Legislative News

Legislative Bulletins
Volume XII - Number 1 : Number 2 : Number 3 : Number 4
Volume XI - Number 1 : Number 2 : Number 3 : Number 4
Volume X - Number 1 : Number 2 : Number 3 : Number 4
Volume IX - Number 1 :Number 2 : Number 3 : Number 4 : Number 5
Volume VIII - Number 1 : Number 2 : Number 3 : Number 4
Volume VII - Number 1 : Number 2 : Number 3
Volume VI - Number 1 : Number 2 : Number 3 : Number 4

Leasehold Improvement Legislation Introduced

May 2, 2008

Senate Finance Committee Chairman Max Baucus (D-MT) has introduced legislation—S. 2886—that includes a provision to renew and extend the 15-year cost recovery period for leasehold improvements. On April 17, 2008 the bill was referred to the Senate Finance Committee.

New Guidance on “Reasonable Modifications” under the Fair Housing Act

March 7, 2008

On March 5, 2008, the Departments of Housing and Urban Development (HUD) and Justice (DOJ) released guidance reinforcing the right of persons with disabilities to make “reasonable modifications” to their dwellings if a structural change to their dwelling or to a common area of the building or complex in which they live is needed.  The guidance is designed to strengthen housing providers and homeowners’ associations’ understanding of their obligations regarding the “reasonable modifications” provision of the federal Fair Housing Act (FHA).

The new guidelines, issued in the form of questions and answers, cover such topics as:

• What is a reasonable modification?
  
• Who must comply with the reasonable modification requirement?
  
• Who is responsible for expenses associated with the upkeep or maintenance of a reasonable modification?
  
• When and how should an individual request permission to make a modification? 
  
• What types of documents and assurances may a housing provider require regarding the modification before granting the modification?
  
• What procedures are available to a person wishing to challenge a denial of a requested modification?

The guidelines are available online at http://www.usdoj.gov/fairhousing.   

U.S. House Passes Bill Providing Energy Efficient Commercial Buildings Tax Incentives

February 28, 2008

On February 28, 2008, the House passed H.R. 5351, the Renewable Energy and Energy Conservation Act of 2008, by a vote of 236 to 182. The bill would extend federal tax incentives for energy efficiency and renewable energy technologies that have expired or will expire at the end of this year. Specifically, it extends tax incentives for energy efficiency in commercial buildings.
CCIM Institute, IREM and NAR are part of a coalition that supports H.R. 5351. The coalition sent a letter in support of the bill to House Representatives prior to the House vote on the bill. In its letter the coalition stated that the incentives must be extended immediately to avoid significant harm to the developing clean energy industries in the United States. The technologies produced by these industries play a vital role in reducing global warming pollution, creating new high-wage jobs in our country, and saving consumers and businesses money on their energy bills.

Two Year Ban on Banks in Real Estate

Energy Independence and Security Act

Now available: CCIM Institute legislative staff analysis of the Energy Independence and Security Act of 2007. Read the Energy and Security Act paper to find how the new law will affect your property management portfolio.

Commercial Real Estate Professionals Await Impact Of New Energy Law

The Energy Independence and Security Act of 2007 became law on December 19, 2007.  The “High Performance Commercial Buildings” section is of the most interest to commercial real estate professionals.  A Director of Commercial High-Performance Green Buildings is to be appointed who will report to the Assistant Secretary for Energy Efficiency and Renewable Energy.  By March 19, 2008, the new director must formally recognize groups that qualify as a high-performance green building partnership consortium.

The director must establish the “Zero-Net-Energy Commercial Building Initiative” to reduce the quantity of energy consumed by commercial buildings located in the U.S. and to achieve the development of zero net energy commercial buildings in the U.S.  The goal of the initiative is to develop and disseminate technologies, practices, and policies for the development and establishment of zero net energy commercial buildings for:

• Any commercial building newly constructed in the U.S. by 2030;
• 50% of the commercial building stock of the U.S. by 2040; and
• All commercial buildings in the U.S. by 2050.

It is important to note that the goal of having all commercial buildings achieve zero net energy by 2050 is a goal, not a mandate. 

The law does not contain any tax incentives for commercial building owners and managers. 

CCIM Institute will be closely monitoring the proposed rules of relevant agencies that will implement the law.  A detailed analysis of the new law will posted here soon.   

Terrorism Insurance Bill Signed Into Law

December 26, 2007

The President signed the Terrorism Risk Insurance Revision Act of 2007 (H.R. 2761) into law on December 26, 2007.  The law extends the federal government’s terrorism risk insurance backstop, which was set to expire on December 31, 2007, for seven years through 2014.  CCIM Institute participates in a coalition that supported this legislation.

AMT Relief Bill Signed Into Law

December 26, 2007

On December 26, 2007, President Bush signed into law H.R. 3996, the Tax Increase Prevention Act of 2007.  This legislation extends alternative minimum tax (AMT) relief for one year for nonrefundable personal credits and increases the AMT exemption amount to $66,250 for joint filers and $44,350 for single filers to ensure that no additional taxpayers are liable for the AMT this year.  Additionally, tax increases on capital gains and carried interests were not included in this piece of legislation.

AMT Relief Bill Awaits President’s Signature

December 20, 2007

The House voted 352 to 64 in favor of the Senate amendment to H.R. 3996, the Tax Increase Prevention Act of 2007, on December 19, 2007. The President is expected to sign H.R. 3996 into law. The legislation would extend alternative minimum tax (AMT) relief for one year for nonrefundable personal credits and increase the AMT exemption amount to $66,250 for joint filers and $44,350 for single filers to ensure that no additional taxpayers are liable for the AMT this year.  Additionally, tax increases on capital gains and carried interests were not included in this piece of legislation.

President Expected To Sign Terrorism Insurance Bill

December 20, 2007

The House approved the Terrorism Risk Insurance Revision Act of 2007 (H.R. 2761) on December 18, 2007, by a vote of 360 to 53. The bill is being sent to the President, who is expected to sign the bill into law. The existing terrorism risk insurance law is set to expire on December 31. The legislation extends the federal government’s terrorism risk insurance backstop for seven years. H.R. 2761 is similar to Senate legislation passed earlier. CCIM Institute participates in a coalition that supports this bill.

U.S. Senate Passes Terrorism Insurance Bill

November 20, 2007

The U.S. Senate approved the Terrorism Risk Insurance Revision Act of 2007 (H.R. 2761) on November 16 by a voice vote. The Senate approved version of the legislation differs from the version passed by the House. Most notably the House version extends the federal backstop program by fifteen years, while the Senate version extends the program by seven years. The current law—the Terrorism Risk Insurance Extension Act—is set to expire on December 31, 2007. The House and Senate must work to find a compromise on H.R. 2761 before New Year’s. CCIM Institute participates in a coalition that supports this bill. CCIM Institute will continue to work for introduction and passage of this important legislation.

U.S. House Passes Terrorism Insurance Bill

September 20, 2007

The House passed the Terrorism Risk Insurance Revision Act of 2007 on September 19 by a vote of 312 to 110. The legislation, H.R. 2761, will extend the federal backstop program, which is currently set to expire on December 31, for fifteen years. The program makes coverage available for nuclear, biological, chemical, or radiological attacks; requires the Treasury Department to report on the terrorism insurance market every 2 years, including analysis of terrorism insurance pricing impacts on commercial real estate; and establishes a blue ribbon commission tasked with recommending a long-term private market solution. The bill will now move to the Senate. CCIM Institute participates in a coalition that supports this bill. CCIM Institute will continue to work for introduction and passage of this important legislation.

New Law Includes 9/11 Commission Report Recommendations

August 16, 2007

On August 16, 2007, President Bush signed into law the “Implementing Recommendations of 9/11 Commission Act of 2007” (H.R. 1), which includes a provision that requires the Department of Homeland Security (DHS) by spring, 2008, to set up a program for certifying private sector entities as meeting a “voluntary” national standard for emergency preparedness. Because the legislation was in fact the 9/11 Commission Report, it quickly moved through the Senate for final passage with no debate or hearings.

This law mandates DHS adopt a voluntary private sector accreditation and certification standard that promotes emergency preparedness, that may be customized to fit the unique characteristics of various industries within the private sector, including real estate. In order to carry out its certification program, DHS is required to select a qualified nongovernmental entity to accredit qualified third parties who will actually perform the certification of real estate. DHS is expected to adopt the National Fire Protection Association (NFPA) 1600 standard or a similar standard.

Although the new law is voluntary, the law could lead to several end results. It may become the market and legal standard of care in the real estate industry. Most importantly for real estate practitioners, the standard may allow for the insurance and credit-rating industries to look closely at a company’s compliance with the NFPA standard or any other DHS selected standard in evaluating its insurability and creditworthiness.

U.S. House Passes Legislation Extending the Energy Efficient Commercial Building Tax Deduction

August 4, 2007

On Saturday, August 4, 2007, the U.S. House passed the Renewable Energy and Energy Conservation Tax Act of 2007 (H.R. 2776), which amends Internal Revenue Code provisions relating to renewable energy sources and energy conservation, by a vote of 221 to 189. Most importantly for commercial real estate owners and brokers, the legislation extends the tax deduction for energy efficient commercial building expenditures through 2013. Representative Charles Rangel, Chairman of the House Ways and Means Committee, is the main sponsor of H.R. 2776. The bill will be sent to the Senate.

Federal Court Rules City's Immigration Ordinance Unconstitutional

July 26, 2007

Pro-immigrant groups brought suit against the city of Hazelton, Pennsylvania in opposition to its ordinance that fines landlords who rent to illegal immigrants $1,000 a day and revokes the licenses of business for five years if they hire illegal workers. On July 26, 2007, a federal judge ruled against the city of Hazelton, explaining that the ordinance gave undue power to the local government and violated the Constitution’s due process protections. The city plans to appeal. The ruling will have an effect on other city council votes and trials on related ordinances.

CCIM Institute Requests Member Input On Capital Gains Bill

June 2007

Share your input on the U.S. House capital gains bill that would place a larger tax burden on commercial real estate professionals.

The financial press has pointed out that private equity markets are not subject to any federal or state financial or securities regulation. In addition to regular compensation, private equity and hedge fund managers receive a share of the profits, called "carried interests," that are currently considered investment income and taxed as long-term capital gains income at 15%. Now carried interests are receiving Congressional scrutiny.

U.S. Representative Sander Levin, a Michigan Democrat, has introduced legislation, H.R. 2834, that measures carried interests as ordinary income taxable up to 35%. The Representative was quoted in a press release as stating that "investment fund employees should not pay a lower tax rate on their compensation for services than other Americans." The sponsors of the legislation, mostly senior Democrats on the Ways and Means Committee, plan for H.R. 2834 to generate revenue to cover the cost of reforming the Alternative Minimum Tax.

H.R. 2834 specifies that those who provide services to manage and operate real estate partnerships will no longer receive capital gains benefits from those carried interests, but will be taxed at ordinary income rates on the carried interest. If this bill becomes law it could significantly increase the tax burden for commercial real estate practitioners who act as an operating partner for a partnership.

The CCIM Institute believes that it is in our nation's best interest for Congress to encourage real estate investment in the United States by having a tax system that provides a meaningful differential between the tax rates for ordinary income and those for capital gains. Thus, the CCIM Institute, in cooperation with the National Association of REALTORS® (NAR), is opposed to changing the tax rate on the carried interests of commercial real estate professionals.

NAR is lobbying against the legislation as introduced in order to prevent any change in the capital gains treatment that currently applies to real estate partnership carried interests. A coalition of real estate organizations are lobbying to make real estate partnerships exempt from any new rule modifying the treatment of carried interest as capital gains. In addition, the association has joined forced with numerous organizations from various industries to defeat the legislation.

The companion bill in the Senate, S. 1624, would focus only on private equity and hedge funds and would apply exclusively to publicly traded partnerships. The Senate Finance Committee is currently holding hearings on the issue.

Have you been involved in a commercial real estate venture that has spurred economic development? Please share your stories that demonstrate how changing the tax rate on carried interests in real estate partnerships will impact you.

For questions or to send your stories, email legislative_affairs@cciminstitute.com.

U.S. Senate Passed Energy Bill That Does Not Include Tax Incentives

June 21, 2007

On June 21, 2007, the U.S. Senate voted 65 to 27 on comprehensive energy legislation that aims to raise fuel economy standards and promote a major expansion of renewable fuels and energy efficiency. The tax component of the bill that would extend and expand the energy efficiency tax deduction for commercial buildings did not pass the Senate. The U.S. House version of the energy bill, which is currently in committee, includes a provision that extends the energy efficiency tax deduction for commercial buildings from 2008 through 2010. CCIM Institute continues to support the extension of the energy efficiency tax deduction for commercial buildings.

FDIC Extends Moratorium on ILC Applications as Congress Considers Legislation

February 5, 2007

In a notice published on the February 5, 2007, the Federal Deposit Insurance Corporation (FDIC) announced a one year extension of the moratorium on deposit insurance applications for industrial loan companies and industrial banks. NAR was among the groups that wrote letters to the FDIC seeking an extension of the previously instituted a moratorium, which expired on January 31, 2007. The CCIM Institute supports action to help maintain the necessary historic separation between banking and commerce. The moratorium has been extended until January 31, 2008, preventing commercial firms (including retailers like Wal-Mart and Home Depot) from submitting applications while the Congress debates legislation to codify this policy into law. The Industrial Bank Holding Company Act of 2007 (H.R. 698), sponsored by Rep. Paul Gillmor (R-OH) and House Financial Services Chair Barney Frank (D-MA), was introduced last week.

Tax Cut Extenders Pass in Final Hours of 109th Congress

As one of its last orders of business, the 109th Congress approved a bill renewing several real-estate related tax relief provisions that had expired in December 2005. The Senate Finance Committee and House Ways and Means Committee reached an agreement that included:

The CCIM Institute, in conjunction with NAR, lobbied Congress throughout 2005 for these measures. The complete agreement worked out by the House and Senate committees can be found here. The bill will now head to the President, who is expected to sign it into law.

Regulators Issue Final Guidance for Commercial Real Estate Lending

December 8, 2006

On December 8, 2006, U.S. banking regulators issued guidance for “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices,” finalizing a rule proposed back in January of this year. While the final draft recognizes that financial institutions should be allowed to effectively manage their own risk by creating commercial real estate portfolios that are diverse, it remains restrictive and may dissuade banks, particularly smaller institutions, from making sound commercial real estate loans. Coupled with the regulations imposed by the Basel Capital Accords, this guidance could have a chilling effect on the amount of money available to the commercial real estate market. The CCIM Institute will continue to work with NAR to monitor the effects of this regulation, and ensure that proper oversight and review are given. A copy of the guidance, published jointly by the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation, is available here.

10 States Approve Ballot Initiatives Restricting Eminent Domain

August 2006

The reaction to the Supreme Court’s highly controversial Kelo decision continued this fall, as voters in a dozen states faced ballot initiatives concerning property rights and eminent domain authority. Florida, Georgia, North Dakota, Michigan, New Hampshire, and South Carolina approved amendments to their state constitutions restricting the use of eminent domain for the purposes of economic development and prohibiting the transfer of seized properties to private entities. Oregon and Arizona approved similar restrictions in the form of new and revised statutes. Nevada voters approved a “Property Owners Bill of Rights” amendment to their constitution, but it must be approved in a second successive election before it is duly ratified. Unfortunately, propositions in California and Idaho were rejected because many felt that the compensation requirements for public use takings would be too costly for taxpayers.

Senate Fails To Pass Tax Breaks, Estate Tax, and Minimum Wage Increase

August 3, 2006

On Wednesday evening, August 3, 2006, the Senate failed to pass a cloture motion to advance the Estate Tax and Extension of Tax Relief Act of 2006—H.R. 5970—which would extend expiring tax credits, repeal the sunset provision for the estate and generation-skipping taxes, and increase the minimum wage. The Senate vote on the motion was 56 to 42, short of the 60 votes needed to end debate and bring the bill to the Senate floor. The CCIM Institute strongly supports tax credits that would benefit commercial real estate brokers as well as reducing those affected by the estate tax.
The federal estate tax is scheduled to disappear in 2010 and return in 2011 at a 55% rate for individual estates over $1 million. This legislation would increase the unified credit against the estate tax to an exclusion of $5 million for individual estates and $10 million per couple, with rates of up to $25 million at 15% and amounts over $25 million at 30%. View the roll call of how each Senator voted.

Small Business Health Plans Update

May 11, 2006

The US Senate did not end the filibuster on the Small Business Health Plans (SBHPs) on Thursday, May 11, 2006. The cloture vote, the only procedure by which the Senate can vote to place a time limit on consideration of a bill and thereby overcome a filibuster, was 55-43, short of the 60 votes needed. As a result, the vote on S. 1955 will not occur at this time. It must be noted that this is the first time in 11 years that SBHP legislation was debated on the U.S. Senate floor. The Senate is divided by partisanship on this issue.

The CCIM Institute, in cooperation with the National Association of REALTORS®, is appreciative of members who contacted their Senators' offices asking them to support S. 1955. Their support got the bill to the floor for debate and increased its Senate support.

Senator Enzi who proposed the legislation will attempt to re-work the bill to attract the necessary support to win a future cloture vote.

Tax Relief Bill Passes US House and Senate

May 11, 2006

On May 11, 2006, the US Senate passed the Tax Relief Extension Reconciliation Act, H.R. 4297, by a vote of 54 to 44. The day prior the House approved the bill by a vote of 224 to 185. H.R. 4297 contains two key provisions that were strongly supported by the CCIM Institute because of their impact to commercial real estate professionals: extended tax cuts on dividends and capital gains for an additional two years (through 2010) and extends relief for the middle-class from the alternative minimum tax (AMT). The President supports the legislation and is expected to sign it.

OCC Rulings Permit Banks in Real Estate Development

December, 2005

In December, 2005, three large, national banks obtained permission from the Office of the Comptroller of the Currency (OCC) to go into commercial real estate. The OCC legal rulings expand the ability of banks to engage in real estate development, ownership, and merchant banking. These rulings, which contradict Gramm-Leach-Bliley Act, bring banks closer to real estate brokerage and management. The CCIM Institute, in cooperation with NAR, has successfully lobbied to keep banks out of real estate the last five years. The CCIM Institute and NAR will lobby Congress to block the OCC from issuing similar rulings in the future.

Congress Looks For Compromise on Tax Bills

December, 2005

Varying federal tax proposals were given consideration in recent months due to the sun-setting of various provisions. The week of December 5th, the U.S. House and Senate began to move on legislation as both chambers are working to reach a compromise and send a tax bill to the President before the end of the year. The House and Senate must find a resolution over the controversial House proposal to extend the 15% capital gains rate from sun-setting in 2008 to 2010. Commercial real estate professionals could be impacted by changes to the AMT, capital gains, leasehold improvements, and brownfields clean-up expenditures.

The House approved an individual AMT relief bill, H.R. 4096, on December 7, 2005, by a vote of 414-4. H.R. 4096 would prevent an increase of an estimated 15 to 20 million middle-class Americans from paying the AMT, or the Alternative Minimum Tax, in 2006. The AMT was enacted in 1970 to prevent the wealthy from using tax exemptions to avoid paying income taxes. In recent years it has begun to hit the middle-class because the tax does not allow for inflation. The bill could be moved in the Senate, or AMT relief could be included in a comprehensive tax bill. AMT relief will add $30 billion to the national deficit.

CCIM Institute supports a House proposal to extend the 15% capital gains rate, currently set to revert to 20% at the end of 2008, and extend it to the end of 2010. The proposal is controversial in the Senate where the issue has previously stalled major tax legislation.

Additional provisions supported by the CCIM Institute include a one-year extension of the 15-year life for leasehold improvements and a two-year extension of the deduction for brownfields clean-up expenditures.

U.S. House Passes Terrorism Reinsurance Bill

December 7, 2005

On Wednesday, December 7th, the U.S. House voted 371-49 in favor of the Terrorism Risk Insurance Act (TRIA) to extend a government backstop for terrorism insurance coverage. Before the legislation can move to the President for his approval, the House and Senate must first work out differences between two different versions: S. 467 and H.R. 4314. The Conference Committee is expected to meet before December 31st, when the current program expires.

The House version would extend TRIA for two years and expand coverage to group life insurance losses resulting from domestic terrorism. Further, it goes beyond the Senate in requiring coverage for nuclear, biological, chemical, and radioactive attacks. The White House favors the Senate version.

Congress Passes Do-Not-Fax Legislation

June 28, 2005

On Tuesday, June 28, 2005, the House approved S. 714, the Junk Fax Prevention Act. The bill has been sent to the President and awaits his signature. The legislation does not legalize unsolicited fax advertisements or solicitations but does allow for an established business relationship exception. Unsolicited commercial faxes may be sent without prior permission provided that:

The bill also clarifies that verbal permission to fax is an allowed means of granting express permission to fax and creates a new consumer right to opt-out of receiving future faxes. Senders will be required to include opt-out instructions on the first page of any commercial fax sent and must provide a no-cost means for consumers to opt-out.

Senders must comply with both the Federal law and with any applicable state laws. The Federal law will not allow an unsolicited fax to be sent where doing so is prohibited by state law.