Larry J. Sabato, director of the University of Virginia’s Center for Politics and author of Sabato’s Crystal Ball, likes to warn his readers that “those who live by the crystal ball wind up eating ground glass.” As we begin a new year, it is with that note of cautious humility that we try to preview what is likely to happen in 2016 on a few federal issues of importance to NAIOP members. This of course comes on the heels of a very successful 2015, when many of NAIOP’s top items on its legislative agenda were realized. That 2016 is also a presidential election year means the focus will turn from legislating to politicking on a national scale.
But these two facts – that we accomplished a great deal last year, and that Congress will be focused on getting re-elected this year – does not mean we won’t have a lot of work in the coming months when it comes to our advocacy. On the contrary: In 2016, we anticipate substantial activity in the following major areas:
Tax Policy: While 2015 proved to be a banner year for NAIOP in terms of achieving its tax policy goals, House Speaker Paul Ryan is intent on pushing forward on comprehensive tax reform. Of course, nobody really believes another major tax reform bill can be enacted prior to the presidential election. The presidential candidates of each party will have the biggest megaphone in politics in 2016, and the natural inclination of Congress is to wait until the people have spoken in the next election before enacting any major, long-term changes to fundamental laws.
On tax policy, House and Senate Republican leadership do, however, want to lay the foundation for the next president. They will want, to the greatest extent possible, to have fully-vetted the various policy positions on hot-button tax issues. The presidential candidates will be talking about income inequality, capital gains tax rates, ending tax preferences, and other issues involving tax policy; those in Congress will be reacting to the debate. While legislation may not be advanced, Republicans and Democrats will be making up their minds as to where they plan to go on matters important to our industry, including capital gains tax rates, carried interest compensation, like-kind exchanges, and other issues. The tax bill passed in 2015, which made several formerly temporary provisions permanent (such as 15-year leasehold improvement depreciation), was just a setup for a broader tax overhaul. We will be actively making our case with members of Congress as they work in committee hearings and behind the scenes as they plan the future course of tax reform.
Energy Legislation: At the close of 2015, the House passed a major energy bill which, among other things, would require the Department of Energy to set energy efficiency targets for commercial building codes. NAIOP worked with Congress to ensure that language requiring that new energy-efficiency building codes be both technologically and economically feasible from a development perspective (i.e., new requirements would have reasonable payback periods).
The Senate’s Energy and Natural Resources Committee passed an energy bill in September of last year which also had similar NAIOP-supported language. That bill garnered Democratic support, and indications are that the Senate will try to move swiftly in the next few months on what leaders hope will be a broad, bipartisan energy bill that can then be reconciled with the House version in conference. The last major energy bill passed in 2007. With many more Senate Republicans up for re-election this year than Democrats, passing major energy legislation would be an accomplishment that could be touted to constituents.
Financial Regulation: House Financial Services Committee Chairman Jeb Hensarling intends to push a major rewrite of Dodd-Frank legislation in order to provide an alternative vision for regulating our financial system. Last year, Hensarling focused on passing smaller bills focused on making changes to specific provisions of the landmark legislation, rather than a repeal or overhaul.
While it is unlikely such a controversial bill would get through the Senate in an election year, issues affecting lending to commercial real estate, such as capital requirements for commercial real estate loans, additional requirements on commercial-mortgage backed securities (CMBS), and other matters affecting our industry will be debated. Some selected provisions could get traction on appropriations bills or other legislation that is moving through Congress.
In addition to these key issues, we anticipate an aggressive push by the White House to get certain environmental regulations in place during the final year of President Obama’s term, including a controversial rule that would expand federal jurisdiction over wetlands. Our prediction is clear: 2016 will remain a very busy year for NAIOP’s advocacy staff in our nation’s capital.