Volume VII, Number 3 - October 2002

In this bulletin:

•	2003 Capital Hill Visit Conference
•	Insurance Task Force Take Proactive Course
•	Terrorism Insurance
•	National Energy Reform
•	Bankruptcy Reform
•	Toxic Mold - H.R. 5040
•	Federal Tax Update
•	Banks In Real Estate
•	Brownfields
•	Senator Kerry Introduces Housing Production Tax Incentive

2003 Capitol Hill Visit Conference

The CCIM Institute will headed to Washington, DC on April 28 & 29, 2003 to meet with Congressional members for the second year in a row! A revamped Briefing Session on Monday will include state caucuses and breakout sessions with Capital Hill staffers and federal issue experts. Tuesday will be reserved for meetings with legislators, presentation of the CCIM Legislator of the Year award, presentation of the new CCIM Advocate of the Year award and a de-briefing cocktail reception at the conference hotel, the Grand Hyatt Regency on Capital Hill.

Registration information is forthcoming as well as nomination forms for the CCIM Legislator and Advocate of the Year awards. The Institute is looking forward to a big CCIM showing in Washington next year! Don't forget that the CCIM Business Meetings will held in conjunction with the Hill Visits this year, so those attending the meetings should plan on coming a day early to participate in meetings with your Senator and Representatives. Go to the 2002 Capital Hill Visit page to see photos of CCIM's meetings with their legislators and general information on last April's event.

Insurance Task Force Take Proactive Course

On October 11th, a REALTOR® Task Force, of which CCIM, Ron Myles, is a member, met in Washington, D.C. to discuss the role NAR, CCIM Institute and other affiliates should take to address the problems facing property owners as they shop for property casualty insurance. The group agreed on the need to focus on short-term measures that could assist REALTORS® and property owners as well as long-term efforts to increase the availability and affordability of insurance. The group will (1) analyze factors that have led to the current insurance market, (2) identify the implications of new underwriting tools, like insurance scoring and shared claims databases, on the real estate transaction as well as housing affordability, (3) explore the feasibility of NAR providing alternative insurance products to its members and their clients, (4) create the informational resources and strategies for state associations necessary to effectively address insurance availability/affordability issues and tort reform at the state regulatory/legislative level, and (5) analyze federal initiatives - ongoing and proposed - for their ability to effectively address the problem and avoiding future 'hard insurance markets'.

Insurance task force members and staff will be meeting with policy committees at the NAR convention in New Orleans to share their insights and seek member input into the task force's deliberations. NAR insurance research currently underway will be discussed by Dr. Bob Klein of the Georgia State University at the Convention's Economic Issues & Residential Real Estate Business Trends Forum on Friday, November 8; Tom Morgan, legal counsel for the Texas Association of REALTORS®, will talk about how the meltdown of the Texas insurance market has impacted real estate transactions. On Saturday, November 9, the Public Policy Political Forum will focus on the policy side of the discussion and feature a panel discussion focused on how the insurance industry and consumer advocates view the current insurance situation.

Thank you to Ron Myles, CCIM, for volunteering to work on this task force and represent the interests of all CCIMs.

For more information on the insurance situation, please visit the Insurance Field Guide located at: http://www.realtor.org/libweb.nsf/pages/fg718.

Terrorism Insurance

On October 3, the White House held a press conference on terrorism insurance. In his remarks, President Bush urged Congress to pass the terrorism bill before they adjourn for the session, saying the legislation is about job security. President Bush state, "More than $15 billion in real estate transactions have been terminated or put on hold because the lack of terrorism insurance -- $15 billion of job-creating projects are not moving forward."

While both the House and Senate have passed terrorism insurance bills (H.R. 3210/S. 2600), they are still working out the differences in a conference committee. A final version is held up by a debate over tort reform provisions. CCIM Institute is a member of the Coalition to Insure Against Terrorism, which represents business insurance policyholders throughout the construction, entertainment, manufacturing, real estate, retailing and transportation sectors of the economy. This coalition will continue to pressure Congress to address this package of bill in the lame duck session.

National Energy Reform

Once a top White House priority, national energy reform is stalled in conference committee awaiting the end of this campaign season's political maneuvering and a break in the focus on vital foreign policy such as a potential war with Iraq. While the conference committee met as recently as the first week of October to hammer out partisan policy differences, senior House and Senate members failed to agree on any of the several issues on the table. The Democratic Senate wants to require large utilities to supply 10 percent of their power from wind and other renewable sources over several years and the Republican led House wants to open up the power industry to more mergers and investment. As the bill currently stands, energy tax credits for business remain and are not a point of debate at this time. Senate majority leader, Tom Daschle, Democrat from South Dakota, has said that he will keep his house in session up to the November 5 elections; however, he also conceded that it was "increasingly likely" that Congress will have to return in November for a lame-duck session to address issues such as the energy reform package.

Bankruptcy Reform

Bankruptcy reform is still stalled in conference committee due to highly controversial language involving abortion. The contested provision would bar abortion opponents from declaring bankruptcy to avoid paying court-imposed fines or damages that result from violent protests at abortion clinics. Apparently, prominent abortion foes have used the bankruptcy laws for the aforementioned purposes. Abortion is arguably the most volatile issue for Americans and the likelihood of legislators voting on any bill related to this issue is nil.

Fortunately, the provisions supported by the commercial real estate industry protecting property owners and investors from tenants declaring bankruptcy and leaving properties off the market for undeterminable lengths of time is still being considered as part of the House sponsored legislation (H.R. 333). A lame-duck session after the November elections will be this conference committee's last opportunity to pass this particular package of reforms.

Toxic Mold - H.R. 5040

Rep. John Conyers, (D-Michigan), introduced H.R. 5040 the "United States Toxic Mold Safety and Protection Act of 2002", a far-reaching bill to prescribing research, inspection and remediation standards to address the issue of toxic mold. In addition, the bill would create a national toxic mold hazard insurance program much like the federal flood insurance program in order to address the burgeoning number of claims against policies for costs related to mold clean-up and health hazards.

Careful analysis of the bill's language reveals several areas of concern. In particular, Sections 201 through 206 addressing inspection requirements for residential properties, building code requirements and construction requirements.

H.R. 5040 does prescribe tax credits for toxic mold inspection and remediation; a component that the CCIM Institute will work with the National Association of REALTORS® and other affiliates and industry organizations to ensure these tax credits remain in any eventual legislation regarding toxic mold. The CCIM Institute Legislative Affairs Committee will be addressing an amendment to the current CCIM Institute statement of policy on mold to include support for mold inspection and remediation tax credits.

H.R. 5040 was referred to the House Committee on Energy and Commerce, and the Committees on Financial Services, Ways and Means, and the Judiciary. H.R. 5040 has no chance for movement or passage in 2002 at this late date due to the many other priorities faced by Congress. We fully expect to see this bill reintroduced in the 108th Congress.

Federal Tax Update

In this election year and current economic climate, many tax proposals have been bantered about on Capital Hill several of which have been on the commercial real estate industry's wish list for some time.

House Republican Tax Package - During the third week of October, the House is considering an economic stimulus package proposed by the House Republicans. The package would increase from $3,000 to $8,250 the amount of stock market losses that can be deducted; raise the age when seniors must begin withdrawing money from individual retirement accounts to 75 from the current 70.5; boost maximum contributions to IRAs and 401(k) plans; enhance the tax break small businesses receive for equipment expenditures; and extend unemployment benefits in states with particularly high unemployment. This legislation would cost Treasury $65 billion over the next decade. It is unlikely the Democrat controlled Senate will take up this Republican sponsored package for consideration; however, it will likely serve as a basis for an economic stimulus package to be introduced next year in the 108th Congress.

Small Business Tax Relief Package - An attempt by Senate Finance Committee Chairman, Max Baucus, to mark up a package dedicated to small business tax relief was thwarted by Senate Republicans who are convinced that this package is really a vehicle for minimum wage debate. This package does include language providing leasehold improvement relief.

Estate Tax Repeal - The House has passed several non-binding resolutions asking the Senate to take up the legislation making the estate tax repeal permanent. Again, it is unlikely the Senate will consider doing so before or after the elections.

Banks In Real Estate

The Department of Treasury and the Federal Reserve have yet to come out with any final rule on banks in real estate. To date, there are 246 co-sponsors of H.R. 3424, which would prohibit banks from engaging in real estate management and brokerage. Also, language included in the House Appropriations bill for the Treasury Department would prohibit the Treasury Secretary from using any FY03 funds to complete consideration of the proposed rule to allow financial holding companies and national bank subsidiaries from operating real estate brokerage, leasing and property management businesses. The bill still needs to be debated in the Senate. If the provision survives the appropriations process, Treasury could not implement the rule until at least October 2003.

Brownfields

The Institute supports a complementary brownfields bill in the 107th Congress. In June, the House passed H.R. 2941, the "Brownfields Redevelopment Enhancement Act." This bill facilitates the provision of HUD assistance for remediation of brownfields sites by eliminating the requirement that local governments obtain Community Development Block Grant loan guarantees in order to obtain funding under HUD's Brownfields Economic Development Initiative program. The Senate has included similar language in the FY2003 HUD appropriations bill, which has been approved by the Senate Appropriations Committee.

Senator Kerry Introduces Housing Production Tax Incentive

Senator John Kerry (D-MS), along with Senators Santorum (R-PA), Sarbanes (D-MD) and Allard (R-CO) have introduced S. 3162. Their bill reflects President Bush's proposal granting a tax credit incentive to developers and investors for construction of affordable housing available for purchase. The bill is a companion to H.R. 5052, and is the culmination of efforts by the Community Homeownership Credit Coalition. The Coalition is comprised of more than 30 housing and advocacy organizations whom all support this credit as a means of increasing the supply of affordable housing and of strengthening neighborhoods through homeownership.

Even though the bill is not likely to be considered during the upcoming lame duck session, its introduction sends an important bipartisan signal about the importance of this approach to expanding homeownership opportunities. The Coalition will be working to have the legislation introduced again in the 108th Congress.

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

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