GroundBreaking News The Tax Man Cometh, and Hes Got His Eyes on - - PDF document

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miller nash llp | Spring 2011

GroundBreaking News

™

Engaged Guidance, Exceptional Counsel.

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The Tax Man Cometh, and He’s Got His Eyes on Your Investment

It’s not news that the current Social Security and Medicare programs are not sustainable. In fact, with the first wave of baby boomers already eligible for Social Security and first becoming eligible for Medicare in 2011, the outlook is bleak for each program unless significant reforms are made. In an attempt to bolster the Medicare program, as part of the over-1,000-page and much-publicized “Health Care and Education Reconciliation Act of 2010,” Internal Revenue Code Section 1411 was enacted. This provision will cause investment income of many individuals to be subject to a 3.8 percent Medicare tax beginning in the year 2013 (the new Medicare tax also applies to trusts and estates, but this article focuses on the application to individuals). Traditionally, Medicare has applied

• nly to an individual’s wages or

self-employment income earned in the operation of a trade or business. Currently, and in general terms, Medicare tax is a payroll tax equal to 2.9 percent of wages paid, and the cost

• f the tax is shared equally by employers

and employees (each paying 1.45 percent

• f the tax). Individuals who are self-

employed pay both the employer and the employee portions of the Medicare tax. Beginning on January 1, 2013, the new Medicare tax will apply at a rate of 3.8 percent on the investment income

• f individuals with a modified adjusted

gross income of $200,000 ($250,000 for couples filing jointly) or more. The tax applies to the lesser of (1) the total investment income for the year, and (2) the amount by which the individual’s total income exceeds the threshold. For example, a single individual taxpayer who has $150,000 of investment income and $125,000 of other income will pay the new Medicare tax on $75,000 (the amount by which the individual’s income exceeds the $200,000 threshold). Because the threshold amounts for the new Medicare tax are not indexed for inflation, more taxpayers will be subject to the new Medicare tax over time. For purposes of the new Medicare tax, net investment income will include interest, dividends, annuities, royalties, rents, income from passive activities, and gain from the sale of

• assets. But investment income that is

not recognized for federal income tax purposes will not be subject to the new Medicare tax, including income from tax-exempt bonds, tax-free distributions from qualified retirement accounts, gain from the sale of a principal residence to the extent that Section 121 applies, gain from the sale of property to the extent that Section 1031 applies, increases in the value of a life insurance policy, and gain in a qualified IRA or

• ther retirement account. Additionally,

taxable distributions from qualified retirement accounts, income from a trade or business (other than a passive trade or business or trading in financial instruments or commodities), and income subject to self-employment taxes are exempt from the new Medicare

inside this issue

2 Where Do We Grow From Here? 3 Clark County Hearings Examiner Softens County’s Hardened Stance on Legal Lot Determinations 4 Oregon’s Proposed Legislative Changes to Environmental and Natural Resources Law 5 Dodd-Frank and Borrowers Costs 5 Announcing Our Real Estate Development Blog

by Jeneé Hilliard

jenee.hilliard@millernash.com

2 | miller nash llp | GroundBreaking News On April 13, 2011, the Washington Division II Court of Appeals muddied the growth plans for Clark County and its seven cities with a complex opinion resulting from litigation brought by Futurewise related to the de-designation

• f

agricultural resources lands.1 In September 2007, Clark County adopted a new comprehensive plan calling for the expansion of the boundaries of all the cities in Clark County except Yacolt. But a predominant amount

• f the land included in the

expansion areas was formerly designated as lands for farming. During the adoption process, the County hired a consultant to review the long-term viability of these lands under the new-at-the-time Lewis County case.2 That case allowed the County not only to look at soil types and productivity, but also to look at the so-called WAC factors to examine the proximity of the land to the urban services and areas as well as better potential economic use

• f the lands under consideration. The

consultant, Globalwise, provided a very detailed paper and matrix outlining the justification for expansion onto certain properties with the agricultural

• designation. And landowners provided

additional evidentiary support to the Board

• f

County Commissioners, proclaiming that larger-scale farming

• perations,

particularly dairy, struggled under regulatory pressures and competition from larger-scale

• perations east of the Cascades. The

County weighed and considered the evidence in the record and decided that the de-designation of some of the land was appropriate. Futurewise challenged the County’s de-designations to the Western Washington Growth Management Hearings Board (the “Board”), declaring that these lands still met the definition

• f agricultural land despite the Lewis

County case and that the County had violated the Growth Management Act (“GMA”) by considering the economic WAC factors. After a one-day hearing, the Board ruled in favor of the County for some of the lands, but in the vast majority of the cases against the County, including huge swaths of industrial lands at the La Center interchange and in North Orchards along SR-503. But during the course of the Board appeal, the cities of Ridgefield and Camas annexed several of the properties under appeal. GMA proclaims that “comprehensive plans and development regulations, and amendments thereto, . . . are presumed valid upon adoption.”3 And Ridgefield and Camas relied on this statement in annexing the properties before the Board issued a decision. We will return to this point later in the discussion. After the Board’s decision, the County and various intervening parties successfully appealed this decision to Clark County Superior Court, where the properties taken out by the Board were re-included. Because the Board had overstepped its authority, substituting its own judgment rather than giving deference to the County as the finder of fact. Futurewise immediately filed an appeal in the court of appeals. But in an interesting twist, even though the County and intervening parties won, the burden of proof remained on them to show that the Board had erred in its decision. Essentially this made the superior court’s decision superfluous. By the time the court of appeals heard this case, several things had

• ccurred. First, we all know that a

worldwide recession hit, particularly battering the real estate development

• community. And this caused several

development plans to stall. But several

• f the parcels annexed by Camas and

Ridgefield continue to be taxed, and the cities and owners continue to expend money on the planning of these areas. And then came the opinion. In a 39-page read, the court of appeals did several things. First of all, it directed the Board to reexamine two areas that it had taken out under the original

by James Howsley

james.howsley@millernash.com

Where Do We Grow From Here?

1Clark Cnty. v. Western Wash. Growth Mgmt. Hearings Review Bd., No. 39546-1-II (Wash. Ct. App. Apr. 13, 2011). 2Lewis Cnty. v. Western Wash. Growth Mgmt. Hearings Bd., 157 Wn.2d 488, 497-98, 139 P.3d 1096 (2006). 3GMA, RCW 36.70A.320(1).

Clark County, Washington, Comprehensive Growth Management Plan Urban Growth Area Map

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GroundBreaking News | miller nash llp | 3 We previously alerted our readers, through our e-mailed Development Dispatch and on the Miller Nash blog (www.fromthegrounduplaw.com), about an issue brewing in Clark County related to legal lot determinations, and now we can provide a favorable update

• f that issue.

To recap, because much of Clark County was divided into parcels before platting and zoning rules went into ef- fect in the 1960s, a number of lots were created and remain vacant even today. Until recently, property owners have benefited from Clark County’s favor- able recognition of legal lots—even if they are undersized under current zoning regulations. Under state and local law, if a lot is not recognized as “legal,” the owner cannot obtain a building permit, so legal lot status is highly coveted. The County Code bestows legal lot status

• n parcels that were divided from larger

parcels before the subdivision laws went into effect and that met the zoning requirements, such as size, at the time they were created or that currently meet the zoning requirements. A common way in which an owner divided property before 1969 was through a tax-lot segregation, in which the owner simply notified the assessor that it wished to divide its property into multiple tax parcels so that they would be taxed separately. Recently, the Coun- ty’s prosecuting attorney’s office took the position that a tax-lot segregation

• ccurring before 1969 did not create a

legal lot even though the County Code states precisely that it does. That office’s position is that the tax-lot segregation had to be for the purpose of creating a parcel for sale or lease: an owner could not simply divide its property into tax parcels and hold on to these parcels until some indefinite time in the future and expect to have a legal lot that could be sold and developed later. The problem with the County’s position is that it is not supported by the County Code, which specifically states that a lot was legally divided if it was carved out of a larger piece through notifying the assessor that the owner wished to have a smaller lot be taxed as a separate tax lot prior to 1969. The County does not need to have this provision in its code since state law does not equate tax lots with legal lots, but for whatever reason this has been the rule on the books for a number of

• years. What is different today is a new

interpretation by the prosecuting at- torney’s office that a tax-lot segregation will create a legal lot only if it was done with the owner’s intent to sell or lease the tax lot. The County never explained when that intent had to be carried out

• r how it could even be proved if these

segregations occurred in the 1950s, for

• instance. The County also argued that

state law trumped the provisions of the County Code. Our Vancouver

• ffice

recently appealed three decisions in which the County was arguing this new interpre-

• tation. In a final order issued by the

hearings examiner on March 28, 2011, the examiner rejected the County’s position, stating succinctly: The County argues that tax lots cre- ated solely for tax purposes cannot qualify as lots of record. In order to qualify as lots of record, there must be some evidence that the tax lots were created for purposes

• f sale, lease or transfer, citing to

the state platting statute, codified as RCW 58.17, including the defini- tions of “subdivision” and “short subdivision” in RCW 58.17.020(1) and (6). As discussed above, there is not support for this argument in the Code. The definition of lot of record expressly recognizes that tax lots segregated for tax purposes can constitute lots of record. The examiner expressly found that the County Code provision was not contrary to state law, and that the County could have excluded tax-lot segregations from the lot-of-record exemption but did not. It is entirely possible that the County will amend its code through legislative action so that it no longer recognizes historic tax-lot segregations as having created legal lots, but for the time being, this is the rule in the County. It is important to note that today an owner cannot divide land through tax-lot segregations. This rule applies only to tax lots created be- fore 1969, but there may be additional reasons why a historic lot may be a legal

• lot. Accordingly, if an owner receives a

denial of a legal lot determination, it will be important to determine whether any of these other reasons exist. For further information about legal lot determinations, contact LeAnne Bremer at (360) 699-4771 or at leanne.bremer@millernash.com.

Clark County Hearings Examiner Softens County’s Hardened Stance on Legal Lot Determinations

by LeAnne Bremer

leanne.bremer@millernash.com

4 | miller nash llp | GroundBreaking News The Oregon legislature has been in full swing, entertaining a number of environmental and natural resources

• bills. At the time of this writing, a

number of bills either have been passed into law or have made significant progress through the process by having at least a public hearing held or

• scheduled. This article summarizes a

few such bills. On April 11, 2011, Governor Kitzhaber signed House Bill 2189en into law. This legislation makes it easier for holders of water permits or rights to withdraw surface water by exempting such water users from the need to obtain a state removal or fill permit when changing the location where surface water is withdrawn as long as the water is put to beneficial use and the change in location is authorized by the Oregon Water Resources Department. This is a state-law exemption only and has no impact on potential requirements under the federal Clean Water Act (the “CWA”). Other bills that continue to receive the attention of the legislature and that, if passed into law, may have significant impact on the regulated community include the following:

HB 2007

acknowledges that facilities with wastewater discharge permits often cannot meet state water quality standards established under the CWA, often for reasons beyond their control. The legislation directs the Oregon Department of Environmental Quality (“DEQ”) and Environmental Quality Commission (“EQC”), to the extent permitted by federal law, to develop a pilot program allowing for a variance from water quality standards. Specifically, DEQ is required to: (1) identify certain permittees to apply for a pilot program; (2) identify certain surface waters that do not meet certain criteria for polychlorinated biphenyls; (3) prepare multiple discharger variances and submit variances to EQC and the United States Environmental Protection Agency; and (4) identify substances that exceed certain water quality standards.

HB 2082 provides prospective

purchasers who enter into a judicially approved consent judgment with explicit protection against direct cost- recovery claims. This bill would change the current Prospective Purchaser Agreement (“PPA”) program to enhance use of PPAs for economic redevelopment and environmental cleanup.

HB 2950 allows DEQ to enter into

certain agreements related to releases

• f hazardous substances. DEQ may

enter an administrative agreement providing a person with a covenant not to sue concerning any future liability to any person under the provisions of ORS 465.200 to 465.545 and 465.900 if DEQ determines that the person who is a party to the agreement has performed all necessary removal or remedial actions related to the release

• f a hazardous substance from a facility.

HB 3591 requires DEQ to consult

with applicants regarding CWA permitting variances with the goals of (1) minimizing costs of the variances, and (2) imposing only variance conditions that are directly related to the purpose

• f a variance.

HB 3613 gives the Department

• f

Agriculture (“DOA”) exclusive authority to develop water quality management plans, supporting rules, and programs to protect and improve water quality through agricultural practice regulations regarding nonpoint sources of pollution on agricultural and rural lands. DOA’s authority extends to activities prohibited under ORS 468B.025, which would include discharges from confined animal feeding operations that are regulated under the CWA and have historically been under the jurisdiction of DEQ.

SB 41 establishes, with exceptions,

deadlines by which public bodies must respond to public records requests (e.g., ten days) and limits the amount of fees that public bodies may charge for responding to public records requests. This bill establishes jurisdiction of the Attorney General to hear petitions for review of public records in custody of elected officials by persons denied the right to inspect records and requires the Attorney General to develop training materials on public records.

SB 42 requires that fines imposed

in environmental crimes cases brought under federal and state environmental laws be in the form of compensatory

• fines. The fines can be used for personal

services, travel, meals, lodging, and all

• ther costs and expenses incurred by

the state in investigating, preparing, commencing, and prosecuting the following actions and suits, and enforcing judgments, settlements, and compromises.

SB 536 prohibits, with exemption,

single-use checkout bags, regardless of whether they are made of paper, plastic,

• r another material.

SB 600

modifies provisions related to the lease of submersible lands, to easements over submersible lands, and to certain privately owned floats and docks, as well as creating a new exemption related to submerged and submersible lands.

SB 867 specifies that DEQ may

by Hong Huynh

hong.huynh@millernash.com

Oregon’s Proposed Legislative Changes to Environmental and Natural Resources Law

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GroundBreaking News | miller nash llp | 5

We’re Pleased to Announce Our Real Estate Development Blog

Check us out at www.fromthegrounduplaw.com Welcome to Our Real Estate Development Blog

Home Search RSS Return to Main Website Blog Contact

James (Jamie) Howsley James.Howsley@MillerNash.com 360.699.4771

Miller Nash is pleased to announce the launch of our real estate development blog, From the Ground Up. This is the Northwest’s first comprehensive blog tackling issues on land use, real estate, environmental, tax, construction, and more related to the real estate development industry. Our focus is to educate our clients, consultants, and the general public of developments not only in the law, but also in the market related to real estate

• development. One of our primary goals is to identify trends to assist others in making

development projects successful. This blog will have multiple new postings every week. We will also host guest posts from time to time from outside consultants. There will be several ways to find out about new posts, including subscribing to our RSS feed or following us on Twitter. And while we will not show comments on this site, please feel free to e-mail us directly with any questions, comments, or suggestions. We hope you find this blog enjoyable to read and that the information is pertinent to the industry. The Dodd-Frank Act (“DFA”), approved by Congress and the Presi- dent in 2010 and effective April 1, 2011, affects almost every aspect of the U.S. financial services industry. The purpose of DFA is to restore pub- lic confidence in the financial system, preventing another financial crisis, and allowing any future asset bubble to be detected and deflated before a crisis like that of 2009 occurs again. The regulations within DFA, and no doubt its myriad of sup- porting administrative rules, will significantly increase regulation of the financial services industry. Many questions about its impact remain and will be revealed over the coming months and years. The purpose of this article is to identify on a preliminary basis the impact of DFA on financial institutions and the corresponding trickle-down effect on commercial borrowers. DFA imposes significant new reg- ulations on banking organizations as well as providing the Federal Reserve with authority to regulate lenders

• ther than banks—such as insurance

companies and investment firms (if they predominantly engage in lend- ing activity and are identified by the federal government as institutions that should be regulated based on their funding sources and other risk- based criteria). DFA will increase the cost of doing business for banks. Local community banks estimate that the additional regulatory cost of DFA compliance could be in the range of $700,000 to $1.2 million. This is on top of all the other regulatory requirements that banks must adhere to from the Federal Reserve, the Federal Deposit Insurance Corporation, and other state and federal agencies. DFA creates the Consumer Finan- cial Protection Bureau. This new federal agency has a mandate to issue regulations, determine compliance with DFA, and implement enforce- ment actions under rules that it will create over the next two or more years. Given the added regulatory costs, it should come as no surprise that

Dodd-Frank and Borrowers’ Costs

by Stephen Horenstein

steve.horenstein@millernash.com

(continued on page 7)

6 | miller nash llp | GroundBreaking News

• pinion, one in Vancouver and one in
• Washougal. The court did this because

the Board had used the wrong measure to determine whether these areas were “characterized by urban growth.”

4

The court also confirmed the Board’s findings that the areas surrounding La Center should remain agricultural lands. In upholding the Board’s decision, the court stated that the County had focused too exclusively on the alternative economic opportunities the land presented rather than weighing all the WAC factors equally and considering the “local agricultural needs.”5 And this despite the fact that the land on the northwest quadrant

• f the interchange gained approval to

be put into trust for the Cowlitz Tribe, which plans a gaming facility, hotel, and convention center. But then came the part of the

• pinion that the court issued sua sponte,
• f its own volition. Essentially the court

ruled that even though Camas and Ridgefield had annexed the properties subject to an appeal, the Board still had authority to rule on whether they remained agricultural. As of now, most

• f the parties remain confused about

whether this ruling was meant to be dicta for future plan updates or whether the court means for a remedy to occur. This ruling raises questions that could change the GMA landscape. By the time this article goes to print, I am confident that several maneuvers will have occurred, including potential motions for clarifications and petitions to the Washington Supreme Court. We will continue to track this case at

• ur blog, which you may find at www.

fromthegrounduplaw.com. For further information about the Growth Management Act, contact James Howsley at (360) 699-4771 or at jamie.howsley@millernash.com. Where Do We Grow . . . | Continued from page 2

4GMA, former RCW 36.70A.030(18). 5Clark Cnty., slip op. at 32.

The Tax Man Cometh . . . | Continued from page 1 enter into agreements to implement institutional controls for purposes related to reducing exposure to hazardous substances, and makes all conditions imposed under those Oregon’s Proposed Legislative Changes. . . | Continued from page 4 agreements valid and enforceable with any conveyance or assignment of interest in real property. For more information, contact Hong Huynh, a partner of Miller Nash, who specializes in environmental and natural resources law and is the 2011 legislative contact for the Oregon State Bar Environment and Natural Resources Section. shareholder will be investment income to the shareholder. This means that creating an entity to hold investment- income-producing assets for a taxpayer is unlikely to effectively avoid the new Medicare tax. Individuals who anticipate being subject to the new 3.8 percent Medicare tax may want to engage in some advance tax planning before the tax becomes

• effective. For example, if an individual

desires to sell an industrial rental property in the next few years and expects to have $1 million of taxable gain as a result of the sale, the taxpayer could avoid $38,000 of Medicare tax if he or she sold the property before January 1,

• 2013. Additionally, a taxpayer might

consider selling investment-income- tax, but any such amounts will be included in the individual’s modified adjusted gross income and could push the taxpayer over the threshold, causing other investment income of the individual to be subject to the new Medicare tax. Although the new Medicare tax applies to individuals, for investment income earned by a partnership (including a limited liability company that is taxed as a partnership rather than a corporation), each partner will be treated as having investment income equal to his or her share of the partnership’s investment income. Additionally, although a corporation won’t be subject to the new Medicare, any dividends paid to an individual producing assets before 2013 and investing the proceeds in tax-exempt bonds or a whole-life insurance policy, thereby avoiding the new Medicare tax on any gain generated by the sale

• f the asset and avoiding the new

Medicare tax on the income produced by the investment. A taxpayer might also consider transferring investment- income-producing assets to a qualified retirement account, or, after 2013, selling assets on an installment-sale basis, if doing so could help keep the taxpayer under the new Medicare tax threshold. For further information regarding taxation of investment income, please contact Jeneé Hilliard at (503) 224-5858

• r at jenee.hilliard@millernash.com.

GroundBreaking News | miller nash llp | 7

Vancouver

Environmental Hill, Steve Miller, Jeff Land Use Bremer, LeAnne Howsley, James Real Estate Horenstein, Steve Klinger, Dustin Tax Nisle, Ryan

Portland

Construction Christensen, Gary Purcell, John Environmental Huynh, Hong Lacampagne, Suzanne Rycewicz, Chris Land Use Grillo, Phil Hossaini, Kelly Rasmussen, Will

team directory

Members of our team are available to help you with any questions you have. E-mail us at clientservices@millernash.com or call us toll-free at (877) 220-5858.

Portland (cont.)

Real Estate Canaday, Richard Goodling, Jonathon Johnson, Randy Tax Hilliard, Jeneé

about from the ground upsm

“From the Ground Up” is Miller Nash’s multidisciplinary team of lawyers serving private- and public-sector clients with needs in construction, environmental, land use, and real estate law. We combine superior technical expertise with a big-picture understanding of clients’ projects. Our approach lets clients choose between a comprehensive package of real estate services, which provides a “start to finish” solution, and a “pick and choose” menu of focused legal and planning services. We pride ourselves on our relationship-based ability to work with local jurisdictions, elected officials, property owners, lenders, agencies, and others as necessary to bring value to clients and the community. “From the Ground Up” is a unique approach that will provide you with comprehensive, cost-effective, and timely real-estate-related services.

Real Estate. Our experienced real estate attorneys bring the knowledge and credibility to support you

with buying, selling, leasing, financing, exchanging, and developing of all types of properties, including residential, office, industrial, retail, and multifamily properties.

Land Use. The Land Use group is a team of experienced and well-regarded professionals who provide services

in Oregon and Washington. Within the group you will find experience in every jurisdiction and with nearly every kind of land use issue you might have. Whether it’s a solar farm in Christmas Valley, a multistory, mixed-use building in Vancouver, or a hospital masterplan in Portland, we’ve been there and we can help you.

Environmental Law. Our Environmental and Natural Resources team regularly assists clients in conducting

due diligence to evaluate environmental risks in real property transactions, resolving environmental claims involving contaminated property, and obtaining the requisite permits and land-use approvals for the development and redevelopment of industrial, commercial, or residential lands from federal, state, and local agencies such as the U.S. Environmental Protection Agency, U.S. Army Corps of Engineers, Oregon Department of Environmental Quality, Washington Department of Ecology, Washington Department of Fish & Wildlife, and various local cities and counties.

Construction Law and Litigation. From design to punch list, and through any claims process, our Construction

Law team works with you to ensure that your project stands on solid ground. We provide clients with counseling, contract negotiation and drafting, and claims litigation.

• Tax. Our Tax group routinely helps clients structure real-estate transactions to maximize tax savings,

including through tax-deferred exchanges, choice of entity issues and entity formation, tax issues related to cancellation of debt, and property tax exemption, valuation, and deferral.

Seattle

Real Estate Lui, Lisa Meserole, Leslie Towle, Guy

Central Oregon

Land Use & Real Estate Van Vactor, Will Wilson, Jeff

3400 U.S. Bancorp Tower 111 S.W. Fifth Avenue Portland, Oregon 97204

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GroundBreaking News™ is published by Miller Nash LLP. This newsletter should not be construed as legal opinion on any specific facts or circumstances. The articles are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have. To be added to any of our newsletter or event mailing lists or to submit feedback, questions, address changes, and article ideas, contact Client Services at (503) 205-2661 or at clientservices@millernash.com.

financial institutions will do their best to pass along DFA costs and DFA compliance to commercial borrowers. Loan document language, devel-

• ped by larger banks already likely

to be followed by most banks mak- ing business and real estate loans, includes a provision requiring bor- rowers to pay toward the bank each increased cost resulting from DFA “regardless of the date” when the cost- triggered change occurs. This means that to the extent that the banks’ regu- latory costs go up, these costs may be passed on to borrowers without regard to whether a loan was entered into before the effective date of DFA. These new costs can be passed along either as a fee or as added interest

• cost. It has been the case that lenders

generally included the “increased cost” clause only for situations in which laws or rules changed after a loan was closed. Now, banks are very concerned and want the broadest pos- sible protections from increased costs in loan documents. It is important for a borrower to watch out for language

• f this type and negotiate provisions

to the borrower’s benefit. In addition to higher potential loan costs for real estate and com- mercial borrowers, the more stringent loan document provisions could slow the rebound in lending that has

• therwise increased at many banks,

especially those that have emerged from the financial crisis with plenty

• f capital to loan.

Real estate and business borrow- ers will find that it is not just banks that are affected by DFA. Insurance companies and other lenders that are substantially in the business of making commercial and real estate loans will also have to comply with

• DFA. Also, the cost of real estate and

commercial loans could increase as a result of a provision in DFA requiring banks and others that package loans to retain the risk of what they are sell- ing to third-party investors. For further information about the Dodd-Frank Act, contact Steve Horen- stein at (360) 699-4771 or at steve. horenstein@millernash.com. Dodd-Frank . . . | Continued from page 5