May 13, 2008

FEDERAL FOCUS

• NAIOP Voices Strong Support for Congressional Action on Tax Extenders; House and Senate Committees Reviewing Bills Now

• Michigan Holds First Day at the Capitol
• Energy Bill Passed in Florida, Includes Common Sense Action

• Calgary Commercial Real Estate Escalates in First Quarter
• Building Permits Continue to Decrease

• Transmission Pipelines and Commercial Real Estate Development - You Can Help!
• Green Development Award Nominations Open Through May

FEDERAL FOCUS

NAIOP Voices Strong Support for Congressional Action on Tax Extenders; House and Senate Committees Reviewing Bills Now

NAIOP and a coalition of 114 business, labor and education organizations have voiced strong support for the extension of critical tax extenders in signed letters to Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Senate Finance Committee Chairman Max Baucus and Ranking Member Charles Grassley, and all members of the Senate. The letter was also sent to Speaker of the House Nancy Pelosi, House Minority Leader John Boehner, House Ways and Means Committee Chairman Charles Rangel and Ranking Member Jim McCrery.

The letter emphasizes that the uncertainty of the nation’s tax laws is impairing the ability to make effective business decisions, reading in part, “Investment decisions to clean up brownfields, expand or build leasehold improvements in commercial properties, locate film productions in the U.S., contribute qualified conservation property, build freight rail track, and repair crumbling schools are being delayed because of the uncertainty of the tax treatment.”

Senate bill S. 2886, which would amend certain expiring provisions, is currently being reviewed by the Senate Finance Committee.

The extenders bill contains include provisions which are top priorities for NAIOP and key to commercial real estate, including the reduction in time for depreciating qualified leasehold improvements in commercial buildings (the cost of the customized improvements a building owner makes to configure rental space for tenants’ needs) from 39 years to 15. Also included are provisions allowing for brownfields remediation expensing, which allow brownfields clean-up to be written off immediately, and an extension of the energy efficient commercial building deduction. Complete overviews of these three important provisions can be found on the NAIOP Web site.

In the House, the Ways and Means committee could continue its efforts toward a one-year extension this week, according to Committee Chairman Charles Rangel (D-N.Y.). Although the precise content of the House bill is still being discussed, Rangel says that the Committee members must prioritize to make the extenders package attractive, and that the House bill will not include a provision that prevents the alternative minimum tax from impacting 25 million taxpayers not already subject to it, which comes at a $60 billion-plus cost to extend for one year.

The cost of extending numerous tax breaks affecting individuals and businesses – including a research and development credit and renewable energy credits for alternative sources – is estimated to top $50 billion. Rangel cites finding offsets to counteract the extended provisions as an obstruction to progress of the legislation. Last week, 41 Senate Republicans communicated to Chairman Baucus that they would oppose offsetting extensions of existing tax policy.

For more information, contact Aquiles Suarez, vice president of government affairs, at (703) 904-7100, ext. 115.

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STATELINE

Members of the Michigan Chapter of NAIOP took their voice to Lansing for the first time this week. Last year the Michigan Generally Assembly passed an all encompassing tax reform package called the Michigan Business Tax (MBT). As a result of MBT, taxes on commercial real estate development projects have gone up 350 percent.

Members arranged meetings with Representatives Melton, Meltzer, Condino, Bieda, Meisner, Knollenberg and Warren, as well as the staff members of Senators Hunter, Jacobs and Thomas, representing the Tax Policy, Finance and Economic Development Committees responsible for drafting the MBT.

Legislators agreed that significant changes were needed to address the concerns of commercial real estate and were encouraged by the six potential solutions offered b NAIOP Michigan. Town Hall meetings will be taking place across the state this month and NAIOP Michigan members will present their suggestions in that forum taking another step forward creating a strong working relationships with legislators in Lansing.

The preparations for Michigan’s State Legislative Day at the Capitol created an excitement for Government Affairs. The chapter has begun working with other real estate groups in the state and would like to spearhead a legislative working group to address positive and negative policies affecting the industry as they arise in the future.

For more information, contact Melissa Huffman, director of state and local affairs, at (703) 904-7100, ext. 110.

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Energy Bill Passed in Florida, Includes Common Sense Action

The members of NAIOP of Florida have new energy-efficiency standards to address in their future, but thanks to the work of local and national staff, as well as a strong presence in the state capitol, a cost-effective benefit has to be proven.

In an effort to reduce greenhouse gas emissions, state governments are passing more stringent energy-efficient building codes to address the carbon emissions released into the atmosphere by coal fire power plants. The commercial real estate industry applauds the efforts made by government to protect the health and welfare of its citizens, but believes that more information should be considered as potentially costly mandates are passed into law.

Fortunately, the Florida Legislature took the industry’s advice and included language into the energy bill that stated ”…prior to implementing the goals established in subsection (1), adopt by rule and implement a cost-effectiveness test for proposed increases in energy efficiency.”

This is an important example of how government affairs activities and relationship building at all levels of government are essential to the continued success of NAIOP members. This language was considered due to the collaborative efforts of NAIOP of Florida members and staff, the contract NAIOP of Florida lobbyists and national staff.

For more information, contact Melissa Huffman, director of state and local affairs, at (703) 904-7100, ext. 110.

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CANADA UPDATE

Calgary Commercial Real Estate Escalates in First Quarter

Calgary’s commercial real estate sales in were the third strongest quarterly results since 1998, hitting $1.28 billion in the first quarter of this year, according to a report by RealNet Canada. Sales activity in the first quarter rose by 8 percent year-over-year, but declined by 25 percent from the previous quarter.

Ridabock, global real estate firm DTZ Barnicke's CEO in Calgary, said, "Canada remains in very good shape certainly compared to the U.S. and Europe,” adding, "Everyone believes that with the continued emergence of India and China, consumption of petroleum products is going up, sourcing and supply is going down and, therefore, the good light continues to shine on Alberta -- and continues to shine on Calgary."

The report is based on RealNet Canada’s research of asset sales within the Greater Calgary Area. The statistics were based on transactions with a minimum sale price of $1 million.

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Building Permits Continue to Decrease

According to Statistics Canada, building permits fell unexpectedly in March, dropping 4.5 percent from a month earlier, although economists had projected a rebound in March. Instead, total permits registered their fourth decrease in five months, with both residential and non-residential sectors declining to $5.6-billion.

Cooled construction starts in Canada is cited as one reason for the decline, and the majority of the weakness stemmed from Alberta, with both residential and non-residential sectors falling for an overall drop of 32.9 percent on the month – the largest among Canada's provinces. In the first quarter of 2008, the total value of permits was down 8.2 percent compared to the fourth quarter of 2007.

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FYI

Transmission Pipelines and Commercial Real Estate Development - You Can Help!

The development community has been requested to participate in PIPA, Pipelines and Informed Planning Alliance.

According to PIPA: “To better understand issues related to land use planning, the Pipeline and Hazardous Materials Safety Administration (PHMSA), in conjunction with the Federal Energy Regulatory Commission (FERC), sponsored a comprehensive study of land use practices, zoning ordinances and preservation of environmental resources on transmission pipeline ROW. The October 2004 report by the Transportation Research Board (TRB) included several recommendations to PHMSA. In response, PHMSA has gathered an enterprise of pipeline safety stakeholders to implement the recommendations from the study.

The Pipelines and Informed Planning Alliance (PIPA) includes stakeholders from property development, the transmission pipeline industry, the real estate industry, and Local, State and Federal government agencies. Stakeholders from around the country have already begun addressing the critical issues involved in land use planning, but there has been no consistent, national guidance for development adjacent to transmission pipelines. PHMSA is asking stakeholders to work together in PIPA to develop guidance and document best practices for land use planning in the vicinity of transmission pipelines.”

This opportunity allows NAIOP members to work business and government officials and truly influence the land planning process as it relates to commercial real estate development. Learn more at the PHMSA Stakeholder Communications Web site.

For more information, contact Melissa Huffman, director of state and local affairs, at (703) 904-7100, ext. 110.

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Green Development Award Nominations Open Through May

Nominations are currently open for NAIOP's prestigious fourth annual Green Development Award. The award honors a member-developer for an outstanding project that best utilizes green elements in design, energy usage and development.

Applications are due to NAIOP headquarters no later than May 30, 2008. This year's award winner will be honored in Las Vegas during NAIOP's conference, development '08: the annual meeting for commercial real estate, October 20-23, 2008.

The award was developed in consultation with the U.S. Green Building Council and is given annually to a company that best exemplifies innovation, efficiency and quality in the field of green development. The Green Development Award winner is chosen by a selection committee comprising association leaders, industry peers and members of the U.S. Green Building Council and affiliate Green Building Alliance. Applicants are evaluated by the following criteria:

• sustainable sites;
• indoor environmental quality;
• water efficiency;
• energy and atmosphere;
• economic viability;
• other sustainable attributes.

Past winners include Corporate Office Properties Trust in 2005, Hines in 2006 and The Georgetown Company and Liberty Property Trust in 2007.

For more information and to download an application, log on to the Green Development Award Web page today!

Contact DeAnn Baxter, public affairs communications manager, at (703) 904-7100, ext. 163, with any additional questions.

The 2008 Green Development Award is sponsored by Liberty Property Trust.

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NAIOP Legislative News Staff