State and Local Legislative Outlook for 2016
Congress worked together late last year to pass a bipartisan tax reform bill – along with a multi-year transportation bill – that included many of NAIOP’s core federal priorities, such as making 15-year leasehold improvements depreciation permanent. While such action at the federal level has been rare over the last few years because of political posturing and bickering, state and local governments were active during the course of last year in passing meaningful legislation of importance to commercial real estate.
In North Carolina, for example, the NAIOP chapters were instrumental in reforming a burdensome zoning process established in 1923 that required supermajority votes when a protest petition has been filed. At the local level, the San Diego and Washington state chapters were at the table, working with city leaders in developing comprehensive affordable housing approaches that did not rely on one industry for finding a solution. NAIOP of Florida has led – and continues to lead – the effort in Tallahassee to pass legislation that gradually reduces the 6 percent sales tax on commercial rents, which leads to its eventual elimination and will remove the stigma of the only state in the country to apply such a commercial business rent tax.
These achievements could not have been realized without comprehensive advocacy approaches that include chapter participation in each stage of the policy-making process, from the ballot box to city hall and the state capitol. State and local governments will continue to debate and develop policies impacting commercial real estate, including tax reform, workforce development, linkage fees and energy efficiency benchmarking mandates. It is important that NAIOP and its members remain engaged, host state and local policy events, including candidate forums, and continue to serve as the voice of the commercial real estate industry before policymakers. Only through education and understanding can state and local officials make the right decisions on legislative matters impacting commercial real estate.
However, 2016 is also an election year. While much of the national media will focus on the presidential race, chapters should not overlook the at times less flashy, but potentially significant, state and local races that can impact the commercial real estate industry. At the state level, in addition to the governors’ races in 12 states and two territories, 86 of the 99 state legislative chambers are holding elections on November 8. Sixty-eight of 99 state legislative chambers are currently under GOP control, with the remaining under Democratic Party control. Whether through retirement, an election defeat or term limits, there will be new legislators and, in some cases, new leadership in state capitals starting in 2017. For example, more than 250 legislators will be forced out of office due to term limits, including the President and Majority Leader of the Ohio Senate. There will be elections for local office in cities across the country, such as Baltimore, Maryland; Portland, Oregon; and Sacramento, California, as well.
NAIOP chapters and its members should monitor and prepare for state and local ballot initiatives that circumvent the legislative process in order to set public policies of importance to commercial real estate, such as paid sick leave and minimum wage increases. Politically, some of these ballot initiatives will also serve as a platform to assist the national parties and the presidential campaigns in energizing and turning out the “base” on November 8.
Given the legislative and political outlook for 2016 and the election, it is important for NAIOP and its chapters to remain engaged and participate in the legislative process, including the elections. Those holding and seeking public office often raise economic development and job creation as top agenda items. NAIOP and its members play a pivotal role in providing the office, retail and warehouse space for economic growth and opportunity and must continue to participate in the lawmaking process. NAIOP’s grassroots and advocacy efforts are making a difference and will continue to do so in 2016.
