NAIOP maintains active legislative efforts on your behalf in Washington, D.C., and throughout its extensive chapter network. At the Southeastern Legislative Summit last month, chapter representatives from throughout the region learned about pressing federal, state and local issues that impact the commercial real estate industry. While each state has its own local concerns, such as Alabama’s loss last year in the legislature of our state historic tax credit program and our hopes to revive it this year, there are some state and local trends that appear to be growing. Fortunately, through NAIOP, we can learn from other chapters how to approach these issues when they arrive on our doorstep. And then, of course, there are the federal issues and prospects for 2017 in light of the recent election results that will impact us all.
On the federal agenda, NAIOP has been monitoring for several years the prospects for tax reform. Before November 8, tax reform was a distant possibility. Next year, with the Republican Party controlling the White House and both branches of the legislature, it is entirely possible that we will see comprehensive federal tax reform in the first quarter of 2017. As everyone knows, reduced corporate tax rates would be a big part of that reform. But how would Congress pay for those cuts? NAIOP’s legislative experts are concerned that, just as in 1986, the commercial real estate industry may take some hits. Ideas floating around include elimination of 1031 tax-free exchanges, the deductibility or expensing of interest on real estate loans, and favorable treatment for carried interest. Before you start polishing your resume, bear in mind that one possible tradeoff for these hits to our industry is the acceleration of the depreciation period for real estate from 39 years to one year! In any case, it’s impossible to predict which, if any, of these ideas might make it into legislation, which is why NAIOP’s efforts on Capitol Hill are so important for us all.
Other federal issues that NAIOP has been following for some time include legislative efforts to include a type of cost-benefit analysis into building code changes, particularly concerning energy efficiency, and extension and maintenance of healthy tax incentives for energy efficiency.
At the state and local level, issues of the day include energy efficiency benchmarking, which requires building owners to monitor and report, sometimes publicly, a building’s energy usage, the impact of water scarcity on economic development, and the usage of “inclusionary zoning” and usage fees to address affordable housing needs in some states and municipalities, notably including Nashville, Tennessee. None of these issues have shown up in a significant way in Alabama yet, but that could change soon, particularly as advocacy groups perceive their options at the federal level weakening in light of the election results.
The 2017 calendar is filling up from a legislative affairs perspective. We’ll get to visit with the Alabama Congressional delegation on Capitol Hill after the annual NAIOP legislative conference in February, we’re planning an event with the Birmingham City Council in March 2017, we’ll be visiting with our state legislators throughout the year, and we’ll be repeating our annual legislative update program for the chapter also in March 2017.