Volume VII, Number 2 - May 2002

In this bulletin:

•	2002 Capitol Hill Visit Conference
•	Banks in Real Estate
•	Bankruptcy Reform Act
•	Terrorism Reinsurance
•	Energy Tax Credits
•	Telecommunication – Battles in the States
•	Supreme Court Decision on Property Rights
•	Brownfields Update
•	Toxic Mold

2002 Capitol Hill Visit Conference

In an effort to show CCIM Institute’s grassroots support and ensure that commercial real estate issues were heard on Capitol Hill, 18 CCIMs participated in the 2002 Capitol Hill Visit Day and visited 33 different Senators and Representatives. Members could be seen moving from office to office, lobbying their elected officials on issues affecting our industry. CCIM Institute will continue to monitor these issues and encourages members to keep in contact with their legislators throughout the year. For details on the issues, to read more about the Hill visits, and see photos go to: http://www.ccim.com/govt/followupwebpage.htm

Banks in Real Estate

In 2001, a rule was proposed by the Federal Reserve and Department of Treasury, which would redefine real estate brokerage and property management activities as “financial in nature.” If the rule were adopted, financial conglomerates would be able to own and operate real estate brokerages and property management firms. CCIM Institute opposes changes or interpretations in present federal regulations, which would permit any banks or bank holding companies or subsidiaries to enter into commercial activities like real estate brokerage beyond properties owned by these institutions. Congress was inundated with letters from the real estate industry expressing opposition to the rule.

Legislation has been introduced in the House and Senate, which would amend the Bank Holding Company Act of 1956 to prohibit financial holding companies and national banks from engaging, directly or indirectly, in real estate brokerage or management. H.R. 3424 and S. 1839, the “Community Choice in Real Estate Act” have widespread bipartisan support. More than 230 members of the House and 11 Senators have signed-on to cosponsor the legislation, a good indication of support for the issue.

CCIM Institute has signed a letter of support of the “Community Choice in Real Estate Act”, along with other real estate industry organizations, which was presented at House Judiciary Commercial and Administrative Law Subcommittee on May 16, 2002 by NAR President and CCIM, Martin Edwards. For a copy of the letter, please contact Charles Achilles at cachille@irem.org or at (312) 329-6020.

Bankruptcy Reform Act

Bankruptcy reform negotiations have stalled yet again due to a seemingly unrelated public policy issue – abortion. A highly sensitive provision that would bar abortion opponents from declaring bankruptcy to avoid paying court-imposed fines and/or damages that result from violent protests at abortion clinics is on the table and the conference committee is unable, at this time, to come to agreement thereby holding up the entire reform package.

CCIM Institute, along with the National Association of Realtors (NAR) and affiliates support the language reported by the House, the “Bankruptcy Reform Act” (H.R. 333). The House language is much clearer on the issue of not allowing bankruptcy as a stay from eviction in rental housing and is much stronger and more desirable.

President Bush has indicated his support for bankruptcy reform and is expected to sign a compromise into law if the conference committee can overcome the abortion issue contained therein.

Terrorism Reinsurance

After being adrift for months, Senate Democrats and Republicans have reached a consensus on the need to revive federal legislation that would provide a government safety net for the risk of terrorism and the damages that ensue. In the wake of September 11, 2001, commercial property owners and lenders are facing perplexing insurance emergencies because they cannot find reasonably priced terrorism insurance. Without this coverage, the real estate industry is at grave risk as is our nation’s economy.

While pressure from the Executive Branch may have had a large impact on the Senate’s renewed interest in addressing the issue of terrorism insurance, it is also the efforts of CCIMs on Capitol Hill in late April lobbying for this issue and others that kept the pressure on Congress.

Energy Tax Credits

The Energy bill, H.R. 4, passed the Senate on April 25 with a substitute, S. 517 and is now in conference. While CCIM Institute strongly opposes mandatory national standards for building energy conservation, CCIM Institute does support positive incentives for conservation activities such as energy tax credits and an increased emphasis on energy efficient technology. Therefore, CCIM Institute supports the following initiatives contained in the Energy bill:

1.	Allowance of Deduction for Energy Efficient Commercial Building Property: Taxpayer will get a credit equal to the energy efficient commercial building property expenditures they make during the taxable year (up to $2.25 per square foot of improved area).
2.	Allowance of Deduction for Qualified Energy Management Devices and Retrofitted Qualified Meters: Taxpayer who is a supplier or provider of electric energy or natural gas can deduct the cost of each qualified energy management device for the taxable year the device is placed in service.

Currently, there is support in both the House and Senate for these initiatives. CCIM Institute will be watching closely in order to determine if these issues are in question and will alert and ask members to contact the conferees if this does become a concern.

Telecommunication – Battles in the States

Here are updates on telecommunications initiatives that CCIM Institute has been monitoring through the Real Access Alliance:

Massachusetts – Regulations were proposed in 2001 that would allow for mandatory access to multifamily and commercial properties. A preliminary injunction to prevent the rule from taking effect was issued in June 2001. The Mass Dept. of Telecommunications and Energy appealed the ruling and the Mass. Supreme Court assumed jurisdiction of the case.

New York – There are some dangerous discussions in New York that could lead to mandatory access efforts. In order to receive the ability to provide long distance service, Verizon has been forced to be open with their network elements. A task force has been created by the New York Public Utility Commission to examine ways to enhance a carrier’s ability to gain access to buildings. The task force is confident it can develop a proposal that provides competition in a building without the owner/manager’s permission. This could set a very dangerous precedent. The Real Estate Board of New York has been a participant of the task force, and the Real Access Alliance will be discussing possible involvement in the near future.

Texas – Time Warner filed a complaint with the Texas Public Utility Commission against a management company, on the ground that the management company violated the Texas Mandatory Access rule. After some review with the PUC’s internal review process, the issue is now in the legal court system on the grounds that the Texas Mandatory Access rule violates the state’s constitution as a “taking” of private property. Oral testimony is currently being heard, and early indications are that the case could be appealed all the way to the U.S. Supreme Court.

Missouri – Legislation was introduced that would require mandatory access to all property types, along with banning exclusive contracts between building managers/owners and telecommunications providers. Attempts to attach the language to another bill with greater likelihood of passage were unsuccessful.

Supreme Court Decision on Property Rights

In a 6-3 decision, the U.S. Supreme Court ruled, the last week in April, that temporary moratoriums on development imposed by governments are not a taking and do not require compensation. In Tahoe-Sierra Preservation Council vs. Tahoe Regional Planning Agency, the court rejected the argument that government prohibitions on development are constitutional takings that require compensation. The court decided these claims must be considered on a case-by-case basis, along with other factors such as the duration of the moratorium and the government's reasons for it.

Brownfields Update

During the May 2002 National Association of Realtors Midyear Legislative Meetings, a representative of the Environmental Protection Agency (EPA), Michael Shapiro, spoke regarding the $1.25 billion brownfields reform legislation enacted into law early this year. According to the EPA the aspects of this law are largely self-implementing meaning that commercial real estate professionals could see brownfield redevelopment sooner rather than later.

The self-implementing provisions are those providing liability relief to owners seeking to clean up contamination on their property according to Shapiro. The rule-writing process can be lengthy delaying the impact of the law on the local level so this is good news for the commercial real estate and development industry. Other provisions in the law, including those that make federal funds available for contamination clean up and assistance, require EPA to write rules before they go into effect. The EPA has committed to issuing interim rules for guidance by October 1, 2002.

The CCIM Institute will continue to monitor the rulemaking process and notify CCIMs when they are available for review.

Toxic Mold

Due to key cases in Texas and California, both national and state lawmakers are paying particular attention to the issue of residential mold contamination which can cause allergic reactions and/or respiratory problems in occupants.

Rep. John Conyers Jr., D-Mich., is preparing to introduce The U.S. Toxic Mold Protection and Safety Act--which would require the Environmental Protection Agency (EPA) to produce guidelines on acceptable mold levels and charge the Centers for Disease Control (CDC) with authorizing studies on the health effects of mold.

At the National Association of Realtors Midyear Legislative Land Use and Environment Forum on Mold, Nathan Yost of the Building Science Corporation and Elissa Feldman of the EPA spoke about the cause, prevention and remediation of mold. In addition, Kenneth Warden, Chair of the Mold Working Group of the NAR Risk Management Committee, presented a report and recommendations on suggested policy directions on mold for the Realtor Community. It was apparent from these presentations that the moist environment where mold is most likely to grow is really the problem and the key to remediation. Building and construction materials have significantly changed over the years and are more susceptible to moisture problems hence the heightened problem in recent years.

The CCIM Institute will be reviewing the current research and data regarding the mold issue and the Legislative Affairs Committee will be charged with developing a statement of policy on the issue. For more information on mold, how it affects commercial real estate professionals and links to EPA and CDC resources go to: http://www.realtor.org/gapublic.nsf/pages/moldpapers.

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