It was my pleasure to attend the recent Lancaster Chamber of Commerce and Industry presentation of the “Changing Nature of Banking in Central PA.”  The presenters were Brian Bisignani of Post & Schell and Dave Hornberger and Andria Linn of Orrstown Bank.  They spoke about topics ranging from the effect of the recent bank acquisitions in central Pennsylvania, to the growth of community banks in Lancaster County, the challenges of marketing to millennials, the decline in retail sales, and cyber security and phishing attacks.

One of the things that struck me was that over thirty percent of all of the cash deposits in Lancaster County were affected by the recent bank acquisitions, or “roll ups” to use the term that Dave frequently called them.  In a very short amount of time there have been huge changes in local banking, affecting both banks and their customers.

Dave did a great job of summing up the concerns I have heard from many bankers over the past few months.  He noted that very big banks can be competitive because of their rates and lending base.  Smaller community banks gain customers by emphasizing their flexibility, with a faster speed to market and more personal customer service.  While these are all necessary, especially the personal level of service, they are not everything that our customers need.  Continue Reading Trends in the Banking Industry

I regularly work with both lenders and commercial borrowers.  In the last 12 months, I have noticed that interest rate swaps are becoming a part of more and more financing arrangements.  While I am not an economist, there are a handful of reasons why including swaps or derivatives in a financing arrangement should be part of more conversations between banks and commercial borrowers.

In this post, I am considering a “plain vanilla” interest rate swap.  A simple example of this would be a bank offering a 10 year fixed interest rate loan to a borrower.  The bank then swaps this fixed interest payment with someone (maybe another lending institution, swap bank, or even back to the borrower) in exchange for a variable rate payment – usually tied to LIBOR plus some amount of basis points.  At the end of the swap period, the difference in interest payments between the fixed and the variable interest rate is paid out to the appropriate party.

Increasing Competition Among Lenders

Many of my commercial clients complain that banks only want to lend money to people who don’t need it.  This is not entirely the decision of lenders.  Today’s regulatory environment has forced banks to tighten their risk tolerances.  The net result of this is that it seems there are more loan demand than there is loan supply.

I think of it as Venn Diagram.  One circle is borrowers who need financing.  The other circle is businesses with acceptable risk.  Where those two circles intersect, banks and borrowers are doing business.  If your project falls into that middle part of the diagram, congratulations! You will have lots of banks competing over your business.

This competition is a problem for lenders.  I have seen banks offer extreme terms just to “win” some of these “good loans.” Many banks just cannot compete with lenders who are willing to cut deep into their profits just to secure a deal.  This is not good for banks, and when banks struggle or consolidate, it ultimately harms borrowers, too. Continue Reading A Perfect Storm: Why are Rate-Swaps or Commercial Loan Hedging Arrangements on the Rise?

This week is officially Small Business Week. The attorneys at Russell, Krafft & Gruber work with many small businesses every day.  Personally, I love to work with family–owned businesses, and get to know the family and what makes them and their business special.  In honor of the well-deserved recognition small business owners are receiving this week, I wanted to offer some advice and encouragement to the many small businesses in our community. I didn’t want to do the typical “here is a problem and here is how to fix it” post about the problems that small businesses face – taxes, employees, contracts, security, technology, and all of that stuff.  This post is a thank you to small businesses.

Many small businesses start because of a personal interest or expertise.  So rather than bore with you legalese  I thought I’d share , a link between my interests and small business that might not come to mind.

My son is a huge professional wrestling fan.  Because of him, I am also a professional wrestling fan.  It is a special bond that we share.  He started watching when he was probably 7 years old.  Now he’s almost 16, taller than me, with a handful of hairs sticking off of his chin. But we share wrestling.  When something happens on a Monday night show, it is the first thing he wants to talk about on Tuesday morning.  He and I have traveled to Giants Stadium to see Wrestlemania with 90,000 fans.  We have also been in the Palmer Center in Easton with 300 people in the stands, or the American Legion in Hellertown with maybe 75 people. We have watched the biggest movie star in the world – Dwayne “The Rock” Johnson — and we have seen someone wrestle dressed up as a Space Monkey.

What does this have to do with small business?  The head of the Small Business Administration is Linda McMahon.  She is the wife of Vince McMahon, the head of World Wrestling Entertainment.  She has been part of storylines and has appeared in the ring.  Linda McMahon has suffered a nervous breakdown, been committed to a “sanitarium” and lapsed into a coma.  She drank beer with “Stone Cold” Steve Austin.  She took a stunner from Austin, been slapped by her daughter numerous times, and ended a bunch of fights with well-placed kicks. (Don’t worry about me — I know it is not real. But for the sake of this post, go with me for a bit.)

It strikes me that every small business can take away some lessons from Linda McMahon. Continue Reading How Your Small Business is Like Professional Wrestling

I have written a number of times on this blog about providing reasonable accommodations for “service animals” and “emotional support animals.”  This legal battle continues to affect condominium and homeowner association communities.  A recent case shows a new way that a condominium association could get in trouble for refusing to provide a reasonable accommodation: because of a neighbor’s blog post.

Estate of Walters v. Cowpet Bay West Condominium Association, begins with the “usual” issue.  Two condominium unit owners sought to keep “emotional support dogs” in the condominium.  The condominium’s rules absolutely banned pets.  In this case, the Court determined that the unit owners were disabled, and that the support animals were necessary to allow them the use and enjoyment of the condominium unit.  Because of this, the condominium association was required to make a reasonable accommodation under the Fair Housing Act.

The concerning part of this case arises from the blog of some disgruntled neighbors.  The opinion from the United States Court of Appeals, Third Circuit, quoted a number of blog posts from residents of the community that opposed the emotional support dogs.  One neighbor replied on a blog post “isolate them [the unit owners] completely to their little “dog patch” on the beach and ignore them at every venue or occasion!” Continue Reading Could a Condominium Face Legal Trouble Because of Residents’ Blog Against Emotional Support Animals

It may be strange to think about slipping on ice now that the weather is finally warming up.  But a recent court ruling decided the question of who is responsible when a resident slips on an icy spot on a community walkway.  Is it the Builder who installed the walkway, or the Association who failed to treat the ice?

In Davis v. NVR, Inc. a homeowner attempted to sue the developer, builder, snow removal contractor and architect for a slip and fall injury. Davis was walking on the homeowners’ association walking path when she slipped on ice and injured herself.  The ice was present at a low spot in the walkway where the walkway crossed through a wetlands area in the homeowners’ association property. Apparently, many owners pointed out to the homeowners’ association that water puddled up at this spot on the walkway. It sounds like this icy spot was a pretty regular occurrence. Continue Reading Is the Builder Responsible When a Homeowners’ Association Doesn’t Treat Ice?

We have written a couple of posts about the Lancaster County-wide Property Tax Reassessment.  In this post, we want to focus specifically on commercial and industrial properties.  This includes any sort of income producing properties, including apartments and other rental properties.

As we explained before, the aim of the 2018 Reassessment is to make the assessed value of property equal to the actual fair market value of that property.  That is relatively easy to do with residential property – the County can see what properties of a similar size and location have sold for, and compare that to your residential property.  But for commercial property, that is much more difficult.  Your commercial property is different from most other properties.  Continue Reading Lancaster County Reassessment – Commercial and Industrial Property Assessment Appeals

If you own property in Lancaster County, you probably have heard a lot about the County-wide property reassessment.  You should have received your Preliminary Assessment Notice in the mail.  If you suffered from a bit of shell shock after opening the Notice, take a breath, there are things you can do if you feel the value attributed to your home is incorrect. Continue Reading So I Received My Preliminary Property Assessment Notice. Now What?

The United States Golf Association (the USGA)and the Royal and Ancient Gold Club of St. Andrews (the R&A) generally write the official rules for golf for the world.  Last week, they announced sweeping proposed changes to the Rules of Golf.  I think that condominium and homeowners’ association boards can learn something from the proposed rules changes. Continue Reading What Homeowners’ Associations Can Learn from Golf

Aaron Marines was a recent contributor to the January/February 2017 issue of Community Assets bi-monthly magazine for the Pennsylvania and Delaware Valley Chapter of Community Associations Institute.

“Associations are often faced with the question of whether they need to ignore their dog rules for an “emotional support animal.”  Many boards are surprised to learn that they DO NOT need to alter pet rules…”

If you are a member of Community Associations Institute, you can read the full article in print or online.  You may also wish to learn more about other issues relating to Condominium and Homeowners’ Associations by reviewing some of Aaron’s blog posts on the Lancaster Law Blog.

Aaron Marines is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Commercial and Residential Real EstateLand Use, Land Planning and Zoning matters.

Recently a property management company was charged with wire fraud for its actions in managing a San Diego, California association.  The property manager was directed to obtain bids for a construction project. According to the criminal indictment, the property manager concealed all of the lowest bids.  Because of this, his affiliated company turned out to have the lowest bid on the project.

According to the indictment, the property manager’s actions get worse.  During the construction, the property manager discovered asbestos that needed to be removed. He negotiated a change order from his Association Board – and an increased amount for the project – for this asbestos removal.  He then concealed the presence of asbestos from the people doing the job. That way, the property manager collected all of the extra asbestos removal fee, while the construction workers removed the asbestos without following the proper procedures.

The property management company and its principal have been charged with four counts of federal wire fraud.  This indictment carries a maximum penalty of twenty years in prison and a $250,000.00 fine.  In addition, the indictment seeks the recovery of $247,000.00, the cost of the construction project. Continue Reading Property Manager Charged with Wire Fraud in HOA Construction Project