Go West, Young Man!

Tuesday, January 1, 2008 - 01:00

Editor: Please provide our readers with a history of Ballard Spahr's Los Angeles office.

Sampson: The history is very brief because we just opened the office at the end of August 2007. Prior to joining Ballard Spahr, I had known some of the lawyers in the firm's Resort Group for a number of years and had worked with them on several projects. When I decided to leave my former firm, I approached them with the idea of opening a Los Angeles office. It turns out that the firm's strategic planning process was underway and one of the targeted locations for a new office was Los Angeles. You might say it was a confluence of good ideas and great timing. Several colleagues at my previous firm also decided to join me at Ballard Spahr. We currently have nine lawyers, having added two new lawyers last week. We are now looking for litigators and employment lawyers and others who fit the strategic mold of Ballard Spahr and its client base. We expect to expand to at least 50 lawyers over the next few years.

Editor: Please describe your practice and the general practices in your office to date?

Sampson: My practice is resort development, principally time-share, whole unit condos and mixed-use resorts. Mixed-use resorts are experiencing phenomenal growth in the South and Southwest, and through the resort world. My practice involves everything from acquiring the property to drafting the construction contracts to arranging the financing, creating the mixed-use time-share and condominium regimes, and having them registered with the various departments of real estate. In addition, we give legal advice on advertising, marketing and even on interactions with the owners' associations.

We have a group in our Los Angeles office who specialize in international resort development, principally in Latin America and the Caribbean. We found that California is a good springboard into Latin America with Mexico serving as a stepping stone. We are finding a number of Spanish hotel chains investing in Mexico and the Caribbean. That practice is led by Letvia Arza-Goderich, who is Cuban by birth and has spent a great deal of time in Puerto Rico, and Scott Preston, whose work experience in Mexico and Spain allow him to better serve his clients in negotiating and conducting business with a sensibility to local language and customs. Together, they have created a specialized resort development practice that enables them to maneuver between U.S. and international legal systems and business cultures on behalf of their clients. We have made Ballard Spahr's already strong national Resort Practice the strongest nationally and probably internationally.

Editor: Are you seeing that you have a number of clients from Europe's strong currency areas coming through your office?

Sampson: The Euro is very strong which has prompted a lot of movement from Europe, particularly Spain and Portugal, into the Latin American countries. We are seeing an influx of investments from these areas.

Editor: In April of 2005 we conducted an interview with Roger P. Tomasch, who is Chairman of your Denver office. We have seen a great deal of expansion on the part of the firm on the West Coast. What is the overall strategy of the firm in moving West?

Sampson: I think our Board decided many years ago that the legal-work pie on the East Coast was a fairly constant size and was not going to be growing much. There might be shifts between law firms as to segments of the pie, but the pie itself was not growing significantly. The Board felt there was going to be a lot of room for development in the Western States which seem to have more of an entrepreneurial bent with an ever-expanding legal-services pie. These decisions by the Board were given even more emphasis by the results of the firm's strategic planning process. Although Ballard Spahr has had offices in Salt Lake City and Denver for more than 20 years, the firm has recently made the commitment to continue its westward expansion with the opening of offices in Las Vegas, Phoenix and now Los Angeles.

Editor: Your principle concentration is in the real estate area. Why is this practice so important to the California economy?

Sampson: California is one of those places where there is only so much land, and there is great demand for that land. The land and consumers here are so very protected that use and development of the land is very legal-services intensive. From its mountains to its beaches, from its deserts to its farmlands, California is a desirable place to own property or even to just visit. There used to be a sign on Highway 99, I believe it was just outside Bakersfield, that said it all: "Sun Fun Stay Play." What a wonderful place for a real estate practice and particularly one dealing with resort development.

Editor: Have you experienced any changes in your practice as a result of the sub-prime fallout?

Sampson: No, we haven't experienced any impact from the sub-prime fallout. Typically, you would see the sub-prime fallout affect the multifamily and lower end residential real estate market, but even there it is a fairly small percentage. The biggest impact has come from lenders who have tightened their lending requirements bringing them back in line with historic credit requirement standards.

Editor: What areas of your real estate practice occupy the greater part of your time?

Sampson: About 90 percent of my time is spent with time-share and fractional projects or mixed-use projects that involve time-shares.

Editor: Are there building codes in California that provide for greener types of construction and energy conservation?

Sampson: The building codes used by most of the California municipalities are off-shoots of or minor deviations from the California Uniform Building Code. The Uniform Building Code does provide certain green mandates such as the use of fluorescent lights in bathrooms and at least one set of fluorescent lights in any place where renovation is being done. The codes also require low water usage faucets, low flush toilets and other measures to conserve resources. I am not aware of major investment requirements such as the use of a photo-voltaic electric system in building a room. Most of the large ticket items - and those that are really valuable in saving energy - are incentivized by tax rebates rather than in the building code.

Editor: Would you say California has a tightly structured land use policy?

Sampson: California does have a very strict land use policy, although that policy derives not so much from state legislation as from an aggregation of the policies of regional authorities and local municipalities. Historically, counties and cities would have general plans and zoning codes providing restrictions on the type of uses to be developed in various areas. Most municipalities have since gone to specific plan zoning in which the general plan is not so much geographic as aspirational, and the zoning sets up specific plan areas rather than specifying particular uses. If you want to build in the specific plan area, you have to get discretionary permits and have city involvement in the entire process. The result has been an increase in development costs, legal fees and time to market. On the other hand, the living environment has been significantly enhanced and the opportunities for cities to minimize the environmental impact have been maximized.

Editor: Are there provisions in connection with the specialized planning areas for setting aside a number of acres for parkland and recreation?

Sampson: California has several provisions for setting aside land for parks and recreation including conservancies, the State and National Park Service and California Coastal Commission. The Conservancy basically buys land from land holders and sets it aside for green space. The State Park Service and the National Park Service are also major purchasers of land. Then there are other entities such as the California Coastal Commission that do not generally exercise the power of eminent domain to purchase land for set aside purposes. Rather, they grant developers conditional permits contingent on the owner giving up a certain portion of his land or requiring the owner to build in such a way that a certain portion of the property is open to the public.

Editor: What about the beaches? Are they all public?

Sampson: The area between the water's edge and the mean high tide line are all public. Above the mean high tide line there can be private property, but again that is subject to whatever conditions the Coastal Commission places on your building in that area. If you are requesting a building permit, quite often the Coastal Commission requires that you give access from the nearest road through a portion of your property to the public portion of the beach.

Editor: How much does the presence or absence of water influence how an area is developed?

Sampson: It is fairly significant in some areas. One of the things that a developer has to show is that he has sufficient water supply for whatever development is planned. If a developer wishes to develop a subdivision of 500 homes, he would have to be able to prove to the city or county issuing the permit that there is enough dedicated water supply from the various water agencies or enough wells on the land to provide the amount of water needed for that subdivision based on the number of bedrooms. In California, and particularly southern California, water supply and water conservation are crucial elements of any development plan.

Editor: On a scale of one to ten how would you rate California as a destination for business investment? What are the pluses?

Sampson: California is a great place to invest. Over the last hundred years, property values in the state have only dropped once or twice and have always rebounded. The weather is unmatchable, the geography is fabulous and the higher education facilities are superb. There are numerous medical and technological research facilities which encourage growth in hi-tech industries and the continual need for a highly skilled workforce.

With respect to real estate values, California is the place that businesses want to be. Whenever there is an economic problem in the state, we hear how many businesses are leaving, what we don't hear is how many come back. And we don't hear how many new entrepreneurial ventures spring up every year. Despite occasional blips, I'd rate California a ten.

Please email the interviewee at sampsond@ballardspahr.com with questions about this interview.