Volume VII, Number 1 - January 2002

In this bulletin:

•	Immediate Action Needed!
•	First Annual CCIM Institute Capitol Hill Visit
•	Terrorism Reinsurance – Round Two in 2002?
•	President Bush Signs Brownfields Legislation
•	Economic Stimulus Package
•	Internet Tax Moratorium Extended
•	Bankruptcy Still in Play But Stalled
•	LLimited Forced Access Language Removed from DOD FY2002 Appropriations Bill
•	Commercial Mortgage-Backed Securities

Immediate Action Needed!

Last year, the Federal Reserve and Treasury Department proposed a rule that would allow financial conglomerates to own and operate real estate property management and brokerage firms. Together with the National Association of REALTORSâ (NAR), IREM, and other industry groups, the CCIM Institute and its members worked diligently to fight this proposal. In December 2001, legislation was introduced in both chambers that would prohibit large banking conglomerates from entering into property management and real estate brokerage. Titled “The Community Choice in Real Estate Act”, its success will have a profound effect on the way real estate business is conducted in the future.

YOUR HELP IS NEEDED! The CCIM Institute, IREM, and NAR are asking their members to contact Congress and ask for support and co-sponsorship of H.R. 3424 and S. 1839. To see if your members of Congress have sponsored the legislation, click on http://www.congress.gov/, then click on the “107th” Congress, at ”Bill/Amendment”, search for information on “H.R. 3424”, for Representatives or “S. 1839”, for Senators who may be “co-sponsors”. If your members of Congress are listed, please call and thank them for their support. If your members are NOT listed, please call and ask them to co-sponsor “The Community Choice in Real Estate Act.” All members of Congress can be reached through the Capitol switchboard at 202-224-3121. The goal is to get as many cosponsors on board before the President’s Day recess in mid-February. Please take action

To review the CCIM Institute Statement of Policy on Banks and Real Estate go to http://www.ccim.com/library/stateofp.html#Regulatory and scroll down to Financial Institutions Subsidiaries Involvement in Commercial Real Estate.

First Annual CCIM Institute Capitol Hill Visit

The CCIM Institute is coordinating a day of meetings with your representatives and senators in Washington, D.C. Save the date and take the time to come to D.C. on April 22 & 23 in order to meet with your elected representatives and inform them about CCIM issues. A briefing session detailing the issues, how to navigate Capitol Hill and how to lobby your congresspersons will be held on Monday, April 22, from 3:00 to 5:30 p.m. Meetings with your congresspersons will be scheduled for April 23. Schedule permitting, CCIMs may choose to participate in two related events: a photo session of CCIM attendees to be held on the Capitol steps, and a cocktail reception and debriefing session in the late afternoon.

These meetings will be held in conjunction with the IREM 2002 Leadership & Legislative Summit and Hill Visits; therefore the briefing session and cocktail reception will be held at their conference hotel, the Omni Shoreham. CCIMs will receive the conference rate on hotel rooms at the Omni Shoreham. Registration information is forthcoming. If you have any questions, please contact Charles Achilles at cachille@irem.org or at (312) 329-6020.

Terrorism Reinsurance – Round Two in 2002?

Congress ends the year without approving a federal backstop for the insurance industry against future terrorism claims. As a result, insurance rates are expected to climb even higher and some businesses may be forced to go without adequate coverage. Real estate industry officials also expect other problems, including the ability to operate or acquire properties, refinance loans and sell commercial backed securities.

Lawmakers in both chambers of Congress addressed the situation, although attempts at passing a final bill approved by both chambers failed. The House was successful in passing legislation that provided some relief for insurers. HR 3210, “The Terrorism Risk Protection Act” limited insurers to the first $1 billion in damages cause by terrorist attacks, with the federal government responsible for the remaining 90% of the costs, up to $20 billion. The bill provided for coverage for up to one year, with an option to renew for two additional years. The Senate introduced similar legislation, however a final version was not passed.

Lawmakers are expected to take up terrorism insurance legislation again when they return to Capitol Hill in late January. In the interim, the House Financial Services Committee has requested a report from the General Accounting Office (GAO), the investigative arm of Congress, regarding the impact of the absence of terrorism insurance and a Federal risk-spending mechanism on the insurance industry’s current activity and the U.S. economy. Thank you to all of those CCIMs who responded to the Call-to-Action requesting hard, anecdotal evidence regarding the lack of terrorism insurance. Your valuable commentary was submitted to the General Accounting Office to be included in its report. The report should be released shortly after Congress reconvenes.

President Bush Signs Brownfields Legislation

After years of negotiations, Congress finally passed a brownfields bill in late December. Signed into law by President Bush, the “Brownfields Reform and Small Business Liability Reform Act”, is the biggest environmental bill of the year.

The Act will provide Superfund liability protection for innocent property owners and developers of land found to be contaminated after purchase. Additionally, the Act limits the federal EPA’s authority to require additional cleanup of sites previously decontaminated under state brownfields programs, and provides additional funding for federal and state brownfields programs.

Thank you to those CCIMs who sent letters, e-mails and placed phone calls to their representatives and senators who supported the brownfields reform bill in response to our Call-for-Action!

Economic Stimulus Package

Congress was unable to come to agreement on an economic stimulus package before it recessed for the 2001 Christmas holiday. Unfortunately, this was after it appeared that the House and Senate had come to an agreement on providing relief for leasehold improvements. The bill the House passed in October 2001 contained a permanent provision that shortened the recovery period for these investments from 39 to 15 years.

The Senate Finance Committee had agreed to provide one-year 10% bonus depreciation. During House-Senate negotiations, the bonus depreciation provision seemed to have been agreed to as a 3-year provision that would permit first-year 30% bonus depreciation. At the last hour, the House passed a second version of a stimulus package. It again provided a permanent provision that reduced the recovery period from 39 years to 15.

In the end, only one issue remained in controversy between the House and Senate, but it was a significant conflict of values between the two bodies. The impasse came as the bodies tried to determine whether and how to provide a health insurance subsidy to unemployed individuals.

Congress is beginning to debate an economic stimulus package in this new session and the CCIM Institute will continue to follow this issue and keep CCIMs informed of policy developments.

Internet Tax Moratorium Extended

President Bush has signed into law legislation that extends the Internet tax moratorium through October 21, 2003. In 1998, Congress first passed legislation that barred state and local governments from imposing taxes on the sale of goods over the Internet. This moratorium expired on October 21, 2001. By extending the moratorium, state and local governments are still barred from imposing any sales tax on Internet access accounts and are prohibited from imposing taxes that apply solely to Internet sales transactions.

Bankruptcy Still in Play But Stalled

Bills including 3 CCIM supported provisions were approved by the House and Senate during the first session of the 107th Congress; however, the legislation is delayed in conference for the time being. Included in both the House and Senate bills is language that would eliminate the cap on single asset bankruptcies, provide protections for shopping center owner when tenants file for bankruptcy, and close the loophole that allows for residential tenants to avoid eviction through bankruptcy.

Conferees have met informally, and plan to meet early in the second session. Assuming an agreement can be reached, President Bush has said he will sign the bill.

Limited Forced Access Language Removed from DOD FY2002 Appropriations Bill

In the waning days of the last Congressional session, NAR, in coalition with the Real Access Alliance, was able to convince legislators to remove an Amendment to the Department Of Defense (DOD) FY 2002 Appropriations Bill Conference Report, that would have impeded a property owner's rights to make and control property access decisions when they are leasing space to the General Services Administration (GSA).

The language was added by Senator Ted Stevens (R-AK), who has added a similar provision to various bills in previous years. Members of the House Appropriations Committee managed to remove this damaging language during the Conference.

Commercial Mortgage-Backed Securities

In an action that will conclude years of regulatory lobbying initiatives by the National Association of REALTORS® and its fellow Capital Consortium members (The Bond Market Association, The Commercial Mortgage Securities Association, The Mortgage Bankers Association of America, and The Real Estate Roundtable), the Board of Directors representing the Office of Thrift Supervision (OTS), the Office of the Comptroller of the Currency (OCC), Federal Reserve and Federal Deposit Insurance Corporation (FDIC) are expected to approve a new joint Final Recourse and Residual Interests Capital Markets Rule effective January 1, 2002 that is extremely favorable to investment property. It will enable banks to more profitably invest in Commercial Mortgage-Backed Securities. The Final Rule allows banks to employ reduced risk-weights for virtually all of their securities investments (including Commercial Mortgaged-Backed Securities) that are rated either Investment Grade or one rating level beneath Investment Grade.

Legislative Staff:
Chuck Achilles, IREM VP Legislative & Research, 312.329.6020, cachille@irem.org

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