CCIM on the Hill

 

While several legislative issues important to commercial real estate professionals recently received short-term fixes in the U.S. Capitol, CCIM advocates are waiting to see if the results of November's midterm elections could aid in moving some along to more permanent solutions.

 

High among those issues are the Section 179D commercial buildings energy efficiency tax deduction and the National Flood Insurance Program, says Chad Gleason, CCIM, 2018 vice chair of CCIM's Government Affairs Committee. The 179D deduction was extended to include projects completed through 2017; the NFIP received a four-month extension signed by President Trump on July 31.

Gleason, who is executive managing director of SVN in Bellevue, Wash., talked to CIRE about both topics as well as other pending legislative issues.

CIRE: What is the 179D deduction?

Gleason: The 179D deduction applies to buildings where energy-efficient components have been installed. Deductions are available to building owners and leasees for making eligible energy-efficient improvements to commercial buildings, including office, retail, industrial, apartments, and warehouses. The deduction is available to both new construction and retrofits. It was originally allowed for projects completed through 2016 only; last summer, Rep. Dave Reichert, from here in Seattle, worked with Oregon Rep. Earl Blumenauer to introduce legislation to make the deduction permanent.

When the budget was passed in 2018, 179D was retroactively extended for projects completed through the end of 2017. Since that's just a short-term fix, we're looking for something long term, and we're just not getting that kind of commitment from anyone.

CIRE: Where does the National Flood Insurance Program stand?

Gleason: That has been a big deal. We've been running with short-term extensions. Last November, the House passed the 21st Century Flood Reform Act, which addresses much-needed reforms and reauthorizes the program for five years. We would like to see this type of reform legislation signed into law. President Trump signed a short-term extension on July 31 - it expires Nov. 30 - but these extensions are critical so the program  doesn't collapse.

CCIM Institute would like to see common-sense reforms to the program to make it more responsive to the needs of businesses in flood zones. This would include offering expanded coverage options for business interruptions and multiple structures, using new technologies to improve the accuracy of Federal Emergency Management Agency mapping, and improving mitigations options and access to FEMA grant money for commercial and multifamily structures.

With the NFIP, they're also trying to update the flood maps so they can be more accurate and fair to some of the businesses - businesses that might be randomly mapped in a 100-year flood plain or one that only floods periodically. They may never flood, yet they have to pay the excessive insurance cost. That's just not fair to those businesses.

The program is extended through the end of November and then the discussion begins again. Even if it's short term, we're happy to see it extended. We definitely do not want it to collapse. If it did, that would cause quite a bit of grief for the commercial real estate community.

CIRE: CCIMs are advocating for net neutrality legislation. Where does that stand?

Gleason: Net neutrality rules were repealed by the Federal Communications Commission earlier this year. Net neutrality is important to small businesses that depend on open internet access to run their businesses and serve their customers. It's a fairness issue. Being able to control where you show up and having a fair shake in Google searches is critical. Otherwise, it's just a monopoly. Having net neutrality rules removed could make it very difficult for small real estate firms to compete with larger firms on the internet.

Now there's more activity at the state level. As of Oct. 1,  legislators in 30 states have introduced more than 72 bills requiring internet service providers to ensure various net neutrality principles, and three states - Washington, Oregon, and Vermont - have enacted legislation. Many states are urging Congress to restate and preserve net neutrality.

CIRE: How have the November elections affected advocacy in Congress?

Gleason: We're in transition. As you can see, there are a lot of short-term pushes heading into the election. People are asking “What happens if Democrats take over the Senate? What will that mean for some of our initiatives? Or will things stay status quo?” The truth is, we don't know. As CCIMs, we are used to dealing with risk, and sometimes not knowing is more dangerous than knowing. We've been noticing a bit of a stall here in sales. People are saying, “Let's just wait.”

Sarah Hoban

Sarah Hoban is a business writer based in Chicago.

CIRE November/December 2018 Cover