Volume IX, Number 4 - October 2004

In this bulletin:

•	CCIM Capitol Hill Visits - Save the Date and Take Your Skills to the Hill!
•	Important Leasehold Improvement Victory!
•	Tax Cuts Extended
•	Real Estate Mortgage Investment Conduits (REMIC)
•	Terrorism Risk Insurance - Close to Extension!
•	Banks in Real Estate Battle Continues
•	Do-Not-Fax Rule Update
•	Brownfields Proposed Rule
•	Consumer Credit Reports
•	Senate Appropriates Flood Map Funding
•	Real Estate Find Telecomm Victory Again
•	Additional Committment Authority Given to FHA Multifamily Program

CCIM Capitol Hill Visits - Save the Date and Take Your Skills to the Hill!

The 2005 CCIM Capitol Hill Visits will take place on Wednesday, April 20, 2005 in Washington, D.C. immediately following the CCIM Institute Spring Business Meetings in Chantilly, VA. Join your CCIM and IREM colleagues for this exciting opportunity to educate and exchange ideas with your Senators and Representatives on commercial real estate issues.

For more information or to register, contact Charles Achilles at cachille@irem.org or at (312) 329-6020.

Tenant Leasehold Improvement Victory!

H.R. 4520, a controversial overhaul of the tax rules governing taxation of multinational corporations, was approved by the conference committee, and includes the tenant leasehold improvement provision that CCIMs lobbied for on Capitol Hill last April. The provision is a temporary reduction of the cost recovery period for leasehold improvements from 39 to 15 years (effective in 2004 and 2005). Congress is expected debate the conference report the first full week of October and the Institute will send an update to the membership with the results.

Tax Cuts Extended

On October 4, President Bush signed the “Working Families Tax Relief Act of 2004” into law. Part of this new law will extend three major middle class tax provisions of the 2001 and 2003 Bush tax cuts through 2009. They are as follows:

•	$1000 per child tax credit;
•	Expanded 10% tax bracket;
•	Marriage penalty relief (the standard deduction for a married couple will continue to be an amount that is double the standard deduction for a single person.) Taxpayers who itemize deductions are not affected by this change.

In addition, Congress extended more than twenty provisions that were supposed to expire at the end of 2003 or earlier this year. Included among them was a one-year extension of the brownfields cleanup expense deduction if incurred in the year the expenditure is made and a one-year extension of the alternative minimum tax (AMT) at the current exemption level.

Real Estate Mortgage Investment Conduits (REMIC)

The Real Estate Mortgage Investment Conduit (REMIC) Coalition, which includes the CCIM Institute as an affiliate of NAR, the Mortgage Bankers Association and the Real Estate Roundtable, indicates that there is a possibility of legislative action on REMICs this year. There is a possibility that one of the Senate REMIC bill sponsors might seek to add legislative language to the international tax bill that went to conference in late September. If this happens, the joint committee on taxation will report that REMIC language does not carry a significant fiscal impact. This would increase the likelihood that REMIC language would be incorporated in the final bill.

The REMIC legislation, H.R. 4113/S. 2422, eases the rules governing loan modifications that have had a dampening effect on the securitization of commercial loans. For more information on REMIC and other policy issues affecting the commercial real estate industry, go to the CCIM Institute Statement of Public Policy at:

https://www.ccim.com/members/govaffairs/pdf/master_SOP_4_04.pdf

Terrorism Risk Insurance - Close to Extension!

On September 29, the House Financial Services Committee approved H.R. 4634, the “Terrorism Risk Insurance Extension Act of 2004”, a bill that would extend the provisions of the Terrorism Risk Insurance Act (TRIA) for two additional years plus add group life insurance coverage to the program. CCIM Institute is a member of the Coalition to Insure Against Terrorism (CIAT) which has been instrumental in getting H.R. 4634 the attention it deserves in the House; however, Senator Richard Shelby, Chair of the Senate Banking Committee, has indicated that he would interested in taking up this legislation in the next legislative session after gathering more information and research.

Fortunately, a new study was published in September that may persuade Senator Shelby to reconsider action yet this year. Professor R. Glenn Hubbard, former chairman of the White House Council of Economic Advisors, concluded in his study that the 2005 expiration of the Terrorism Risk Insurance Act “will result in lower economic performance and greater disruption to the U.S. economy in the event of a terrorist attack.”

H.R. 4634 would extend current provisions that require insurers to offer terrorism insurance to the commercial industry while providing a federal backstop to support the insurance industry in the case of future catastrophic terrorist attacks. For more information on TRIA and terrorism issues, go to the CCIM Institute Statements of Public Policy Manual at:

https://www.ccim.com/members/govaffairs/pdf/master_SOP_4_04.pdf

Banks in Real Estate Battle Continues

H.R. 111 and S. 98, the Community Choice in Real Estate Act, both have high numbers of cosponsors (H.R. 111 has 254 and S. 98 has 28), but have yet to see legislative action. The CCIM Institute continues to work with NAR to prevent banks from engaging in real estate management and brokerage activities. In September, the House passed their appropriations bill, which contains a one year prohibition against the Treasury Department finalizing the banks in real estate proposal. This language is identical to that passed over the last two years. The Senate bill is still pending, but contains language inserted by Senator Richard Shelby (R-AL) that would permanently ban banks in real estate. This bill is expected to be considered in November in a possible lame-duck session.

Do-Not-Fax Rule Update

On August 10, 2004, NAR, the fifty state REALTOR® associations and the Washington, D.C., Puerto Rico and Virgin Islands REALTOR® associations filed a Petition for Extension of Stay of the Federal Communication Commission's (FCC) "Do-Not-Fax" rules. In response, the FCC issued another stay of the fax rules which is set to expire on July 1, 2005.

CCIM Institute and NAR have been working to secure legislation to mitigate the burden that the FCC created by their "Do-Not-Fax" rules. H.R. 4600, the “Junk Fax Prevention Act”, was approved by the full House in July. S. 2603, the Senate version of the bill, also passed the Senate Commerce Committee in July and is pending before the full Senate. The NAR petition asked the FCC to grant an extension so as to give Congress time to complete consideration of legislation without burdening state and local associations as well as affiliates such as the CCIM Institute with significant compliance costs while it is unclear what rules will be in effect on July 1, 2005.

NAR also was a party to a second Petition for Extension filed by the broad-based Fax Ban Coalition. The Coalition's Petition was filed on behalf of over 600 businesses and trade organizations.

Brownfields Proposed Rule

The Environmental Protection Agency (EPA) recently published a proposed rule to help property owners develop brownfields. The proposed rule will establish regulatory standards for conducting “All Appropriate Inquiries” into the previous ownership, uses and environmental conditions of a property in order to determine brownfield development opportunities. Once these standards are met, developers will not be liable for costs of any possible future clean-up activities on the site.

Public commentary on these standards is due on October 25, 2004. The National Association of Realtors, the CCIM Institute and the Institute of Real Estate Management are currently reviewing the proposed rules and will focus their comments on the environmental and economic benefits these rules will present for developers and communities, as well as any ways the proposed requirements could be modified to enhance the economic development potential of brownfield sites.

If you would like to review the proposed rules and provide insight into the commentary submitted by the Institute, please contact Charles Achilles at cachille@irem.org or at (312) 329-6020.

Consumer Credit Reports

On September 17, 2004, CCIM Institute along with NAR and the Institute of Real Estate Management comments for the joint Federal Reserve Board (Fed)-Federal Trade Commission (FTC) study on investigations of disputed consumer information reported to consumer reporting agencies (sometimes called credit bureaus). The Fair and Accurate Credit Transactions (FACT) Act of 2003 requires the study. Click here to view the letter.

CCIM Institute supports ongoing efforts to improve the credit reporting system. The CCIM/NAR/IREM comment letter recommends that the Fed-FTC report to Congress (due on December 4, 2004) include several recommendations for legislative and administrative action. Congress should shorten the 30-day period that consumer reporting agencies now have to reinvestigate the accuracy of disputed information. The current 30-day delay can unfairly deny affordable credit to homebuyers and cause delays or cancellations of home purchases. In addition, (a) FTC should spearhead improved consumer education, (b) enforcement agencies should make enforcement of the reinvestigation requirements a higher priority, and (c) Congress should consider strengthening statutory penalties for firms that repeatedly report inaccurate consumer information to reporting agencies.

Senate Appropriates Flood Map Funding

The Department of Homeland Security FY2005 appropriations bill passed in late September by the Senate includes $200 million to fund FEMA's ongoing Flood Map Modernization Program. The House-passed version of the DHS appropriations bill provides $150 million for the FEMA map program. The bill now moves to a House-Senate conference to resolve differences. CCIM Institute and NAR support full funding of the Administration's request of $200 million in FY2005 funding and will urge House-Senate conferees to include that amount in the conference bill.

Real Estate Finds Telecomm Victory Yet Again

In a 2 to 1 opinion, the 10th Circuit (Judges Lucero,McKay and Hartz) affirmed the decision of the trial court that Time Warner had to move, abandon or sell its wires to units where the tenant chose not to subscribe to Time Warner's service. In the case, Time Warner wanted to right to run their own individual wires throughout the building, regardless of the views of the building owner and the tenants. IREM, as a member of the Real Access Alliance, filed a brief supporting the original court decision, which was being appealed.

The 10th Circuit’s opinion establishes that under the FCC’s cable home run wiring rule, 47 C.F.R. § 76.804, a property owner may invite a competing cable provider to serve the building using existing wiring, unless the contract between the property owner and the incumbent provider specifically provides that the incumbent has a “legally enforceable right” to maintain wiring dedicated to units to which it does not provide cable service. This is true even if the cable operator otherwise has the right to continue to maintain its lines inside a building.

This decision, although only binding in the 10th circuit, can assist multi-tenant property owners to introduce competitive cable offerings without installing new “home run” wiring.

Additional Commitment Authority Given to FHA Multifamily Program

To avoid a potential shutdown of the program, HUD increased the FY04 level of commitment authority for the GI/SRI insurance fund from $25 billion to $29 billion. This will allow the program to operate through the end of FY04, and this new ceiling will be used to calculate the pro-rata share during the time of the continuing resolution, which is expected to last into November.

2005 CCIM Institute Legislative Affairs Subcommittee Leadership
Stephanie Short, CCIM, ChairLou Nimkoff, CCIM, Vice-Chair

CCIM Institute Legislative Affairs Staff
Chuck Achilles, IREM VP Legislative & Research, (312) 329-6020, cachille@irem.org

back to the top ^