Before leasing land, it is important for developers to understand the benefits of using a lease-option structure instead of jumping straight into a leasehold. By deliberately separating and sequencing the grant of rights from a landowner to a developer, parties can better manage potential reporting obligations under the Agricultural Foreign Investment Disclosure Act (AFIDA) and environmental liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Understanding lease options vs. leaseholds

A “lease option” agreement can give you the right, but not the obligation, to lease real property in the future. A lease option is generally considered to be a contractual, personal property right. On the other hand, a “true lease” agreement creates a leasehold estate once the agreement is signed. Leaseholds generally give rise to contractual, real property rights. By using a lease option or structuring a lease to function like a lease option, you can better control when real property rights are created, and by extension, when certain legal obligations/implications take effect.

Why this matters: AFIDA

AFIDA is a federal law that requires foreign persons (including entities organized or formed under the laws of foreign governments and domestic entities that are substantially controlled by foreign persons) to file a report with the USDA within 90 days of acquiring or transferring “any interest” in agricultural land. Leasehold interests of more than 10 years trigger an AFIDA filing requirement, as “any interest” is defined broadly. However, certain types of interests are excluded from the filing requirement, including “contingent future interests.”

If your lease has a term of longer than 10 years, you might need to make an AFIDA filing with the USDA. However, the USDA appears to interpret the “contingent future interest” exception to mean that lease options are not reportable interests because options do not effectively convey an ownership interest in agricultural land. The USDA’s Handbook on Foreign Investment Disclosure explicitly states that “options are considered future interests” and are not reportable. Some developers rely on this safe harbor to delay AFIDA filings after lease execution, arguing that the development period under a lease is functionally equivalent to an option period, with the AFIDA filing requirement triggered by the shift from the development period into the operations period of the lease.

While the clearest way for a developer to avoid triggering an AFIDA filing requirement would be to use a true option agreement with a lease attached as an exhibit, many developers favor a more streamlined document put in front of landowners. Thus, some agreements maintain the look and feel of a lease while making the distinction that the developer’s real property rights under the agreement are “contingent future interests” vesting upon a defined commencement date, not the agreement effective date. The developer can then treat that commencement date as the trigger for the 90-day AFIDA filing window.

Why this matters: CERCLA

CERCLA, on the other hand, is a federal law that deals with environmental liability. CERCLA creates a defense to liability a tenant can preserve by conducting all appropriate inquiries (AAI) before it acquires a leasehold interest in the facility. One of the key steps in a tenant’s AAI is obtaining a proper Phase I environmental site assessment within 180 days before the creation of the tenant’s leasehold estate.

While there is not much case law on point, courts deciding questions of tenant liability under CERCLA seem mostly concerned with the level of control the tenant had over the subject property. We are not aware of any case law interpreting whether a tenant under a lease could preserve a defense to CERCLA liability by arguing that it conducted AAI before it exercised exclusive control over, or earth-moving activities on, the subject property. Still, a tenant would be in a better position to argue for that defense if the lease itself only creates a leasehold estate in favor of the tenant upon a defined commencement date (e.g., the start of construction), not the agreement effective date.

How to structure your agreement

Ultimately, a developer’s ability to designate when its real property rights vest allows for greater control over timing for (1) the trigger date for the AFIDA filing requirement and (2) the receipt of a Phase I ESA to preserve a defense to liability under CERCLA.

There are two approaches to address these concerns: (A) using a true option agreement with an agreed-upon form of lease attached as an exhibit; and (B) using a nuanced lease agreement that makes the distinction between the grantee’s rights during a development period (e.g., a license for site access and inspection only; no possessory interest) and the grantee’s real property rights (e.g., leasehold and easement rights; possession and right of use) vesting upon a defined commencement date, not the agreement effective date.

By using either of these strategies, you can better manage reporting obligations under AFIDA and/or environmental liability under CERCLA, providing important flexibility as you plan and develop your projects.

Chris Criglow is a Stoel Rives LLP partner. He practices in the real estate, development and construction group. Contact him at 503-294-9267 or chris.criglow@stoel.com.

Ben Criswell is a Stoel Rives LLP associate. He practices in the real estate, development and construction group. Contact him at 503-294-9531 or ben.criswell@stoel.com.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the authors and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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Local construction helmet manufacturer Studson Inc. is navigating fast-changing tariffs that are deeply impacting costs for its made-in-China products.

The Trump administration’s tariffs struck amid the company’s expansion. Studson celebrated a grand opening Thursday at Sherwood Commerce Center, a newly built industrial warehouse space owned by Schnitzer Properties.

President Donald Trump’s tariffs have directly impacted Studson’s shipments from China, said Ryan Barnes, the company’s CEO and founder.

Tariff rates on products imported from China — a primary target of Trump’s trade war — briefly hit 145 percent before declining to 30 percent. Trump announced the reduced but still historically high rate as part of a 90-day pause, and it’s unclear what will happen next.

Studson recently resumed shipping helmets from China after halting shipments for more than a month, Barnes said.

“It’s been terrible,” he said. “We had put a pause for the last five weeks.”

The tariffs, if again raised, would threaten Studson’s business, Barnes said.

“Essentially, we can’t operate — we can only operate for a short amount of time at 145 percent (tariffs),” Barnes said.  “We would be paying so much in tariffs, it would just drain our cash and we would be out of business.”

Barnes started Studson in 2019 after a conversation with Bremik Construction co-founder Mike Greenslade about the need for innovation in construction helmets. Barnes had worked at Poc, a cycling helmet company.

Traditional hard hats are meant to protect workers from falling objects. Modern Type II helmets, like those made by Studson and its competitors, also protect from the front, sides and rear, and more easily accommodate accessories like face shields. Barnes calls it “360-degree protection.”

Barnes developed his first construction helmets in his own basement and later shipped them from his in-laws’ garage. Sharp growth soon followed, with sales jumping 706 percent from 2022 to 2024. Studson helmets are now a common sight at job sites, including the Portland International Airport main terminal project.

“Studson” is a portmanteau of Barnes’ children’s names, Stella and Hudson. Ryan Barnes’ wife, Kim, has served in a variety of company roles in Studson’s early years and now manages operations and recruitment.

Studson moved into the Sherwood space earlier this year, inking a five-year lease. It offers 37,000 square feet of warehouse space and 4,200 square feet of office space with conference rooms and collaborative space, and ample room to grow. The company has 26 employees.

“In the first two spaces we were at, they were old buildings, and they did a little bit of improvements on the office, but they were still old,” Barnes said. “We’re a very premium-positioned brand, and it just doesn’t fit the culture to be in a 20-, 30-year-old office.”

Schnitzer Properties has plenty of space: The first phase of Sherwood Commerce Center was completed in 2024 and comprises 445,000 square feet in three buildings. The second and third phases, now under construction, will add a total of 549,600 square feet in four additional structures. Perlo Construction is building all phases of the project.

The first phase is approximately 72 percent leased, said Jordan Schnitzer, CEO of Schnitzer Properties.

“Oregon’s not a place that’s known for manufacturing,” Schnitzer said. “So, to have a place like (Studson), a bright shining light that’s never given up — this is exactly the kind of tenant you want to have. They’re locally owned, they’ll work hard and they’re saving lives.”

Studson sells its helmets for about $150 each at retail. It sells directly through its website, through distributors and via Amazon.

Studson is weighing whether to diversify its manufacturing by moving some work to Vietnam, Europe and potentially the United States.

“We still hold onto the hope that we could produce in the U.S.,” Barnes said. “It’s been a goal of ours. I’m sure our customers would love it.

“Will our customers pay extra for it? No, but they would love it, and we’d be proud of that if we could pull it off,” he added.

Studson is also considering the possibility of opening a distribution center in the Eastern U.S., Barnes said.

For Sherwood, whose residents typically commute to Hillsboro and other Westside suburbs or Portland, Studson provides local jobs, Mayor Tim Rosener said.

“We really want to give people the opportunity to live and work in Sherwood,” he said.

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