|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Legislative News |
|||
| October 13, 2008 FEDERAL FOCUS
NAIOP Tax Extenders Included in Legislation On October 3, President Bush signed into law the Emergency Economic Stabilization Act (H.R. 1424 ). The focal point of the legislation is a financial markets rescue package developed primarily by Treasury Secretary Henry Paulsen, authorizing the federal government to purchase up to $700 billion in illiquid mortgage-related assets that have directly contributed to the current crisis in the credit markets. Also included in the bill were unrelated provisions added by the Senate to increase support for the package in the House of Representatives, which had voted against the Treasury plan earlier in the week. Included among these were major elements of NAIOP’s legislative agenda, including 15-year qualified leasehold improvement depreciation, brownfields remediation expensing and the energy efficient commercial buildings tax deduction. Both the provisions allowing for 15-year leasehold improvement depreciation and brownfields expensing expired at the end of 2007, when Congress failed to agree on tax extender legislation. The energy efficient building deduction was due to expire at the end of 2008. NAIOP, its real estate allies and a broad coalition of business, labor and education organizations had been working with Senators and Members of Congress throughout the year to pass legislation extending expired or expiring tax provisions essential to industry. The House included these extenders in a tax bill (HR 6049) passed earlier this year, which have also provided relief from the Alternative Minimum Tax (AMT) for millions of taxpayers, but the Senate would not include revenue-raising measures demanded by the House to offset the costs of the extenders. NAIOP and its allied real estate organizations mobilized in support of financial rescue legislation after hearing from many in the industry of worsening problems in the credit markets. Many feared that Congress would adjourn without taking some action, and resulting in severe economic fallout. After the House failed to pass the original plan on September 29th in a 228-205 vote, the stock market lost approximately $1.2 trillion in value. The Senate then added major provisions to the legislation to increase support, including an oversight board, limits on excessive executive compensation, and an increase to $250,000 in the amount of bank deposits insurable by the Federal Deposit Insurance Corporation. In addition, the Senate added Alternative Minimum Tax (AMT) relief, help for areas affected by recent hurricanes, language to require health care insurers to give mental health treatments the same coverage as other types of medical care and the politically popular tax extenders legislation. The stock market plunge following the House’s defeat of the financial rescue package earlier in the week, coupled with the addition by the Senate of the new provisions, convinced many of those who had opposed the rescue package to reverse their position and support the measure. The House passed the bill on October 3, 2008 by a vote of 263-171. For more information, contact Aquiles Suarez, vice president of government affairs, at (703) 904-7100, ext. 115. House Democrats Circulate Climate Change Proposal House Energy and Commerce Committee Chairman John Dingell (D-Mich.) and Energy and Air Quality subcommittee Chairman Rick Boucher (D-Va.) released a draft greenhouse gas cap and trade bill to start discussing legislative options and begin to frame the debate for next year. The 461-page bill seeks to cut 80 percent of greenhouse gases over 2005 levels by 2050, starting with a 6 percent reduction of greenhouse gases by 2020. In a letter addressed to the full Energy and Commerce Committee, Dingell and Boucher wrote, “Politically, scientifically, legally and morally, the question has been settled: regulation of greenhouse gases in the United States is coming. We believe that elected and accountable representatives in the Congress, not the Executive Branch, should properly design that regulatory program. The only remaining question is what form that regulation will take.” In addition to creating a federal system to regulate greenhouse gases, the bill also imposes strict mandates for states to update their building energy codes. More specifically, states will be required to increase energy efficiency in both residential and commercial buildings for new construction by thirty percent above the ASHRAE 90.1 (2004) and IECC 2006 standards by 2010 and by fifty percent by 2020. While some environmental and other advocacy groups believe that this bill is a good start, many on the Republican side of the aisle feel that Chairman Dingell’s approach goes too far. Noted in the committee letter was the absence of Republican support. “Regrettably, the Bush Administration and the Committee’s Republican leadership have yet to engage in a constructive dialogue on how to structure a mandatory greenhouse gas reduction program.” It further reads, “Reaching a consensus on a national approach to addressing climate change will be difficult under the best of circumstances. Reaching consensus if people are unwilling to engage in discussion of different issues will be impossible.” Because both Presidential candidates have voiced their support for a cap and trade system to regulate greenhouse gases, though they differ on how such a system should be implemented, it is very plausible that there will be forward movement on this issue in the near future. NAIOP will continue to work with members of both political parties in the House and Senate to constructively address energy efficiency and to ensure that our industries issues are addressed as the debate continues. For more information, visit the Executive Summary, read the bill text or contact Aquiles Suarez, vice president of government affairs, at (703) 904-7100, ext. 115. STATELINEPlan Your Government Affairs Strategy for 2009 As the 2008 election approaches, NAIOP chapters should begin to focus on preparing their government affairs programs for the likely challenges they will face in 2009. Having strong relationships with your state and local officials is vital to the success of every NAIOP chapter. Now is the time to develop your “to do list” for after the election:
For more information, contact Toby Burke at (703) 904-7100, ext. 116 or Melissa Huffman at (703) 904-7100, ext. 110. CANADA UPDATECities Prepare for Slowing Economy A recent article in The Globe and Mail discussed the possibility of budget reductions on the part of Canadian cities in light of the global economic slowdown. Instability in the financial markets and a slowing economy are causing many municipal governments across the country to prepare for budget cuts. Some cities are planning to delay capital projects while others are looking to trim spending. Falling prices in the residential real estate market could mean less money from property taxes, a major source of revenue for all municipalities. According to Tony Haddad, chief administrative officer for the Town of Tecumseh, Ontario, “The financial meltdown adds to the already challenging economic climate that exists currently.” He added that while the town has not has to cancel any projects to date, property values are down as much as 5 percent in the region which will almost certainly affect next year’s budget. Benjamin Tal, a senior economist with CIBC World Markets Inc., stated that city infrastructure projects will likely suffer because of the tighter borrowing climate. Just last month, the Greater Toronto Airport Authority temporarily suspended plans for an $800 million expansion due to the unstable credit markets. Tal went on to express his view that the current situation is not permanent and that infrastructure will still be a major focus over the next five years. In Kelowna, B.C., city officials are expecting lower revenue from building permits and construction taxes and fees charged to developers for infrastructure. Keith Grayston, Kelowna’s director of finance, noted that there could be some potential benefits from a downturn. The cost of some construction materials and contract services could fall, giving the city financial room to “plan for projects that are funded by reserves or other non-taxation sources.” Edmonton’s Office Vacancy Rate Still Sliding According to a report in the Edmonton Journal, available office space in the city remains scarce. A third-quarter office report released by Colliers International indicates that the office vacancy rate continues to slip and fell to 3.8 percent in the third quarter, down from 4 percent in 2007. The White-Collar Sector Vital to Commercial Real Estate Markets A Journal of Commerce report recently reiterated the importance of continued growth in the “white-collar” sector in relation to Canada’s commercial real estate market. Paul Morse, senior vice president, general manager and national practice director for Cushman & Wakefield LePage, stressed the view that the country “Needs continued investment and resurgence in these modern white-collar factories.” He also noted that the building and renovation of office space in low-vacancy city hubs across Canada is keeping businesses and workers in the downtowns of cities instead of the suburbs. Morse illustrated the trend that firms in Toronto are currently building more now in the downtown cores more than in recent history and cited the Telus Tower, RBC Centre, 18 York Street and the first phase of Bay Adelaide as examples of the downtown resurgence. He also observed that the outlook for Canadian industrial markets will see a softening in demand in Western Canada, due largely in part to the slowdown of logistics and distribution activity
Disclaimer: The information provided by this newsletter is not a substitute for legal or professional advice. Consult your personal/company’s qualified specialist for an expert opinion on matters relating to issues that affect your business. NAIOP South Florida Chapter Legislative Committee |
