Legislative Outlook 2016

With the election looming, will anything get done in Congress?

While average working Americans will be required to report to their jobs 251 of the 366 days in 2016, our U.S. representatives scheduled themselves to be in session for 111 days. This is the fewest House workdays since 2006 when the gavel sounded on 101 days.

Both chambers ordinarily recess each summer in August. However, House GOP leaders have decided to adjourn early on July 15 and not return until September 6. The House will then be in session until September 30, and adjourn until November 14, after the elections.

The Senate is running on a similar summer schedule, with its recess formally running from July 18 through September. Senators are scheduled to be in session during the fall a bit longer than the House, with the Senate's target pre-election adjournment date set for October 7. The chamber will also return November 14 after the elections.

What will your elected officials do with this free time?  They will attempt to secure their jobs for 2017. Members of Congress plan to spend more time campaigning in district and meeting with constituents. They will also attend their party's national convention, where Democrats and Republicans will choose their final candidates for president and vice president.

With an abridged congressional schedule, will this be a productive year in Congress?

Tax Reform

Rep. Kevin Brady (R-Texas), newly elected chairman of the tax writing House Ways and Means Committee believes so. Brady said he would use the committee gavel to advance “a pro-growth agenda to get this country back on track. This includes taking real steps toward fixing this broken tax code, reforming welfare, saving Social Security and Medicare for the long term, and enlarging America's economic freedom to trade.”

Brady intends to immediately push a bipartisan package of permanent tax provisions. CCIM Institute has advocated for the permanent reinstatement of 15-year leasehold improvement depreciation and energy deduction 179D, which have historically been allowed to expire and be reauthorized retroactively on an annual basis.

“One of the immediate steps to overall tax reform is making permanent key provisions in the temporary extenders,” Brady said. “That will be our first priority.”

Brady also intends to conclude discussions on international tax reform saying, “It could be a significant down payment on overall tax reform, done right, allow U.S. companies to bring those stranded profits home and reinvest in the U.S. ...”

Lease Accounting

While Congress may divert some of its attention from legislating, regulatory bodies are steadily finalizing rules.

The Financial Accounting Standards Board, or FASB, voted 6-1 to issue a final standard on its lease accounting reform project in early 2016. The latest reports from FASB indicate that under the new standard many companies will be forced to capitalize operating leases, including them as assets and liabilities on their balance sheets. The proposed change could “swell balance sheets by as much as $2 trillion and make some companies look more leveraged to the average investor than they do now,” according to The Wall Street Journal.

For public companies, the upcoming standard will be effective for fiscal years beginning after Dec. 15, 2015. For private companies, the standard will be effective for annual periods beginning after Dec. 1, 2019.  Early adoption will be permitted upon issuance of the standard. [For more on the FASB lease accounting changes, see Financing Focus]

Basel III

In October 2014, U.S. banking regulators approved final Dodd-Frank risk-retention rules for commercial mortgage-backed securities that will go into effect at the end of 2016. Under the rule, banks that package loans into securities must retain 5 percent of the credit risk on their balance sheets. The potential impact on the market is unclear, but the requirement is expected to fall largely on B-piece buyers.

CCIMs Support RPAC

Six CCIM designees were inducted into the Realtors Political Action Committee Hall of Fame, which recognizes dedicated Realtors whose RPAC investments total an aggregate lifetime amount of $25,000 or greater.

RPAC enables Realtors to support candidates that back the legislative issues that are important to their profession and livelihood.

In 2015, approximately 1,870 CCIM members invested in RPAC with 117 CCIMs qualifying as RPAC Major Investors. RPAC’s Major Investor Program consists of an elite and passionate group of investors who partner with NAR to shape the political future of the real estate industry.  To qualify as an RPAC Major Investor, members must make an annual investment of $1,000 or more.

Visit the NAR’s Realtor Action Center at www.realtoractioncenter.com to learn more about and contribute to RPAC.

RPAC Hall of Fame, 2015 CCIM Members

Robert E. Carter, CCIM

James L. Helsel Jr., CCIM ($50,000 level)

George P. Richards, CCIM

Thomas A. Riley, CCIM

John D. Rinehart Sr., CCIM

Matthew Ritchie, CCIM


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