The Impact of the New Jersey Mansion Tax Bill
Introduction
The New Jersey Mansion Tax Bill, which was signed by Governor Murphy on June 30, 2025, brings significant changes to the taxation of certain real property transfers in New Jersey. Previously, a flat rate of one percent was applied to property transfers over $1 million, affecting residential, commercial, certain farm properties, and cooperative units. This tax was imposed on the buyer. Effective July 10, 2025, the new legislation increases taxes on transfers over $2 million and shifts the payment responsibility to the seller. The new tax rates are designed to generate additional state revenue and address the financial dynamics of high-value property transactions.
Affected Property Types
The legislation applies to various property types, including:
Class 2 “Residential” Properties: These include properties designed for use as homes, such as single-family houses and residential condominiums for use by not more than four families.
Class 3A “Farm Property (Regular)” with Residential Structures: This category covers farm properties that include buildings or structures intended for residential use.
Cooperative Units: These are units within a cooperative housing corporation, where residents own shares in the corporation rather than owning their individual units outright.
Class 4A “Commercial Properties”: This class includes properties used for business purposes, such as office buildings, retail spaces, and other commercial establishments.
The legislation also impacts the sale or transfer of a controlling interest in entities holding classified real property, which refers to property that is categorized based on its use and characteristics for taxation and regulatory purposes, provided the consideration or equalized assessed value exceeds $1 million.
Tax Rates and Compliance
The Mansion Tax introduces a graduated tax rate based on total consideration as follows:
$1,000,000 to $2,000,000: 1%
$2,000,001 to $2,500,000: 2%
$2,500,001 to $3,000,000: 2.5%
$3,000,001 to $3,500,000: 3%
Over $3,500,000: 3.5%
These rates apply to the total amount if consideration stated in the deed and similarly affect controlling interest transfers.
Strategic Considerations
Buyers and Seller must consider the Mansion Tax Bill’s revised tax rates and the shifting of the financial burden in their future transactions and strategic planning. The legislation continues exemptions, such as transfers related to corporate mergers where the property’s value is less than 20 percent of total assets exchanged. Sellers may also apply for a refund of fees exceeding 1 percent for transfers recorded by November 15, 2025, if the contract was executed before July 10, 2025.
Conclusion
The New Jersey Mansion Tax Bill introduces significant changes to high-value property transfers and necessitates careful planning and compliance strategies. Consulting with legal and financial experts is advised to navigate these changes effectively.
Illinois Proposes Regulations for Shared Appreciation Agreements Under the Residential Mortgage License Act
On August 15, the Illinois Department of Financial and Professional Regulation proposed regulations to implement recent amendments to the Residential Mortgage License Act of 1987 (RMLA) covering “shared appreciation agreements.” The proposed revisions treat these agreements as residential mortgage loans subject to RMLA licensing and compliance requirements.
A shared appreciation mortgage is when the borrower shares a percentage of the appreciation in the home’s value with the lender. When a borrower sells their home, they must repay the lender the loan balance plus an agreed-upon percentage of the increase in market value of the home. In return for this additional compensation, the mortgage lender agrees to charge a below-market interest rate.
The proposal clarifies how providers of shared appreciation agreements, also known as home equity investment products, must operate under Illinois’ mortgage licensing framework. The proposal includes the following provisions:
Shared appreciation agreements treated as mortgage loans. Providers must be licensed under the RMLA when brokering, originating, purchasing, or servicing these agreements.
Expanded disclosure obligations. Licensees must give consumers clear information regarding repayment terms, risks, and alternatives before entering into an agreement.
Borrower protections. The rules introduce counseling requirements, repayment limits, and restrictions on balloon payments within the first five years.
Supervision and recordkeeping. Originators and servicers must maintain detailed loan logs and comply with examination and enforcement standards applicable to other mortgage products.
Putting It Into Practice: With these rules, Illinois is signaling that home equity investment products will not sit outside traditional mortgage licensing and compliance regimes. With the CFPB issuing guidance last year warning that similar products may be subject to Truth in Lending Act requirements earlier this year (previously discussed here), Illinois’ proposal signals that the state’s regulators are prepared to set their own standards, despite recent changes at the Bureau. Providers should evaluate licensing status, disclosure practices, and counseling arrangements now in anticipation of these proposed rules moving forward.
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The Impact of Tariffs on the Commercial Real Estate Market
This year has seen a renewed focus on tariffs, especially on construction materials such as steel and aluminum. In February, the current administration imposed a 25% tariff on steel and aluminum imports.[1] In June, the administration increased the steel and aluminum tariffs to 50%,[2] and on August 18th, expanded the tariffs to include over 400 additional product categories[3].
In the retail context, we often think of tariffs in terms of the individual pricing of certain materials or consumer goods. However, the impact of tariffs on commercial real estate has a downstream effect on end-product pricing. Commercial real estate sits at the focal point of many products and industries, with commercial construction playing a primary role in continuing supply across and within various sectors.
Key economic factors in commercial construction include strength of the local market and access to cheap capital, but of similar importance is the cost of the materials themselves. Fluctuations in the cost of steel significantly impact the overall cost of a building project. Approximately a quarter of all steel used in the US is imported [4], with Canada, Mexico, and Brazil being the top three sources.[5] While tariffs may be beneficial to local steel-producing markets, their overall impact when considering imports, has been an increase in the pricing of large-scale commercial projects.
Further, for rough-in (the installation of electrical, mechanical, and plumbing), the fluctuations in cost of smaller-scale metal materials, like sheeting, grating, and piping also affect the overall price of a project. Likewise, depending on the needs of the end occupant, there may be specifically outsized rough-in needs like a growing store’s need for refrigeration or electrical capacity. For fixtures and finishing, the effect of tariffs on imports is even more apparent to the end-occupant. Similarly, the cost of appliances and other equipment can have an additional impact.
All the cost above factors into the end price of rent for a commercial tenant. Increasing construction costs can put pressure on existing space, especially in crowded markets. Investors should take note of the potential long-term impacts of the tariff environment.
Footnotes
[1] https://www.reuters.com/markets/commodities/new-steel-aluminum-tariff-rates-take-effect-march-12-executive-orders-show-2025-02-11/
[2] https://www.whitehouse.gov/fact-sheets/2025/06/fact-sheet-president-donald-j-trump-increases-section-232-tariffs-on-steel-and-aluminum/
[3] https://www.nbcnews.com/business/business-news/trump-expands-50-steel-aluminum-tariffs-include-407-additional-product-rcna225899
[4] https://www.steel.org/2025/01/steel-imports-up-2-5-in-2024/
[5] https://www.trade.gov/data-visualization/united-states-steel-imports-report
Florida’s SB 492 and the Future of Wetland Development
Key Takeaways
Effective July 1, 2025, SB 492 makes significant revisions to Florida’s wetland mitigation banking framework, creating new flexibility for developers but also adding compliance considerations that will affect project planning and permitting.
The law allows developers to use credits outside a mitigation bank’s designated service area, subject to regulatory approval. This flexibility can help avoid project delays but comes with proximity-based multipliers that may significantly increase the number of credits and overall costs required.
SB 492 also establishes a standardized framework for when mitigation credits are released, giving developers and lenders greater predictability for financing and construction planning.
New multiplier rules and standardized release schedules mark a shift from the prior case-by-case system, requiring stakeholders to closely track credit availability and factor compliance obligations into early project planning.
Significant changes to Florida’s wetland mitigation banking framework were introduced on June 26, 2025, when Florida Senate Bill 492 (SB 492) was signed into law. Effective July 1, 2025, the law allows developers to purchase credits from mitigation banks outside the project’s watershed when local credits are unavailable, standardizes mitigation credit release schedules — allowing credits to be issued before full ecological restoration is complete — and creates new reporting requirements. For developers and lenders, the law provides greater flexibility and predictability for planning and financing projects but may also increase costs when out-of-watershed credits are required.
This alert summarizes the key provisions of SB 492, outlines its implications for project planning and permitting in Florida and highlights steps stakeholders should take to ensure compliance with the new law.
Key Changes Under SB 492
Out-of-Watershed Credits
Under SB 492, developers may now purchase credits from mitigation banks outside the local watershed if state regulators confirm that credits from the local watershed are insufficient. When credits are purchased from outside the project’s watershed, the state applies “multiplier adjustments” to determine how many credits must be purchased to offset the same impact. Essentially, the farther the credit source is from the project site or the less similar the watershed type, the higher the multiplier.
Specifically:
Credits within the project’s watershed carry no multiplier;
Credits from an adjacent watershed adds a 1.2 multiplier;
Each additional watershed crossed adds a 0.25 multiplier; and
An additional 0.50 multiplier is applied if the credits are from a waterbody not similar to the one impacted by the project.
This framework is designed to reduce potential project delays by allowing developers to access credits beyond the immediate watershed, rather than waiting for new banks or credit releases to become available within the same service area. However, depending on the distance and watershed type, the multipliers can potentially significantly increase the number of credits — and therefore the cost — required for compliance.
Standardized Credit Release Schedules
SB 492 also establishes a new standardized schedule for the release of mitigation credits, replacing the case-by-case approach previously used by regulators. Under this new framework, credit releases will now be tied to specific milestones set forth in SB 492, Section 1:
30% of credits are released when the conservation easement is recorded and financial assurances are secured;
30% are released when initial construction activities are completed;
20% are released after satisfying performance benchmarks identified in the mitigation bank permit; and
The final 20% are released once all success criteria established by the mitigation bank permit are met.
This new standardized release schedule gives developers and lenders greater certainty about when credits will become available — a key factor in securing financing and planning construction activities.
Annual Reporting Requirements
Finally, SB 492 introduced annual reporting requirements for mitigation banks, with credit availability data compiled into a statewide summary for the legislature. This creates new transparency around credit availability and gives developers better visibility into market conditions, enabling them to assess regional availability more effectively and incorporate these insights into early development planning.
What This Means for Developers and Lenders
While SB 492 has created notable changes to Florida’s wetland mitigation banking scheme, the changes are largely favorable to development and lender interests.
We recommend developers and lenders:
Review current and planned projects to determine whether local credit limitations may require the use of out-of-watershed credits and factor in potential multiplier costs.
Develop a system to track credit release schedules and annual statewide credit availability reports as they are published.
Continue working closely with environmental and real estate counsel to obtain approvals from state and local agencies and ensure projects are compliant with recordkeeping requirements.
SB 492 has the ability to elevate mitigation banking from a segmented, case-by-case system to a more predictable, structured approach. By introducing standardized credit-release benchmarks and proximity-based multipliers, the law should provide much needed flexibility for developers, while maintaining and safeguarding Florida’s unique environmental features.
New Developments in Residential Solar Energy (And They Are Not Good)
Introduction
For many years, the residential solar industry experienced substantial growth precipitated by numerous factors including (i) attractive borrowing costs; (ii) governmental policies and incentives at the federal and state levels, including tax credits; and (iii) an increased focus on the purported benefits of renewable energy such as solar energy, most notably a significant reduction in a residential consumer’s monthly electric bill. Then, during the Biden Administration, the inflation rate spiked, and in response, the Federal Reserve raised interest rates multiple times, due to higher borrowing costs, decreased demand, changes in policies at the federal level and in key states. Notably, in the case of Sunnova Energy Corporation, a large solar energy entity based in Houston, the Trump Administration terminated $3 billion in loan guarantees that had been given by the Biden Administration. A multitude of solar energy entities and their contractors have sought bankruptcy protection or have gone out of business, wreaking havoc on residential homeowners who purchased or leased solar energy systems.
Typical Transaction
The purchase of a solar energy panel system (the “System”) by a residential homeowner is typically structured as follows:
In response to a solicited or unsolicited communication with the homeowner, an entity enters into an agreement with the homeowner for the sale and installation of the System (the “Seller-Installer”), often described as a “Home Improvement Contract.” The Home Improvement Contract is a standard agreement that can be lengthy and, not surprisingly, favors the Seller-Installer. The Seller-Installer may be the solar energy entity itself, or a contractor or “partner” of the solar energy entity.
The Home Improvement Contract usually includes a limited warranty that includes guaranteed electricity output. Because the installation of the System on the roof involves roof penetrations, the limited warranty will include a roof warranty.
Along with entering into the Home Improvement Contract, the homeowner enters into a Loan and Security Agreement that provides 100% financing for the purchase and installation of the System, and sometimes, the purchase and installation of a new roof. The lender typically files a Uniform Commercial Code financing statement evidencing that the lender has a lien on the System. Like the Home Improvement Contract, the Loan and Security Agreement is a standard agreement that can be lengthy and, not surprisingly, favors the Seller-Installer.
The total cost of the System, including the cost of financing, can range from about $40,000 to over $200,000 depending on the size of the System.
In some instances, a homeowner will decide to lease rather than purchase a System.
Difficulties
The typical purchase or lease of a System appears straightforward, with upside potential in energy savings and no up-front costs for the homeowner. So what could possibly go wrong? Unfortunately, plenty. Outlined below are the difficulties homeowners have encountered:
The installation was defective, resulting in roof leaks and water damage to the interior of the home.
The System does not work or is not producing the electricity output that has been guaranteed.
The Seller-Installer and the lender either do not respond to communications from the homeowner, or the response time is very slow, resulting in a failure to honor warranty claims.
The Seller-Installer has gone out of business.
The lender may describe the Seller-Installer as a “partner,” but later contend it has no liability or responsibility for the actions of the Seller-Installer.
The solar energy entity that financed the purchase of the System has sought bankruptcy protection, making the situation more difficult and complicated.
Despite problems with the System, homeowners often have agreed to have monthly loan payments automatically debited from a bank account. As a result, they find themselves paying month after month for a System with problems.
Such difficulties have resulted in significant frustrations and annoyance on the part of homeowners, who are left attempting to determine how to remove themselves from these difficulties.
Solutions
Resolving the difficulties homeowners have experienced and continue to experience has proved to be challenging, particularly if bankruptcy proceedings are involved. With bankruptcy proceedings, issues relating to the filing of a proof of claim, the dollar amount to be stated in the claim, the date on or before which a claim must be filed and where, and whether the bankrupt entity will attempt to accept or reject contracts, must all be addressed. The Home Improvement Contract, the Loan and Security Agreement, and a lease typically provide that all disputes must be resolved by final and binding arbitration, thereby eliminating the ability to commence litigation, and the law that governs the arbitration may be of a different state than the state where the homeowner lives. To compound matters, if a state has a consumer protection law such as Pennsylvania Unfair Trade Practices Consumer Protection Law, the law may impact the transaction and the arbitration proceedings.
While no two situations are precisely the same, as noted above, the transaction structures are similar. Further, and very importantly, each homeowner faces the prospect of having to spend potentially significant additional money on top of the considerable amounts spent to purchase a System.
DFPI Orders Mortgage Lender to Pay $2.3 Million for Per Diem Interest Overcharges
On August 18, the California Department of Financial Protection and Innovation (DFPI) announced a $2.3 million settlement with a former mortgage lender and servicer for alleged violations of the California Residential Mortgage Lending Act and California Financing Law. According to the DFPI, the company improperly charged thousands of California borrowers per diem interest in excess of what is permitted under state law.
The settlement follows DFPI examinations dating back to 2016, which identified both per diem overcharges and failures to maintain borrower trust accounts in compliance with the California Residential Mortgage Lending Act. The DFPI required the company to conduct a self-audit and issue refunds to consumers. The matter was resolved ahead of a scheduled administrative hearing.
As part of the settlement, the company refunded $550,316 plus 10% annual interest to impacted borrowers and agreed to surrender both its California Financing Law and California Residential Mortgage Lending Act licenses. The company also paid $1.8 million in administrative penalties.
Putting It Into Practice: The settlement comes as California expands its focus on mortgage issues, including recent legislation revising mortgage servicing and foreclosure requirements (previously discussed here). These developments show a renewed emphasis on borrower protections. Mortgage lenders and servicers operating in California should expect ongoing scrutiny of origination and servicing practices and ensure that compliance procedures are updated accordingly.
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IRS Roundup: July 12 – July 29, 2025
Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for July 12, 2025 – July 29, 2025.
IRS guidance
July 15, 2025: The IRS issued Revenue Ruling 2025-14, providing prescribed rates for federal income tax purposes for August 2025, including but not limited to:
Short-, mid-, and long-term applicable federal rates for August 2025 for purposes of Internal Revenue Code (Code) Section 1274(d).
Short-, mid-, and long-term adjusted applicable federal rates for August 2025 for purposes of Code Section 1288(b).
The adjusted federal long-term rate and the long-term tax-exempt rate, as described in Code Section 382(f).
The appropriate percentages for determining the low-income housing credit described in Section 42(b)(1) for buildings placed in service during the current month.
The federal rate for determining the present value of an annuity, an interest for life, a term of years, a remainder, or a reversionary interest for purposes of Code Section 7520.
July 15, 2025: The IRS issued Notice 2025-39, providing guidance on the corporate bond monthly yield curve, corresponding spot segment rates under Code Section 417(e)(3), and the 24-month average segment rates under Code Section 430(h)(2). The notice also provides guidance on the interest rate for 30-year Treasury securities under Code Section 417(e)(3)(A)(ii)(II) (for plan years in effect before 2008) and the 30-year Treasury weighted average rate under Code Section 431(c)(6)(E)(ii)(I).
July 16, 2025: The IRS issued Revenue Ruling 2025-15, clarifying certain withholding and reporting requirements with respect to uncashed retirement plan distribution checks. The IRS held that no adjustment or refund is available under Sections 6413 and 6414 with respect to amounts withheld and remitted when more than the correct amount of tax was not withheld or paid.
July 16, 2025: The IRS issued Notice 2025-40, providing updated static mortality tables for defined benefit pension plans under Code Section 430(h)(3)(A) and Section 303(h)(3)(A) of the Employee Retirement Income Security Act of 1974 (ERISA). These updated static mortality tables apply for purposes of calculating the funding target and other items for valuation dates occurring during the 2026 calendar year.
The notice also includes a modified unisex version of the mortality tables for determining the minimum present value under ERISA Sections 417(e)(3) and 205(g)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2026 calendar year.
July 21, 2025: The IRS issued Notice 2025-36, identifying and making obsolete 83 Internal Revenue Bulletin guidance documents. The notice cites Executive Order 14192, Unleashing Prosperity Through Deregulation, which directed agencies to identify regulations to be repealed and other guidance that are appropriate for withdrawal. The 83 obsolete regulations span multiple contexts and Code sections.
July 21, 2025: The IRS issued Notice 2025-37, which includes the inflation adjustment factors and applicable amounts for calendar year 2025 for the zero-emission nuclear power production credit under Code Section 45U. It also includes the adjustment factors for the clean hydrogen production credit under Section 45V and the clean fuel production credit under Section 45Z.
For Section 45U, the inflation adjustment factor for calendar year 2025 is 1.0242.
For Section 45V, the inflation adjustment factor for calendar year 2025 is 1.0611.
For Section 45Z, the inflation adjustment factor for calendar year 2025 is 1.0611.
July 22, 2025: The IRS issued Revenue Procedure 2025-26, with indexing adjustments for the applicable dollar amounts under Sections 4980H(c)(1) and (b)(1). These indexed amounts are used to calculate the employer shared responsibility payments under Sections 4980H(a) and (b)(1). The US Department of Health and Human Services published the premium adjustment percentage for 2026 back in June.
July 23, 2025: The IRS issued guidance to improve the Large Business & International Examination Process. The guidance is intended to reduce case cycle times for corporate taxpayers, making examinations more consistent and efficient. The memo specifically provides guidance on:
Phasing out the Acknowledgement of Facts Information Document Request process in examinations by 2026.
Clarifying that Accelerated Issue Resolution applies to large corporate cases.
Improving the Fast Track Settlement (FTS) process to require further internal reviews and approvals before a taxpayer’s FTS request is denied.
July 29, 2025: The IRS issued Notice 2025-28, providing interim guidance to reduce compliance burdens and costs associated with applying the corporate alternative minimum tax (CAMT) to partnerships and CAMT entity partners. The US Department of the Treasury and the IRS also announced their intention to partially withdraw the CAMT proposed regulations and issue revised proposed regulations. The proposed regulations will include rules similar to the interim guidance provided in Sections 3 to 7 of Notice 2025-28 as it relates to the application of Sections 56A(c)(2)(D) and 56A(c)(15)(B).
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
Ninth Circuit Revives Washington Consumer Protection Claims over “HomeOwner Agreement”
On August 7, the U.S. Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of a putative class action alleging violations of the Washington Consumer Protection Act (WCPA) against a company offering a “HomeOwner Agreement” product. The plaintiffs claimed the arrangement functioned as a reverse mortgage loan subject to the Washington Consumer Loan Act (WCLA) and Washington Reverse Mortgage Act (WRMA), and that the defendant failed to comply with licensing, counseling, and other statutory requirements.
The Ninth Circuit concluded the agreement created a nonrecourse consumer credit obligation secured by a deed of trust, with repayment through shared appreciation or equity after certain triggering events. Despite being structured as an option to purchase a percentage interest in the home, the court found the transaction fell within Washington’s statutory definition of a reverse mortgage loan, allowing the plaintiffs’ per se WCPA claim to proceed.
The court’s ruling addressed the following under the WCPA:
Reverse mortgage loan classification. The agreement met the statutory definition of a reverse mortgage loan under the WRMA because it involved an advance of funds, was secured by a deed of trust, and required repayment through shared equity or appreciation after triggering events.
Per se unfair practice. Alleged noncompliance with WRMA provisions, including licensing, counseling, and insurance requirements, constituted a valid claim for per se unfair trade practice under the WCPA.
Deceptive marketing statements. Plaintiffs plausibly alleged deception from the company’s statements such as “no loan,” “no debt,” and “no interest.”
Putting It Into Practice: The Ninth Circuit’s decision sends the case back for further proceedings, where class certification could significantly expand potential liability. Companies offering equity-based home financing in Washington should not assume that alternative structures fall outside reverse mortgage regulations. If an arrangement resembles a loan secured by a home, it may be treated as such under state law. Providers should proactively review product terms, licensing status, and marketing statements for compliance with the WCLA, WRMA, and WCPA to reduce the risk of protracted litigation and enforcement action.
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New Executive Order Seeks to Facilitate Alternative Investments in 401(k) Plans
On August 7, 2025, President Trump signed an Executive Order titled “Democratizing Access to Alternative Assets for 401(k) Investors.” This Executive Order has the potential to significantly change how retirement savings assets in employer-sponsored defined contribution plans, such as 401(k) plans, can be invested.
Today, the vast majority of large defined contribution plans permit participant-directed investments. A plan’s investment menu is determined by the plan’s fiduciaries. Historically, plan fiduciaries have been hesitant to include alternative assets on these investment menus for fear that these investment options would be deemed imprudent and would subject the fiduciary to the risk of DOL enforcement action or participant litigation. The Executive Order signals a distinct policy shift by the federal government intended to expand investment options for participants in employer-sponsored defined contribution plans to allow for investment in “alternative assets,” defined as:
Private market investments (e.g. private equity or private debt)
Real estate
Digital assets
Commodities
Infrastructure financing projects
Lifetime income strategies, including longevity risk-sharing pools
Specifically, the Executive Order provides the DOL with 180 days to:
Review its existing guidance regarding ERISA fiduciary duties relating to the inclusion of alternative assets on employer-sponsored defined contribution plan menus, including consideration of whether to rescind the “December 21, 2021 Private Equity Statement” issued by the Biden DOL, which had cautioned against the inclusion of such investments. (Spoiler Alert: The DOL has already rescinded the 2021 Statement.)
Clarify its position on the inclusion of alternative assets in such plans, as well as the appropriate fiduciary process and relevant criteria to prudently balance the higher expenses typically associated with alternative assets against the potential for higher long-term net returns and diversification goals. As part of this directive, the DOL is instructed to prioritize actions to curb ERISA litigation against plan fiduciaries, which has exploded in recent years.
In carrying out these tasks, the DOL is directed to coordinate with other relevant federal regulators, such as Treasury and the SEC.
It is important to note that—notwithstanding this Executive Order—there will still be significant challenges associated with inclusion of such alternative assets on plan menus. These types of investments carry substantial risks. Investments in these alternatives are typically quite volatile, illiquid, riddled with complex fee structures, and generally lack transparency. These characteristics don’t mesh well with the requirements associated with participant-directed plans. It is also possible that the guidance issued by the DOL pursuant to the Executive Order will be vacated by a court or reversed by a future administration. Given this uncertainty, it will be incumbent on plan fiduciaries to carefully assess these issues when deciding whether to offer these alternative assets as investment options to participants in their employer-sponsored defined contribution plans.
Do The Recent California Amendments to Its Environmental Review Statute Offer a Blueprint for Similar Changes in New York?
On June 30, 2025, California Gov. Newsom approved a bill (SB 131) aimed at increasing housing supply and strategic economic development. The bill has sparked controversy among some groups. Critics view it as a rollback of environmental protections under the California Environmental Quality Act (CEQA), which is California’s version of the federal National Environmental Policy Act (NEPA) – also called “little NEPA.” However well-intentioned CEQA was when originally passed, critics assert that over the years it may have led to unintended consequences, such as delays in approval of crucial projects and housing. Overall, the CEQA amendments shift the responsibility to the lead agency to determine whether the project is exempt from CEQA requirements.
California’s move may lead calls for New York to reexamine its own little NEPA, known as the State Environmental Quality Review Act (SEQRA) (ECL Article 8). While regulations implementing SEQRA include exemptions for non-discretionary decisions, commonly known as Type II actions, the regulations have not been substantially amended since 2018. Earlier this year, the Department of Environmental Conservation (DEC) proposed amendments to its SEQRA regulations (6 NYCRR Part 617), which are due to be finalized this year and include adding certain multi-family housing developments to the Type II list of exempt actions.
Although the CEQA process is different from SEQRA, these statutes, along with the Massachusetts Environmental Protection Act (MEPA), are the most rigorous of the state equivalents to NEPA laws. California’s broadening of exemptions in the areas of housing and infrastructure might serve as a conversation starter in New York. Amendments to CEQA include an update to infill guidelines and several relevant exemptions:
Day care center, federally qualified health center or a rural health clinic, nonprofit food bank, or food pantry (CA Public Resource Code 21080.69 (a)(2))
Advanced Manufacturing (CA Public Resource Code 21080.69 (a)(4))
High-speed rail (CA Public Resource Code 21080.70)
Rezonings (CA Public Resource Code 21080.085)
For the advanced manufacturing exemption, the project must be located on a site zoned exclusively for industrial uses. The definition of “project” is broadly linked to advanced transportation technologies or alternative sources. (See CA Public Resource Code 26003 (1), (2), and (7)). This exemption is narrowly crafted to strike a balance between advancing technologies and environmental protections.
New York Already Requires Balancing Social, Economic, and Environmental Factors
A key legislative intent of SEQRA is its instruction that agencies balance consideration of environmental effects with social and economic factors when decision makers are reviewing actions.
It is the intent of the legislature that the protection and enhancement of the environment, human and community resources shall be given appropriate weight with social and economic considerations in public policy. Social, economic, and environmental factors shall be considered together in reaching decisions on proposed activities. (ECL § 8-0103 (7)).
There are several examples of State agencies and the legislature considering these factors in policy making. For example, 6 NYCRR Part 617 already includes certain exemptions from environmental review for installation of solar arrays, and construction and operation of an anaerobic digester. These exemptions reflect a policy promoting a balance between advancing renewable energy development with the need for environmental review. Other exemptions such as emergency actions or actions of the legislature reflect consideration of social factors. Additionally, pursuant to 6 NYCRR Part 617.5(b), certain agencies and authorities such as the Department of Transportation, Thruway Authority, Metropolitan Transportation Authority, and New York Power Authority, through regulations, have developed their own Type II lists of SEQRA-exempted actions. These actions allow the State to advance critical projects in appropriate timeframes. Further, in some instances the legislature has already excluded some agency decisions. (See PAL § 1266 and PSL §144).
California’s recent actions may open the door for New York’s environmental regulator to evaluate and consider additional amendments to its Type II list of SEQRA-exempt actions, or for the legislature to revise the SEQRA statute itself, to ensure that the balancing of social, economic, and environmental factors promised in the language of the statute itself is appropriately implemented. This year marks the 50th anniversary of SEQRA’s enactment, and that anniversary may be an appropriate time for New York decisionmakers to evaluate if changes are needed to ensure New York is equipped to address the various challenges it faces in housing and economic development.
No Day But Today: Greystar Reaches Settlement Agreement with the Department of Justice in Realpage Algorithmic Pricing Case
Last August, we wrote about the Justice Department’s lawsuit against software developer RealPage, which alleged that the property management software company enabled rent collusion, through its revenue management product, in violation of Sections 1 and 2 of the Sherman Antitrust Act. In January, the DOJ amended its complaint to include six multifamily apartment owners and managers and allegations that, in addition to their common use of RealPage, these landlords exchanged competitively sensitive information with one another through other means. RealPage’s activities have additionally faced private litigation and actions from local enforcers in D.C. and Arizona.
The Proposed Greystar Consent Decree
Last week, the DOJ filed a Proposed Final Judgment against one of the landlords: Greystar Management Services, LLC – the largest landlord in the United States, according to the DOJ’s press release. Although the Proposed Final Judgment does not have the precedential authority of a court’s opinion, it is instructive in providing insight into enforcers’ thinking as to where the “out of bounds” lines are.
The terms of the Final Judgment are operative for five years after its entry, unless it is extended by the court or otherwise terminated at least two years after its entry, if the DOJ deems that the Final Judgment is no longer necessary or in the public interest.
Among the Final Judgment limits are the license or use of any revenue management product that uses non-public data to set rents. Greystar is additionally prohibited from using any revenue management product that incorporates a rental price floor or a limit on rental price recommendation decreases or otherwise requires Greystar to accept recommended rental prices or range of prices. Greystar will be required to certify to the DOJ that whichever product it decides to use complies with the non-public data requirements. In the event Greystar cannot certify that the revenue management product it uses complies with the Final Judgment, a Monitor with sweeping oversight authority over the company’s operations to ensure compliance with the Final Judgment will be appointed.
Importantly, the Final Judgment does not prohibit Greystar’s use of algorithmic pricing but rather sets conditions Greystar must meet and certify prior to that use – in some cases. For example, if Greystar uses a RealPage revenue management product after the court enters a final judgement in the RealPage case, no certification is required. If Greystar uses a revenue management product from a vendor other than RealPage, after a final judgment in the RealPage case is filed but before entry by the court, Greystar must secure and submit a certification from the vendor of the revenue management product that the product complies with the non-public data and rent recommendation restrictions and limitations sent forth above. The same applies if Greystar decides to use a RealPage revenue management product at any Greystar Property in the absence of a RealPage final judgment.
Information Sharing Prohibitions
The Final Judgment also contains restrictions on information sharing. The antitrust limitation on information sharing, even without an agreement, has been an important antitrust issue for nearly 50 years. Most antitrust learning taught that historical data and aggregated or otherwise non-identifiable data did not raise an antitrust risk. With the rise of algorithmic pricing and artificial intelligence, the antitrust enforcers’ views have also evolved. This evolution is reflected in the relevant provisions of the consent decree. Here, the DOJ has broadly defined competitively sensitive information to include “property-specific data or information (whether past, present, or prospective) which, individually or when aggregated with such data or information from other properties:
(1) could be reasonably used to determine current or future rental supply, demand, or pricing at a property or of any property’s units . . .;
(2) relates to the Property Owner’s or Property Manager’s use of settings or user-specified parameters within Revenue Management Products with respect to such property or properties; or
(3) relates to the Property Owner’s or Property Manager’s rental pricing amount, formula, or strategy . . .”
Greystar is additionally prohibited from agreeing, expressly or tacitly, with another landlord on which revenue management product to use; disclosing non-public data to or soliciting non-public data from another landlord; or using non-public data Greystar receives from another landlord. Greystar is also prohibited from attending or participating in RealPage meetings, a forum the DOJ alleged was the breeding ground for the underlying allegations.
The Final Judgment further requires an antitrust compliance plan and officer, that Greystar become a Government Cooperator in the DOJ’s case against RealPage and other landlords, and, upon reasonable notice, that Greystar open its doors and books for inspection by the DOJ. Of course, in a settlement such as this, conduct remedies may go beyond what a court may impose at trial, prohibiting specific prior unlawful acts as well as other conduct that may result in recurrence of the violation. These measures are often referred to as “fencing in” provisions.
Following the announcement of the settlement, the Assistant Attorney General for the Antitrust Division cautioned that “as these systems become more prevalent across our economy, we anticipate that the number of investigations involving these shared algorithms will grow. To avoid exposure, firms should perform their own due diligence on shared algorithms’ inputs and functionality to prevent collusion that can harm consumers.” Clearly, algorithmic price-fixing, a major focus of the Biden administration, will remain an area heavily scrutinized by regulators and enforcers for the foreseeable future.
The Keep Call Centers in America Act of 2025: What Financial Services Companies Need to Know
On July 29, 2025, Sens. Ruben Gallego (D-AZ) and Jim Justice (R-WV) introduced the Keep Call Centers in America Act of 2025. The act targets the offshoring of call center operations, imposes new disclosure rules for customer service interactions, and ties federal funding eligibility to domestic operations. Oversight of foreign call centers is not a new concept for financial institutions, as regulators have issued guidance on the topic since the early 2000s. For financial services providers, where customer service and compliance are already tightly regulated, the act will have significant operational and strategic implications. Banks, credit unions, mortgage servicers, and fintech companies that currently rely on offshore call centers will need to prepare for the compliance burdens and operational adjustments the legislation requires.
Key Provisions
1. Applicability
For purposes of the act, the term “employer” refers to any business enterprise that operates a call center and either employs 50 or more individuals (not counting part-time employees) or employs 50 or more individuals who, collectively, work at least 1,500 hours per week (excluding overtime). A “part-time employee” is defined as any employee who works an average of fewer than 20 hours per week or who has been employed for fewer than six of the 12 months preceding the date on which notice is required under the act.
2. Public List of Employers with Offshore Call Centers
The act directs the secretary of labor to create and maintain a publicly available list of employers that relocate a call center overseas or outsource at least 30% of a call center’s work to a foreign provider. Employers must give the secretary of labor at least 120 days’ advance notice before such relocation or outsourcing, and noncompliance can trigger civil penalties of up to $10,000 per day. Once an employer is added to the list, it remains on the list for up to five years unless it brings the work back to the United States and meets specific staffing requirements. For financial institutions, this listing could impact both public perception and eligibility for federal support. The act does not include directions for employers that are already utilizing offshore call centers.
Removal from the List
The secretary of labor must remove an employer from the list if certain conditions are met. Specifically, an employer will be removed if it has relocated a call center from outside the United States to a domestic location and the new call center employs as many or more workers than the overseas center it replaced. Alternatively, an employer that previously outsourced call center work may also be removed from the list if it amends its contract to require that all call center work be performed within the United States.
3. Federal Funding Restrictions
Appearing on the public list has immediate financial consequences. Companies on the list become ineligible for federal grants or guaranteed loans for a period of five years. If a company with an existing federal award is later added to the list, it must pay monthly penalties equal to 8.3% of the total award and may see the award canceled after a year if it remains listed. Although waivers may be granted in limited cases involving national security, significant U.S. job loss, or environmental harm, waivers will be the exception rather than the rule. The law also requires agencies (a federal or state executive agency or a military department) to give contracting preference to employers not appearing on the public list, and mandates that any call center work performed under a federal contract be conducted entirely within the United States.
4. Mandatory Customer Service Disclosures
One year after enactment, the act will require businesses engaged in customer service communications to disclose the physical location of their customer service agents at the start of each interaction. If the agent is outside the United States, the customer must be informed of their right to request an immediate transfer to a U.S.-based agent. Businesses that use artificial intelligence (AI) for customer service must also disclose its use at the outset and offer a transfer to a human agent located domestically. These obligations apply regardless of whether the customer service is performed in-house or by a third-party vendor. Financial institutions will therefore need to adjust scripts, technology platforms, and operational workflows to comply. Annual certification of compliance to the Federal Trade Commission (FTC) will be required, and violations will be treated as unfair or deceptive acts under the FTC Act.
There are several exceptions to the disclosure requirements regarding the location of customer service agents. First, the requirements do not apply when all employees or agents participating in the customer service communication are physically located within the United States. Second, the requirements are waived if a consumer knowingly initiates contact with a foreign business or address, and the consumer is aware, or reasonably should be aware, that the representative is located outside the United States. Third, communications related to emergency services are exempt. Finally, the FTC has the authority to exclude certain business entities or types of customer service communications from these requirements if exceptionally compelling circumstances justify the exclusion.
Impact on Financial Services Businesses
For financial services companies, the act presents a multifaceted compliance and operational challenge. Institutions will need to conduct a full audit of their call center arrangements, both domestic and international, and review all vendor agreements to ensure offshore providers follow the required notice, disclosure, and transfer protocols. They will also need to evaluate their exposure to federal grants, guarantees, and contracts, as offshore call center operations could jeopardize critical funding sources. Beyond the regulatory consequences, the public nature of the public list means that customer and investor perception could be at stake, potentially affecting brand reputation in a sector where trust and service quality are paramount.
1. Compliance Complexity
Banks, credit unions, mortgage servicers, and fintech companies often rely on offshore call centers for cost efficiency. The act’s notification, certification, and disclosure requirements introduce new compliance layers — with the FTC, Department of Labor, and contracting agencies all involved.
2. Funding & Contracting Risks
For institutions that receive federal loan guarantees, grants, or contracts (e.g., Community Development Financial Institutions, SBA lenders, or Ginnie Mae issuers), offshore call center operations could jeopardize eligibility. Even temporary outsourcing could trigger multi-year ineligibility.
3. Technology & Vendor Management
The disclosure mandates extend to third-party vendors. Financial institutions will need to:
Review vendor contracts to ensure compliance.
Implement call routing that enables immediate transfer to U.S.-based staff.
Incorporate AI usage disclosures into scripts and systems.
4. Reputational Considerations
The public list could influence consumer perception. For financial brands that rely heavily on trust, appearing on this list might have marketing and customer loyalty consequences beyond the regulatory penalties.
Practical Steps for Financial Institutions
Audit Call Center Footprint – Map all in-house and outsourced call center operations, including virtual agents.
Review Federal Funding Exposure – Identify current or anticipated grants, guarantees, or contracts that could be at risk.
Revise Vendor Contracts – Add provisions requiring advance notice of any offshore relocation and compliance with disclosure requirements.
Plan for Disclosure Protocols – Update scripts, CRM systems, and AI interfaces to meet location and AI-use disclosure rules.
Engage Compliance Early – Coordinate across compliance, legal, IT, and operations to avoid penalties and protect eligibility for federal programs.
Final Thoughts
The Keep Call Centers in America Act of 2025 reflects a broader federal policy shift toward linking access to federal benefits with domestic job retention and operational transparency. For financial services businesses, its provisions go beyond symbolic support for U.S.-based employment; they create real compliance, funding, and reputational considerations. Now is the time for institutions to engage legal, compliance, IT, and operations teams to assess current practices, update procedures, and ensure that all customer service operations, whether internal or outsourced, are aligned with the requirements of this new legislation.
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