Legislative News
December 23, 2008
FEDERAL FOCUS
STATELINE
CANADA UPDATE
FOR YOUR INFORMATION
FEDERAL FOCUS
Treasury Uses TARP Funds for Auto Industry Assistance – Use of Remaining Funds at Issue
On December 19, President Bush announced that the Treasury Department would use the remaining funds from the initial $350 billion allocation for the Troubled Asset Relief Program (TARP) to help the domestic auto industry in becoming financially viable. The automobile manufacturers would be provided with $13.4 billion in short-term financing from TARP and an additional $4 billion would be made available in February, to be drawn from the second installment of the TARP program.
Congress provided $700 billion for the TARP in October to help the federal government deal with the crisis in the financial markets. Use of the TARP funds for purposes of assisting the auto industry had initially been opposed by the White House and Treasury, but the action became necessary when Congress failed to approve legislation to deal with the auto industry crisis.
NAIOP and its allies in the commercial real estate industry have been working with policy makers with the goal of developing solutions to the credit crisis affecting the industry. In late November, a coalition comprised of major industry organizations sent a letter to Treasury Secretary Henry Paulson detailing the severe liquidity shortage in the capital markets for commercial real estate and emphasizing the growing seriousness of the problem for 2009.
The commercial real estate industry is advocating the creation of a commercial debt purchasing facility similar to the facility created by Treasury to purchase consumer-loan (auto, credit cards) based asset-backed securities and to restore confidence to the commercial mortgage-backed securities (CMBS) markets.
The federal government’s short-term rescue action effectively depletes the current TARP fund, requiring that Congress approve the second installment of $350 billion for use by Treasury. Treasury Secretary Henry Paulson has publicly called on Congress to release the remaining bailout funds, but has not formally provided to Congress specific plans for their use and the White House may leave the matter for the incoming Obama administration.
For more information, contact Aquiles Suarez, vice president of government affairs, at (703) 904-7100, ext. 115.
From the State House to the White House: Obama’s Cabinet Appointees Show the Importance of State and Local Relationships
On November 4, the nation elected Barrack Obama as the 44th President of the United States. President-elect Obama’s public service began at the local level serving as a community organizer before being elected to the Illinois Senate, and he has nominated several individuals to serve in key positions within his administration that have clear experience serving at the state and local levels. These appointees will bring their local and state experience and backgrounds with them to Washington and apply them in the development and implementation of federal policy
Many of the new administration appointees have worked in issues of importance to the commercial real estate industry. This underscores the importance of each NAIOP chapter maintaining a strong public affairs program that ensures a continued discussion on policy with public officials whether they serve at the local level, the state capitol or eventually at the federal level in Washington, D.C. Many of President-elect Obama’s appointments are well known to NAIOP chapters, including Commerce Secretary-designee Governor Bill Richardson (N.M.), Interior Secretary-designee Senator Ken Salazar (Colo.) and EPA Administrator-designee Lisa Jackson (N.J.).
Please click here for a complete list of President-elect Obama’s Cabinet nominees along with other key staff appointments.
For more information, contact Aquiles Suarez, vice president of government affairs, at (703) 904-7100, ext. 115.
STATELINE
Florida Supreme Court Upholds Alternative to Florida Hometown Democracy Amendment
The Florida Supreme Court recently held that the constitutional ballot petition for land use management proposed by Floridians for Smarter Growth (FSG), a coalition that includes NAIOP of Florida, Florida Association of Realtors, Florida League of Cities and many others, had complied with all legal requirements. The decision by the court is considered a victory by many in the business community. The FSG constitutional amendment is an alternative to the Florida Home Democracy (FHD) effort which requires a public vote on all changes to the local comprehensive plan.
Unlike FHD, the alternative FSG constitutional amendment would require that a petition signed by 10 percent of the local electorate be filed calling for a public vote on a proposed change to the local comprehensive land use plan and would not subject minor or technical changes to vote. The state of Florida has annually averaged 10,599 changes to local comprehensive land use plans over the last four years.
NAIOP of Florida continues to actively support FSG and the alternative amendment to the FHD initiative. For more information, visit www.Florida2010.org or contact
Toby Burke, senior director for state and local affairs, at (703) 904-7100, ext. 116.
CANADA UPDATE
Canada’s Aging Infrastructure May Benefit from Billions Proposed for Revitalization
A recent article in the Calgary Herald cited several examples of how breakdowns in the country’s aging infrastructure have reached critical levels with some failures of infrastructure resulting in citizen injuries and even fatalities. The article also detailed a proposed federal strategy to rebuild the crumbling infrastructure – from roads to sewage treatment facilities. In light of the economic downturn, some federal leaders are eager to allocate billions of federal dollars to revamping the infrastructure to stimulate companies who would bid for contracts and create more jobs.
However, the country’s mayors, leading civil engineers, urban transit agencies and environmentalists see an even more pressing reason to take dramatic action. They believe that aging sewage systems, failing water treatment facilities, crumbling roads, deteriorating bridges and overloaded public transit networks have cities in critical condition, putting the health and safety of Canadians in danger.
The Building Canada plan, which would allocate more than $33 billion over seven years to rebuilding efforts, was proposed by the Conservative government as part of the 2007 budget. However, key stakeholders of the plan are doubtful that this proposal will be enough to fix the problems, with costs of repairs increasing each day.
In addition, the federal government is still at least five years away from completion of a vital study that would detail the specifics of infrastructure damage.
Jean Perrault, mayor of Sherbrooke, Quebec and president of the Federation of Canadian Municipalities, expressed his concerns, stating “I think we have reached a crossroads in the face of our situation with our infrastructure. Everything is getting old – all our streets, bridges, sports centers, cultural buildings and so on.”
Parrault’s federation estimates that cities would need at least $123 billion to bring essential public infrastructure up to acceptable levels and an additional $115 billion to build new infrastructure to meet the needs of the growing population.
Toronto Mayor’s Economic Plan Includes New Commercial Development
A recent article in the The Star outlined Toronto’s mayor’s plans for boosting a slumping local economy. Mayor David Miller has plans for developing city land at the top of his list of measures intended to aid Toronto’s shrinking economy.
Miller has asked bank executives to keep credit lines flowing to real estate developers in Toronto and is trying to encourage development on city-owned property near subway stations in an effort to create jobs and bring in revenue for the city. Miller and his staff are focusing on possible development on several dozen city-owned properties and he is talking directly to lenders, emphasizing the dire need to keep credit open to developers. He expressed his views on new development, saying that “keeping the development industry going is vital to keeping Toronto’s economy on track.”
Councilor Kyle Rae, chair of Toronto’s economic development committee, has asked the mayor to speak to Premier Dalton McGuinty on behalf of developers with a goal of securing finance guarantees for several major projects. Miller has not approached the province on the subject, but reported that city staff is in ongoing communications with the development industry and financial institutions as to what provincial assistance may be needed. The city is also creating two new agencies: Build Toronto and Invest Toronto. Build Toronto will look for ways to develop city-owned land and Invest Toronto will promote the city to investors. The creation of these new agencies is a result of recommendations from a private-sector panel of advisors who told the mayor that the city could get more value from its real estate and should be more aggressive in promoting investment.
CIBC Releases Economic Rankings for Canadian Cities
Regina, Saskatchewan claimed the number one spot on CIBC’s 2008 Metropolitan Economic Activity Index.
Regina was the best city in Canada economically in 2008 as measured by the CIBC's metropolitan economic activity index with 23 points. That represented a jump of nine spots and 10.5 points compared to the city's ranking in 2007.
Canada's cities have been losing financial ground over the past two years. But nearly half of the drop has occurred since the beginning of 2008 and the acceleration of the current global credit crunch.
Places such as Toronto, Calgary and Vancouver saw slower employment growth, fewer housing starts and fewer full-time employees as a percentage of the total workforce this year - all signs of economic trouble according to economist Benjamin Tal.
Regina and Saskatoon, which maintained 2007's third-place ranking this year, have both posted decent employment growth and have continued to see their populations increase, a major factor in home sales and housing starts, the CIBC noted.
Edmonton and Calgary dropped to fifth and sixth respectively in the 2008 ranking, down from first and second last year. Both cities also scored lower in terms of the CIBC index.
Vancouver placed fourth on the list while Toronto, Canada's biggest city, came in at number two on the CIBC list for 2008.
The bank measures nine different economic indicators, such as commercial bankruptcies and employment as a percentage of the city's workforce, to arrive at a final index figure.
FYI
NAIOP Research Foundation Presents New Report on Commercial Real Estate's Contribution to the U.S. Economy
A new report presented by the NAIOP Research Foundation, The Contribution of Office, Industrial and Retail Development and Construction to the U.S. Economy, states that the value of commercial buildings is much more than the sum of their construction outlays or their assessed valuation.
Research was submitted by Dr. Stephen Fuller, George Mason University, which details the important economic benefits – including the “ripple effect” – that are derived from commercial real estate activities. This research project calculates the contribution of office, industrial and retail commercial buildings to the national and respective state economies, and provides a document that commercial real estate, from association leaders to all NAIOP membership, can use to emphasize the economic and fiscal importance of commercial buildings to local, state and national audiences.
Download the full report here. Individual state reports are also available.
NAIOP Legislative News Staff
President, Thomas J. Bisacquino (Ext. 104)
Vice President for Government Affairs, Aquiles Suarez (Ext. 115)
Vice President for Marketing, Kathryn Hamilton (Ext. 165)
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