New Laws and Industry Trends to watch in 2023
Save Money and Avoid Penalties
The last two years have brought major macroeconomic and geopolitical shocks (Covid-19, Inflation, Ukraine war) that deeply affected the growth plans of many small and medium businesses and made investors very risk-averse. The recession is still looming, but here are some of the trends that might be interesting for Cea Legal’s clients:
New York Real Estate
NYC gets Tough on Building Emissions and there Will be Fines
Despite an extremely difficult economic environment characterized by historically high-interest rates, house prices did not plummet in 2022 in New York City. Certainly, buyers managed to get some concessions, such as a few of the closing costs covered by Sellers, but not deals at a significant discount. Heading into 2023, if the last period of decreasing interest rates continues in this direction and hovers around 5%, we might suddenly enter a hot market where buyers compete to close on transactions before the beginning of a strong bull market.
Compliance with Local Law 97 will become a major topic in 2023. The new law will become effective in 2024 and will require nearly 40,000 NYC buildings to file a report with the Department of Building outlining their gas emissions. Fines will be imposed on those buildings whose emissions exceed the limits. The Department of Building will release guidelines later in the year.
With respect to the commercial real estate industry, 2022 was l very weak. Many retail and office spaces are still vacant in New York. The beginning of the new year might be the best time to secure spaces at prices that are unlikely to be offered again in the coming years.
Business Matters
No More Secret Partners
The recently enacted New York City’s pay transparency law makes it illegal for a NYC-based company – with a minimum for employees – to advertise a job opening without information regarding a “good faith determination” of the minimum and the maximum salary for the position. Violators can be liable for civil penalties up to $250,000 imposed by the NYC Commission on Human Rights (CHR).
The Corporate Transparency Act requires US domestic entities and foreign companies registered to do business in any US state to submit a report to the Department of Treasury listing the beneficial owner(s), anyone who owns 25% or more of the company, and anyone exercising substantial decision-making power on its behalf. There are several exemptions provided by the Financial Crimes Enforcement Network, the most significant one is the one for “large operating companies,” which are considered those with 20 or more employees and annual gross receipts exceeding $5 million.
Blockchain
Look for the Industry to become more Decentralized but more Accountable
2022 has been the toughest year in the young history of the blockchain industry. A bubble burst, the NFT hype is gone, major cryptocurrencies lost on average nearly 70%-80% of their value, and big companies went belly up. The industry now finds itself at a very important crossroads: die or bounce back offering reliable business solutions. A comparison with the “dot.com” crisis of the late 1990s suggests that valuable projects will survive, and the bubble will turn out to be healthy for the industry.
NFTs are expected to be incorporated into business practices as receipts, coupons, tickets and tags, proving authenticity, to name a few. NFTs are opening new revenue streams thanks to the implementation of the rolling royalty structure which enables the initial seller to be paid on each subsequent sale. From a legal standpoint, NFT licenses are going to be more detailed, clarifying the rights of the NFT initial creators. Specifically, licenses detailing publicly on the blockchain all the commercial rights granted are becoming increasingly popular.
One of the causes that amplified the terrible side effects of the failure at FTX was how the organization and decision making power was centralized, which is in contrast with what blockchain purists preach. In the coming months, we expect truly decentralized projects to thrive.
Business Immigration
The U.S. is opening up some avenues for Green Cards, especially if you’re Extraordinary or an Investor
2023 might witness a rise in the popularity of the EB-5 program. The EB-5 visa category allows entrepreneurs to apply for a green card if they make a substantial investment in a commercial enterprise in the United States, and plan to create and preserve ten permanent full-time jobs for qualified US workers. Immigrants can invest directly in a job-creating business, or they can invest through Regional Centers approved by USCIS to promote economic growth in designated areas. The EB-5 program has been recently overhauled by the EB-5 Reform and Integrity Act (the “RIA). The new minimum investment thresholds are: $800,000 if the investment is made in targeted employment areas or in infrastructure projects; or $1,050,000 for any other projects.
One of the most significant novelties introduced by the RIA is granting more time to the investors to show the creation of the ten jobs, thus addressing those common situations where the development of the project is slower than expected.
Other employment visa categories that foreign individuals should seriously consider are O1 and EB-1, which are those visa categories for individuals that can show “extraordinary ability” in a number of fields, including but not limited to “arts”. In the last months, USCIS approved more applications as compared to the last few years. Therefore, this might be a great year to submit an “extraordinary ability” application to a somehow reasonable USCIS officer.
Contact Cea Legal, New York City Business Law Attorney in Manhattan to assist you with all Corporate/Commercial, Real Estate, Immigration, and Blockchain issues.
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