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Volume VI, Number 3 - June 2001In this bulletin: Related Topics: Supplement Federal Reserve Board/Department of Treasury Proposed Rule StatusThe comment period for the Federal Reserve Board/Department of Treasury (Agencies) proposed rule allowing banks to engage in real estate brokerage and management activities ended on May 1, 2001 with 41,095 letters and e-mails received and recorded by the Federal Reserve. In addition to those letters and e-mails sent by REALTORS®, CCIMs, CPMs and federal banking institutions, a bipartisan letter was sent to the Agencies with 47 Congressional signatures. This letter expressed concern with the Agencies exploring the mixture of banking and commerce in detail.On May 2, 2001, NAR President Richard Mendenhall, CCIM, presented the REALTORS® case against the Agency’s regulatory proposal before the House Financial Services Financial Institutions Subcommittee. Chairman Spencer Bachus (R-AL) convened the hearing to explore the issues raised by the Agencies. If you would like to read President Mendenhall’s testimony and that of other witnesses, please go to http://www.house.gov/financialservices/050201me.pdf . Due to the additional questions and concerns regarding congressional intent that came up during debate in the May 2nd hearing, Reps. Bob Riley (R-AL) and Paul Kanjorski (D-PA) are seeking consignors for a letter addressed to House Financial Services Committee Chairman Mike Oxley (R-OH) and Financial Institutions Subcommittee Chairman Spencer Bachas (R-AL) requesting additional hearings on the Agency’s proposed rule. The letter currently has over 60 signatures and NAR will be working with the state and local REALTORS® during the month of June (before Congress adjourns for the July 4th recess) to encourage additional members of Congress to sign the letter. If you are interested in assisting NAR and the CCIM Institute with these efforts, please contact Charles Achilles at cachille@irem.org or at (312) 329-6020. The letter will be delivered to Reps. Oxley and Bachus after Congress reconvenes. CCIM Institute Letter to Federal Reserve and Department of TreasuryBefore the May 1 deadline, the CCIM Institute submitted a letter of commentary to the Federal Reserve and the Department of Treasury regarding their proposed rule allowing banks to engage in real estate brokerage and management activities. The letter included talking points developed by CCIMs in response to the questions posed by the agencies in regard to whether real estate activities are deemed “financial” in nature. These talking points included the following:
The CCIM Institute will continue to monitor the progress of this proposed rule and will continue to work with NAR and their efforts as well. Senate and House Agree on Tax Relief PackageIn late May, the House and Senate gave final approval to the $1.35 trillion tax cut package which is the largest tax cut approved by Congress in two decades. Some of the tax cuts will be retroactive, allowing the Treasury Department to begin sending refund checks to taxpayers this summer (single taxpayers will receive up to $300 each, while heads of households will receive up to $500 and married couples up to $600). The Treasury will begin mailing the checks in the third week of July (issued in order of the last two digits of a person’s Social Security number starting with 00) and hopes to have them all distributed by early October. Taxpayers who filed their 2000 returns will be eligible.The key provisions of the bill are as follows: Estate and Gift Taxes – Estate taxes are reduced gradually until their repeal in 2010. Gift taxes will remain, but the top rate drops to 45 percent. Lowest Income Tax Bracket – Lowest rate drops to 10 percent next year. This year, a one-time credit will be paid by check. The rate applies to the first $6,000 of a single filer’s taxable income and the first $12,000 of a married couple’s income. Income Tax Rates – Most tax rates will drop by about 3 percentage points until 2006. Beginning in 2006, income limits on itemized deductions will rise, and phase-outs of personal exemptions will gradually be repealed. Child Tax Credit – The credit increases to $600 per child this year, rising gradually to $1,000 by 2010. Taxpayers with earned income above $10,000 may qualify for a refund if the credit is larger than their tax due. Married Couples – The standard deduction for married couples’ filing jointly gradually becomes twice that of singles. The marriage penalty will be further mitigated by lowering marginal tax rates, which will reduce the portion of the marriage penalty that is derived from the current rate structure. The CCIM Institute will continue to work with NAR in lobbying for business tax relief during the 107th Congress. New Position and Amendments Adopted at CCIM Conference in Denver The CCIM Institute Legislative Affairs Committee and subsequently the Governing Council adopted the following new statement of policy: CCIM Institute Statement of Policy on License ReciprocityThe CCIM Institute urges state legislatures to pass Cooperation Agreement statutes allowing out-of-state licensees (OSLs) to perform licensed real estate services regarding the lease, purchase, sale or other transfer of commercial real property (any real estate, other than real estate containing four or fewer residential units, which is not intended for residential purposes, and specifically raw land) within their states.A Cooperation Agreement shall allow an OSL (or any licensee affiliated with the OSL) to enter a Transaction State (state in which a transaction is taking place) and perform licensed activities in that state or perform such licensed activities from outside the Transaction State, only if the OSL enters into a written cooperation agreement with a licensee of the Transaction State. That agreement shall require that all acts of the OSL within or outside the Transaction State, in furtherance of the real estate transaction, will be in close cooperation with the in-state licensee and will comply with all Transaction State laws. The cooperation agreement should: (a) set forth the payment obligations of the parties; (b) set forth the OSL’s consent to the jurisdiction of the Transaction State; and (c) allow the OSL to bring suit to enforce his or her right to payment under the cooperation agreement. The cooperation agreement can be filed with the Transaction State’s real estate license commission, or it can simply serve as an enforceable contract among the licensees and the parties to the transaction. In addition to this new statement of policy, the committee adopted amendments to the Energy and Utility Deregulation statements of policy. The new statements read as follows: CCIM Institute Statement of Policy on EnergyThe free market system is the most appropriate means of attaining energy conservation and production goals. Increased conservation and domestic expansion are essential to our nation's security and economic prosperity. The nation should strive for greater energy self-sufficiency through further development of existing sources, decontrol of energy prices and the development of all new sources of domestic energy to reduce our dependence on foreign energy supplies.We support the concept of conservation policies and the use of energy efficient technology. However, we strongly oppose mandatory national standards for building energy conservation. Specifically, CCIM Institute opposes mandatory installation, purchase, or usage guidelines for energy conserving products. Instead, we encourage positive incentives for conservation activities such as energy tax credits and an increased emphasis on energy efficient technology by the nation’s building industry. While states should carefully control local deregulation of energy, the federal government also has a role to play with a National energy policy. CCIM Institute believes the federal government should work to identify reliable sources of domestic and renewable energy, and promote development of these energy sources by reducing regulatory burdens and price Restrictions. Furthermore, in the absence of competitive market forces, the federal government may need to step-in to protect consumers. In this growing economy, it is vital that consumers (both individual and business) have access to reliable, reasonably priced energy. CCIM Institute encourages its members to conserve energy and reduce demand in their facilities. We encourage voluntary participation in programs such as EPA’s Building Program, Green Lights Program, and Energy Star Program. CCIM Institute Statement of Policy on Utility DeregulationThe CCIM Institute appreciates the need to restructure the electric and gas power industries and believes it must be done carefully to ensure that all parties involved (present providers, future providers and all consumer types, including multifamily and commercial property owners) are treated fairly in the deregulation of the utility.The CCIM Institute believes that deregulation of our electric and gas utilities should be done at the state level, not the federal level, to ensure that the individual consumers and businesses will have the greatest representation in determining the impact on their particular area. Energy system reliability should not be compromised by deregulation, therefore, adequate safeguards should be included in deregulation plans to ensure the integrity of the generation, transmission, and local delivery systems. Deregulation should also allow for long-term energy contracts, to all consumers to lock in prices on utilities. The costs of deregulation should not be borne by the consumer. Although some states and municipalities could feel some loss in tax revenue, any shortfall resulting from deregulation should not be passed onto the property owner in the form of higher property taxes or other taxes or fees. Since electricity deregulation would not allow electricity producers to recover capital costs (previously considered stranded costs), recovery of these costs should be paid for by all ratepayer categories on an equal basis. Deregulation plans should also allow power production facilities to retain their ownership rights, when they meet deregulation requirements. Lastly, deregulation plans should include price controls so that energy costs cannot be substantially raised simply as a result of deregulation. Bankruptcy Bill Gets a PushThe House and Senate have both passed versions of bankruptcy legislation and the bills have been stalled in conference committee for months. As a result of the Democratic takeover of the Senate, the new Senate majority leader, Thomas A. Daschle of South Dakota, has said the he will act quickly to organize a conference committee to move a bill to President Bush’s desk. President Bush has already signaled that he will sign whatever bill is agreed upon by the House and Senate.The CCIM Institute has three provisions in the bankruptcy bill dealing with eliminating the cap on single asset bankruptcies, providing protections for shopping center owners when retailers file for bankruptcy and closing the loophole that allows for residential tenant abuse of the Code to avoid eviction. The language on the rental tenant issue was seriously damaged during committee and on the floor of the Senate; therefore, the CCIM Institute is urging members of Congress to support the House language when the bill goes to conference. The other provisions remain intact in both bills. Model Agreement for Telecommunications Deal ReleasedIn late May, the Real Access Alliance, of which IREM and NAR are founding members, released the final version of a model license agreement for commercial office space. The prototype contract is designed to speed up the delivery of telecommunications services to office building tenants. The agreement fulfills a promise made by the Alliance to the Federal Communications Commission (FCC) last year. Copies of the agreement are available at http://www.realaccess.org/.Brownfields Slow to Move in the HouseWhen the Senate passed S. 350 by a 99-0 vote in April, it was expected the House would be eager to take up the issue. However, to date no companion bill has been introduced in the House. There are several brownfields bills before the House, but none are similar to the measure passed in the Senate. S. 350 would amend the Comprehensive Environmental Response Compensation and Liability Act of 1980 to promote the cleanup and reuse of brownfields, to provide financial assistance for brownfields revitalization, and to enhance State response programs. The bill clarifies that prospective purchaser, innocent landowners, and contiguous property owners are not responsible for paying cleanup costs. This legislation also provides finality by precluding EPA from taking an action at a site being addressed under a state cleanup program unless there is an “imminent and substantial endangerment” to public health or the environment and additional work needs to be done.HUD IssuesOn May 24, 2001, HUD published a final rule that implements requirements included in the Quality Housing and Work Responsibility Act (QHWRA), relating to better screening and denial of housing to individuals and families with specific types of criminal activity in their history. The rule also requires eviction for the same. Targeted individuals are: current illegal drug users, sex offenders, or persons who have criminal records related to drugs or violence. The requirements apply to both public and privately assisted housing. PHAs and State Housing Finance Agencies have been tasked with providing background checks and similar information. This rule is effective June 25, 2001. A copy of the notice is available at http://www.hudclips.org.The Bush Administration has proposed $30.4 billion for HUD’s FY02 budget, a 6.6% increase over FY01. The House Appropriators are expected to increase this amount by another $1.1 billion. The budget request includes $15.1 billion for Section 8 contract renewals, as well as 34,000 new vouchers. In a controversial move, the Administration has proposed eliminating the Drug Elimination Grant program. Many in Congress question this move and there is expected to be a great deal of contention over this issue. The Bush proposal also includes a significant cut in the Public Housing Capital Fund (reduced by $700m). The Administration believes that the huge backlog of unspent funds will accommodate any capital needs for FY02. Hearings have just begun in the House and the Senate is expected to start their hearings in the coming weeks. On May 24, 2001, the Senate approved four HUD appointees. John Weicher will serve as Assistant Secretary for Housing/FHA Commissioner. Weicher has extensive experience at HUD, serving under Jack Kemp, as well as holding positions in HUD during the Ford and Sr. Bush administrations. Alphonso R. Jackson will become the Deputy Secretary of HUD. Jackson has administered three housing authorities – in Dallas, St. Louis, and Washington D.C. Richard Houser, former White House Counsel for Reagan will serve as General Counsel at HUD. Lastly, Ray Bernadi, the Mayor of Syracuse, NY, has been selected as the Assistant Secretary for Community Planning and Development. With the change in the Senate, it is expected additional Bush nominees will have a tougher time making it through the appointment process. Energy Price Controls for CaliforniaCommissioners from the Federal Energy Regulatory Commission agreed on April 25 to impose price controls on electric sales in California. They agreed to a price cap that would go into effect whenever electric power supply in the state falls to within 7.5 percent of demand. These price controls will go into effect on May 1, 2001 and remain in place for one year. This price cap may benefit those real estate industries in California who have reported that electric power price volatility is slowing their business.CCIM Institute Legislative Leadership Hal Maxfield, CCIM, Chair, Legislative Affairs Committee Sig Buster, III, CCIM, Vice Chair, Legislative Affairs Committee CCIM Institute Legislative Staff Chuck Achilles, IREM VP Legislative & Research, 312.329.6020, cachille@irem.org back to the top ^ |