Washington, D.C. – In the midst of the political infighting that marked the 107th Congress, BOMA and the real estate industry scored some important victories.
When the 107th Congress began in January 2001, Republicans controlled the White House, House of Representatives, and Senate. However, the margins were so slight that, just a few months later, a key decision by one Republican Senator to become an Independent changed the balance of power. Throughout the entire session, the slim margins ensured that neither party had the ability to enact its agenda at the expense of the other. If fact, even the basic legislative priorities – such as passing appropriations bills – proved to be an insurmountable challenge.
After more than a year of intense advocacy efforts, BOMA International scored a huge win when, as one of the final actions before adjourning, the Senate passed the terrorism insurance bill. President Bush signed it into law November 26.
Under the new law, federal funds of up to $100 billion will be made available to cover losses from a terrorist attack. The federal government’s share would be 90 percent of losses above the deductible. Insurance company deductibles would be set at seven percent of premiums the first year, 10 percent the second year, and 15 percent the third year.
The program will be in place for three years. Once the three-year period is over, the insurance market for terrorism coverage should be sufficiently developed to continue offering coverage absent government involvement.
The new law will also consolidate civil lawsuits stemming from a terrorist attack in a single federal court for trial under the laws of the state in which the attack took place. This provision is intended to prevent property owners from facing multiple claims in multiple jurisdictions from the same terrorist attack.
Other issues also saw some action. Below is a brief summary of legislation that was addressed during the session (2001-2002).
On Dec. 20, 2001, Congress passed the Brownfields Revitalization and Economic Restoration Act of 2001, which President Bush signed into law. The new law protects purchasers of brownfield properties from CERCLA (“Superfund”) liability, even if they knew of the contamination at the time of purchase; supports use of state voluntary programs (rather than Superfund regulations) to address contamination of brownfield properties; and protects owners from Superfund liability if they hold property contaminated by pollution that migrated from other sources.
Partisan bickering over some major policy issues, including drilling in the Arctic National Wildlife Refuge (ANWR), automobile fuel efficiency standards, and improving the interstate transmission system, derailed the effort to pass a broad national energy policy bill. BOMA International had actively supported energy-efficiency tax incentives for commercial buildings that died along with the rest of the bill. Expect to see all of these issues early in the 108th Congress.
In early 2002, Congress passed a $42 billion stimulus package that included a tenant improvement provision. Property owners can now take a 30-percent depreciation deduction for leasehold improvements in the first year and then depreciate the rest of the basis over the asset’s normal schedule. These new provisions apply to property purchased between Sept. 11, 2001, and Sept. 11, 2004, and the property must be placed in service before Jan. 1, 2005.
Legislation was also introduced (though not passed) by Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) to permanently alter the time period over which leasehold improvements are depreciated. The proposed tax change would make qualified leasehold improvements eligible for a 25-year depreciation period, as opposed to the current 39-year time period, beginning in 2004. With Republicans controlling the White House, Senate, and House of Representatives, the 108th Congress may present the ideal time for this legislation to pass.
Legislation was introduced that would have called on the U.S. Environmental Protection Agency (EPA) to issue guidelines to establish acceptable levels of mold; set standards for inspections and remediation; and license labs that would test toxicity levels of mold. The legislation also would have required the Centers for Disease Control (CDC), EPA, and the National Institutes of Health (NIH) to study the health effects of mold exposure. BOMA International opposed many of the provisions in this bill, which did not see any action. It expects to see similar legislation in the 108th Congress.
The forced access community, in spite of its repeated setbacks, continues to scheme at the federal level. A mandatory access provision was slipped into the FY 02 Department of Defense appropriations bill. It would have mandated that the federal government require multiple service providers for buildings it occupies. BOMA and its real estate allies successfully lobbied to have it stripped from the final bill. However, this is a threat that can potentially arise year after year; BOMA International will remain vigilant throughout the next session of Congress.
For more information on the issues discussed in this column, visit (www.boma.org) or call (202) 408-2662.