– While 2004 is just half over, the 108th Session of Congress is quickly nearing its end. Will real estate’s issues be left stranded?
In the remaining days on the legislative calendar, election politics are expected to be a major distraction. Both parties will hold their national conventions later this summer. All 435 Representatives and one-third of U.S. Senators are up for re-election – not to mention the political feeding frenzy that will continue to surround the presidential race. However, several of real estate’s key legislative issues may still see action. Here’s a quick look at BOMA’s legislative priorities for the remainder of the session.
Leasehold Depreciation. House Ways and Means Committee member Clay Shaw, Jr. (R-FL) introduced a leasehold depreciation bill (H.R. 1634) in the House on April 3, 2003. This version is identical to the one introduced by Senator Kent Conrad (D-ND) in the Senate (S. 576). Both versions allow for a 10-year depreciation schedule as opposed to the 39-year schedule currently required by law. As a result of efforts by BOMA and its coalition partners, Shaw’s bill was introduced with 47 bipartisan cosponsors, many of them members of the Ways and Means Committee. Outlook: It’s a long shot.
Leasehold Depreciation II. The House Ways and Means Committee approved an international tax bill last fall that calls for a 15-year depreciation schedule for leasehold improvements placed into service during 2004 and 2005. The House is currently in the process of reworking the bill and BOMA International and other real estate groups are emphasizing to committee members the importance of including this provision. The Senate version of the international tax bill does not include the leasehold depreciation language. Outlook: Only a little better.
National Energy Policy. After a year of work on national energy policy legislation (H.R. 6) that culminated in passage of a conference report in the House but failed in the Senate, Senate leaders have started over with less expensive bills. On February 12, Senator Pete Domenici (R-NM), chair of the Senate Energy and Natural Resources Committee, introduced a scaled-down version (S. 2095). On May 11, the Senate passed a corporate tax bill (S. 1637) that repeals the U.S. export tax regime and included a $13 billion package of energy tax breaks and incentives. In April, bills were introduced in both the Senate and the House (S. 2311, H.R. 4206) aimed at increasing the security and reliability of the electric grid while reducing natural gas and electricity prices. Each of these bills contains a provision to provide tax incentives for energy-efficiency upgrades to commercial properties, though S. 2311 and H.R. 4206 are the most favorable. Outlook: BOMA has stopped guessing on this one.
Tort Reform. Class action reform legislation (S. 2062) would make it easier to move class action lawsuits from state courts to federal courts, limit current abuses of the system, and protect the rights of both plaintiffs and defendants. It is supported by BOMA and a host of business interests. The bill was expected to be one of the first items of business for this session, but efforts by the Democrats to derail the bill with non-germane amendments forced Senate leadership to delay debate until some agreements could be reached. It is now expected to come to the Senate floor in early June. Outlook: It could get messy as more non-germane amendments – including a controversial one on minimum wage – are expected. If it passes, it will go to Conference with H.R. 1115, the version the House passed last year.
Transportation. The Senate passed a $318 billion highway bill on February 12, amid opposition from President Bush and threats of a veto. The bill would fund roads and highways, bridges, mass transit, and safety programs. The House passed its $283 billion version in April. The Administration has recommended that the President veto any bill higher than his $256 billion proposal and has been unwilling to bend on this issue. A previous transportation bill expired in September of last year and has been extended through June. The House and Senate are now set to begin conference negotiations.
Outlook: It will be quite a challenge to cut the price tag sufficiently to appease President Bush.
Terrorism Risk Insurance Act (TRIA) Extension. The Terrorism Risk Insurance Act of 2002 will expire at the end of 2005, and one of its key provisions – requiring insurers to make available coverage at the same terms and conditions as property and casualty insurance – expires at the end of 2004 unless the Treasury Secretary acts by September 1 to extend it. BOMA International continues to work with the Coalition to Insure Against Terrorism (CIAT); CIAT and the insurance industry have united to support a two-year extension of TRIA. Outlook: Hopeful. Key legislators have begun to put pressure on the Treasury Department to extend the “make available” provision, and legislation is expected to be introduced soon to extend the Act.
For more information, contact BOMA International at (202) 408-2662 or (www.boma.org).