed Rubacha says it’s unlikely for tribal communities to resist payment by declaring sovereign immunity after a project is completed, the disputes of the Hualapai Skywalk and Ranch can make some developers nervous. Granted, if it’s a large project, Rubacha says, with a well-known tribe it may be smart to ask for a waive of immunity. A recent example being the Navajo Nation waiving its right to declare immunity on a $500M purchase of a coal mine being purchased by the Navajo Transitional Energy Company.

In the early 2000’s, the Navajo Nation decided to build its first casino in Arizona. It wouldn’t break ground until 2011 or open until May 2013. Twin Arrows employs 1,300 people and will make $45M a year. Instead of enlisting the help of a commercial bank, developers worked with the Navajo government to secure adequate funding.

“In 2009-10, the capital market was really soft,” says Navajo Nation Gaming Enterprise Chief Executive Darrick Wachtman. “Wall Street wasn’t lending to the casino startups. There was no activity. It was a good opportunity for the nation to get good returns. The interest rate was higher than market. It’s dependent on the cash-flow leverage.”

As for developers, Gallagher reports positive feedback: “Sacks Tierney’s clients have found that successful tribal finance transactions are akin to hitting a perfect golf shot in that the result is well worth the effort.”