Filtered by category: Legislative Clear Filter

Congressional Budget Deal Contains Big Policy Wins for Real Estate

Posted on February 20, 2018

The federal budget deal signed by President Trump contains a number of wins for real estate, including a temporary extension of federal flood insurance and extension of tax provisions that include relief from debt forgiveness, the deductibility of mortgage insurance premiums, and several energy-efficiency related provisions.

Flood Insurance

Extends the National Flood Insurance Program until March 23, giving lawmakers time to work on longer term reauthorization and reform legislation. It also adds $27 billion in mitigation and resiliency funds to address issues arising from last year's hurricanes. The extension makes $12 billion available under the Community Development Block Grant (CDBG) program to fund U.S. Army Corp of Engineers flood mitigation projects.

Click here to read more.

U.S. House Approves Brownfields Legislation

Posted on December 27, 2017

On November 30, 2017, the U.S. House of Representative passed H.R. 3017, the Brownfields Enhancement, Economic Redevelopment and Reauthorization Act of 2017, which would allow up to $250 million annually to clean up brownfield sites during 2018-2022. The legislation, sponsored by Congressman David McKinley (R-WV), seeks to assist communities in restoring the contaminated land to productive use.

Click here to read the full article.

Victory for CRE in Tax Reform

Posted on December 19, 2017

Last Friday, House and Senate negotiators came to an agreement on what is sure to be far-reaching reform of our existing tax code. The Tax Cuts and Jobs Act will be voted on this week and is expected to pass and be signed by President Trump.

This legislation, when passed, represents an important victory for NAIOP members and the commercial real estate industry. For many years, the debate surrounding tax reform gave rise to ideas that would have caused long-term damage to our industry, including the elimination of 1031 like-kind exchanges, ending capital gains tax treatment for real estate carried interests, and not allowing deductibility for interest payments on the financing for real estate projects.

The active involvement of NAIOP members and NAIOP's legislative team in this important public policy debate helped shape the final product to ensure that commercial real estate remains a vibrant contributor to our nation's economy. This tax reform legislation will:

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A message from NAIOP’s Legislative Team

Posted on December 8, 2017

NAIOP's legislative team is committed to keeping you informed throughout this historic tax reform legislative process with progress updates and what the legislation means for the commercial real estate development industry.

The Senate has taken a significant step toward achieving comprehensive tax reform by passing its version of the Tax Cuts and Jobs Act. This week, the House and Senate will meet in conference to iron out the differences between the two versions.

Both the Senate and House versions of the bill include matters important to our industry, including:

  • Maintaining Section 1031 like-kind exchanges for real estate.
  • Maintaining the deductibility of interest on debt for those involved in real property trades or businesses, including CRE development.
  • Preserving capital gains tax treatment of carried interest for real estate practitioners, but requiring that assets be held for three years or more. Senate amendments that would have eliminated capital gains treatment for carried interests completely were defeated.
  • Reducing corporate tax rates to 20 percent from the current 35 percent, not taking effect until 2019 in the Senate proposal.
  • Limiting state and local taxes deductions to property tax and capping it at $10,000; the original Senate proposal would have eliminated it completely.
  • Doubling the estate and gift tax exemption levels (with inflation adjustments) from the current $5.49 million for individuals or $10.98 million for married couples.  The Senate version would not completely repeal the estate tax; the House version phases it out entirely by 2024.

While the Senate amended its original version to bring it more in line with provisions included in the House bill, several important differences remain, including:  

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Tax Reform Measures Taking Shape in Congress

Posted on November 16, 2017

Last Thursday, the Senate Finance Committee released draft tax reform legislation that they will move through committee later this week. The Senate bill was released after the House Ways and Means Committee passed its version of tax reform earlier that day.

The Senate draft differs in some aspects from the initial House version, which NAIOP President and CEO Thomas Bisacquino detailed last week in terms of its impact on the commercial real estate industry. Overall, both bills continue taxing commercial real estate development and investment on an economic basis, recognizing the long-term, capital-intensive nature of the industry.

Importantly, both bills would preserve the use of 1031 exchanges and continue the deductibility of business interest expense for the commercial real estate industry. Both would also lower corporate tax rates to 20 percent. Under the Senate bill, however, the rate reduction would be delayed until 2019. Some other differences of note for commercial real estate include:

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Tax Reform's Effect on CRE

Posted on November 3, 2017

House leaders took a significant step forward with tax reform efforts on Thursday with the release of the Tax Cuts and Jobs Act, H.R.1, which includes an expansive set of proposed changes to the corporate and individual tax system.

As promised in my previous messages to you on this topic, our legislative team and I are committed to keeping you informed on tax reform developments affecting the commercial real estate industry. In this proposal:

  • Section 1031 like-kind exchanges are preserved for real estate.
  • Current tax treatment of carried interest is preserved.
  • Deductibility of interest on debt is maintained for those involved in real property trades or businesses, including commercial real estate development.
  • Current eight individual tax brackets are condensed into four brackets: 12 percent, 25 percent, 35 percent and 39.6 percent. The top rate of 39.6 percent would apply to income levels of more than $500,000 for an individual and $1 million for couples.
  • Corporate tax rates are reduced from the current 35 percent to 20 percent.
  • Pass-through businesses (such as partnerships and limited liability companies) will pay a new, lower top rate of 25 percent on their business income, subject to certain restrictions.
  • Alternative Minimum Tax (AMT) is eliminated.
  • Estate tax threshold is doubled (from the current $11.2 million for married couples), and phased out entirely by 2024. The step-up in cost basis on assets is retained.
  • Deduction for state and local taxes limited only to property tax and capped at $10,000. (Currently, state and local income and sales taxes can also be deducted.).
  • The Historic Preservation Tax Credit and New Markets Tax Credit are discontinued, with transition periods provided. As legislation moves forward in the House and Senate, NAIOP will advocate for the continuation of these important incentives.

Starting next Monday, the House Ways & Means Committee will begin marking up the legislation. The president has expressed his desire to accelerate tax reform and sign a bill before the end of the year.

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Get Out and Vote! - REBIC Election Guide

Posted on October 23, 2017

REBIC has put together an Election Guide to help you cast your vote for candidates who support the real estate industry.

See which candidates REBIC has endorsed

Tax Reform Provisions Important to CRE

Posted on October 9, 2017

Below are some details on the recently released Unified Framework for Fixing Our Broken Tax Code, in which the Trump administration and congressional Republican leadership have outlined chief areas of agreement for tax reform legislation.

While House and Senate GOP leaders and members of President Trump's economic team left many details of the legislation for the tax-writing committees in both chambers to resolve, there are several agreed-upon major provisions of interest to CRE:

  • Reduction of the number of tax brackets from seven to three: 12, 25 and 35 percent, leaving open the possibility of an additional higher bracket for the highest-income taxpayers to ensure the share of taxes paid by the wealthy remain the same.
  • Reduction of corporate tax rates to a maximum of 20 percent, down from the current rate of 35 percent.
  • A top rate of 25 percent applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations (pass-through entities). The framework contemplates that the committees will adopt measures to prevent any recharacterization of personal income taxed at ordinary rates into business income taxed at the lower pass-through rate, done solely for purposes of avoiding taxation.
  • Immediate expensing for new investments in capital assets, not to include structures, but leaving open the possibility for increased expensing for small businesses and modernizing current depreciation schedules for assets not provided immediate expensing.
  • Partial limitation for deductibility of interest expenses for C corporations, asking the committees to consider the appropriate levels of deductibility for other types of businesses.
  • Elimination of the Alternative Minimum Tax.
  • Repeal of the Estate Tax.

We believe that these provisions will spur stronger economic growth and job creation, benefitting our industry in the long term, but many questions remain unanswered.

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Budget First, Tax Reform Next

Posted on October 6, 2017

Lawmakers in the House and Senate say they’re determined to pass a sweeping tax reform bill this year. But first, for procedural reasons, both houses need to pass a Fiscal Year 2018 budget. FY 2018 began on October 1.

Republicans on the Senate Budget Committee released a draft budget that it says would balance within nine years. But committee members haven’t explained where they would find $5 trillion in spending cuts. That draft budget will be voted on by the full Budget Committee this week, then go to the floor of the Senate later this month. The House drafted a budget plan over the summer and plans to hold a vote on Thursday.

After the two chambers come to an agreement on budgetary spending levels, lawmakers would be able to turn to tax reform, which is a key priority for NAIOP. Throughout the year, NAIOP has met with lawmakers and Hill staffers to deliver the message that all federal spending and tax reform bills should protect the interests of the CRE industry.

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Busy Time for Tax Reform Writers

Posted on September 25, 2017

Lawmakers are focusing their attention on tax reform this month. The Senate Finance Committee will hold a hearing this week to collect testimony about business tax reform proposals. That follows a similar session last week to discuss individual reform.

For his part, House Speaker Paul Ryan promises to release details of a tax reform plan by September 25. “The outline will represent a consensus between the two tax-writing committees in Congress, the House Ways and Means Committee and the Senate Finance Committee, and the Trump administration,” Bloomberg reported.

President Donald Trump says the final tax measure should draw bipartisan support, and he’s met with leading Democrats including Sen. Charles Schumer and House Minority Leader Nancy Pelosi to discuss taxes and other issues. “More and more, we’re trying to work things out together,” Trump said during a meeting with moderates from both parties.

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Tax Reform is Imminent: NAIOP Update

Posted on September 21, 2017

With 24/7 coverage of ongoing global events dominating the news cycle, it's easy to lose sight of what's happening with U.S. legislation critical to our industry.

Tax reform negotiations are imminent: House Speaker Paul Ryan has promised to release an outline of a tax reform plan the week of September 25, followed by negotiations between the House, Senate, and administration.

This is the first major tax reform in more than three decades, and the stakes for commercial real estate are high. We have been closely working with Congress to ensure legislative programs and incentives critical to our industry are carefully considered throughout the negotiation process, including:

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Senate Approves Extension of National Flood Insurance Program

Posted on September 12, 2017

On Thursday, September 7, the United States Senate voted to pass a three-month extension of the National Flood Insurance Program (NFIP). The House of Representatives is expected to pass the legislation on Friday, September 8, 2017, and the President is expected to quickly sign the bill into law later in the day.

This legislation ensures that the NFIP will not lapse on September 30, 2017, and will be extended until December 8, 2017.

Source: National Association of Realtors® (NAR)

The Uncertain Future of Carried Interest Tax

Posted on September 6, 2017

The future of tax reform remains unclear as Labor Day approaches. However, the White House is indicating it plans to step back and allow lawmakers to take the lead this fall. “The White House does not plan to release its own version of a tax reform plan and will instead leave that to the congressional leadership and the major tax-writing committees,” Politico reports, citing an administration source.

One issue that may be on the table is the current tax treatment of carried interest as capital gains.

During an event in Louisville with Senate Majority Leader Mitch McConnell, Treasury Secretary Steven Mnuchin hinted the administration might be open to preserving the current status of carried interest for certain activities that result in long-term capital investment and assets. “We will close the loophole for hedge funds in carried interest. What we are focused on is there are many other types of funds that do create jobs and we want to make sure we don’t discourage investment,” he said.

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Early Voting Now Underway for Charlotte’s Primary Election!

Posted on September 6, 2017

Early Voting Now Underway for Charlotte’s Primary Election! Early Voting is now underway in the City of Charlotte’s September 12th Primary Election, with nine convenient polling sites around town. Click here to find out where and when you can vote. To see which candidates support the priorities of the real estate industry, click here. Completed candidate questionnaires are posted on the REBIC website.

Executive Order Seeks to Eliminate Red Tape for Infrastructure Projects

Posted on August 23, 2017

In a press conference last Tuesday, President Donald Trump announced his latest executive order, which addressed infrastructure permitting. Though the event ultimately devolved into a controversial discussion about the tragic events in Charlottesville, the order offers some insight into the administration’s strategy on infrastructure policy.

The executive order, entitled “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure,” is aimed at expediting permitting for infrastructure projects. It broadly tasks federal agencies with proposing ways to reduce average permitting time from the current average of seven years down to two years, and assigns an agency to each future project, placing them in charge of navigating the bureaucratic process.  To demonstrate its inherent complexity, Trump unveiled a six-foot long graphic depicting the permitting process at the press conference.

Trump has often spoken of a $1 trillion infrastructure plan, though none has materialized as of yet. His budget request proposed a mix of $200 billion in tax credits and direct funds, but it remains unclear whether this could spur enough private investment to reach $1 trillion. To complicate things further, the president recently announced that he would scrap plans to create an infrastructure advisory panel, which would have allowed the private sector to share input. 

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NAIOP-backed Bill Passes House Committee

Posted August 9, 2017

The House Transportation and Infrastructure Committee last week voted unanimously to advance H.R. 1758, the Brownfields Reauthorization Act of 2017. As its name suggests, the legislation would formally reauthorize the brownfields program for the first time since 2006, when authorization for the program expired. Congress had continued to appropriate funds despite a lack of authorization, but at varying and often decreased levels. Reauthorization provides supporters of brownfields redevelopment efforts with added leverage in future funding fights. H.R. 1758 makes important adjustments to the program, giving states added flexibility in spending brownfields grant funds, and expanding the universe of eligible grant recipients to include non-profit groups.

Administered by the Environmental Protection Agency, the brownfields program assists states in the cleanup and remediation of properties where contamination is suspected. The fear of unknown and potentially exorbitant costs – particularly those stemming from liability – at these sites often forces developers to look elsewhere for new opportunities. As a result, brownfields go untouched, which can depress surrounding property values and deprive local communities of much-needed tax revenue. Remediation of brownfields sites can yield substantial returns on taxpayers’ investment. Since its inception, the brownfields program has created 10 jobs for every redeveloped acre, and has leveraged $18 in private and state development funds for every $1 of taxpayer-funded brownfields grants.

NAIOP joined several other members of the real estate community in support of the bipartisan legislation, and will continue to advocate for reauthorization of and funding for the brownfields program as the bill is considered by the full House of Representatives.

Congress, Make Tax Reform Take the Long View

Posted on August 8, 2017

Written by Thomas J. Bisacquino

The world today moves faster than it ever has before. Smartphones provide immediate access to people and information. Retailers deliver with blinding speed, often the same day. But not everything should, or can, be immediate. That’s true in tax policy, and in commercial real estate (CRE).

In the CRE industry, owners and operators often must wait years, even decades, to recoup their investments. Meanwhile, they keep pouring further spending into their properties to keep them up to code and to deliver the perks tenants demand. CRE doesn’t deliver immediate rewards, but forces owners to make the necessary long-term investments that will pay off for them and the economy.

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EPA Releases Rule to Withdraw WOTUS

Posted on August 8, 2017

IMG_0072Fulfilling a portion of an executive order by President Donald Trump, the EPA and U.S. Army Corps of Engineers have released a proposal to rescind the Waters of the United States rule that expanded federal jurisdiction under the Clean Water Act.

The proposal (link is external) published in the Federal Register on Thursday, July 28 would nix the 2015 WOTUS rule and reinstate the definition of the streams and wetlands subject to federal oversight under the act that existed prior to its finalization.

The publication of the proposal constitutes the first part of a two-step process to meet the Feb. 28 executive order directing the rule’s review. The second step will be “a separate notice and comment rulemaking that will consider developing a new definition” for the extent of federal jurisdiction under the act, say the EPA and Corps in a pre-publication copy of the proposed rescission.

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House Hopes to Pass Budget Plan Before Recess

Posted on July 28, 2017

Republican leaders are trying to pass a budget before the House of Representatives goes on recess at the end of the week. The proposal would “set the stage for a potential $203 billion rollback of financial industry regulations, federal employee benefits, welfare spending and more,” The Washington Post reported.

The bill passed the Budget Committee last week. The GOP calls it “a plan for fiscal responsibility,” and says it would balance the budget without raising taxes or cutting Social Security. However, the plan is facing a tough battle; some parts of it are opposed by House conservatives, other parts by Republican moderates.

The bill aims to do more than set spending priorities. It would also be a stepping stone lawmakers could use in the Senate to avoid a filibuster and advance one of President Donald Trump’s top issues. “This is the tax reform budget,” Ways and Means Chairman Kevin Brady (R-TX) said. “It’s critical that our party in the House comes together to pass this budget.”

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Senate Returns to Health Care Debate, Potential Energy Legislation

Posted on July 14, 2017

Congress returns from their July 4 recess this week, with the Senate consumed by the debate over their version of healthcare legislation meant to repeal and replace the Affordable Care Act. While Senate Majority Leader Mitch McConnell had hoped to pass a healthcare bill prior to the July 4 recess, he will now will try to accomplish that prior to the six-week summer recess beginning in August. Senator McConnell has begun to hint that goal may not be attainable, however, because of divisions within the Republican caucus.

The delay by the Senate on healthcare has prompted Republican leadership to try to fast-track bipartisan legislation, including NAIOP-supported energy legislation governing the development of energy-efficiency codes for commercial buildings. The bill, S. 1460, the Energy and Natural Resources Act of 2017, originally sponsored by Senators Rob Portman (R-OH) and Jeanne Shaheen (D-NH), could bypass the committee process and go directly to a floor vote. NAIOP worked with Senate staff to include language requiring a rule-making process for industry input, and that codes be economically and technically feasible. The prior Portman-Shaheen bill failed to advance when negotiations stalled in the last Congress.

Having passed their version of a healthcare bill, the House of Representatives plans to continue moving toward comprehensive tax reform legislation. This week, the House Ways and Means Subcommittee on Tax Policy, chaired by Representative Peter Roskam (R-IL), will hold a hearing on July 13 on the impact of tax reform on small business. The hearing will be the third held by the committee as it moves to develop a bill that most anticipate will be ready this September.