Twice a year, at the annual Forums Symposium and again at CRE.Converge, NAIOP’s government affairs staff meets with a number of NAIOP’s National Forums for purposes of updating members on current issues in Congress, the status of our federal advocacy efforts, challenges faced by the industry on the state and local level, and on issues these Forum members deem important to their businesses. Elections and election-year politics, of course, are a topic of discussion at these meetings as well. But whatever the focus, and regardless of whether the meetings are with a NAIOP Forum on industrial development, capital markets, investment management, e-commerce or a Developing Leaders Forum, they provide a valuable source of industry feedback that inform our advocacy efforts and help ensure we are aligned with the interests of our members. They also serve to educate our members as to some of the ins and outs of the happenings in our nation’s capital and in Congress, and to understand how we advocate for their interests.
At our recent Forums Symposium held last week in Houston, a priority discussion item was the status of tax proposals that would impact commercial real estate in President Joe Biden’s tax agenda, many of which were included in his American Families Plan. That became part of the larger debate between the U. S. House of Representatives and Senate over a filibuster-proof budget reconciliation bill that could pass the Senate. NAIOP members also learned of a proposed regulation on corporate climate disclosures recently issued by the Securities and Exchange Commission (SEC) and the likely impact on their businesses. Toby Burke, NAIOP’s associate vice president for state and local government affairs, provided information regarding state and local challenges facing our industry and members. And the upcoming congressional midterm elections and legislative outlook thereafter were also topics of discussion.
Tax increases that had been proposed by the White House and some in Congress included virtual elimination of Section 1031 like-kind exchanges for commercial real estate, a near doubling of capital gains tax rates, increases in corporate and partnership taxes, taxing real estate carried interests at higher ordinary income rates, and modifying estate tax rules to tax all the appreciation of an asset, making it immediately payable upon the death of the decedent. Forum members learned of our successful efforts to educate elected officials on the potential harm of these proposals, the impact of senators like Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) and other centrists on the debate, and the future outlook for tax policy affecting our industry.
The SEC’s proposed rule requiring corporations to disclose climate-related risks and greenhouse gas (GHG) emissions also ensured that sustainability was a major topic of discussion. NAIOP members have been at the forefront of increasing sustainability and energy-efficiency in the built-environment, making these goals part of their corporate culture and investing substantial resources to advance these efforts. Our advocacy has emphasized the importance of incentive-based approaches, and that policies to promote increased energy-efficiency should be technologically and economically feasible and allow for the differences between local markets. The SEC proposal raises a number of challenging issues for commercial real estate, including possibly conflicting with processes already in place at many of the largest commercial real estate public corporations. Forum members heard how we are working with a coalition of national real estate organizations and federal regulators to ensure the SEC’s approach considers the unique characteristics of commercial real estate.
In addition to federal legislation and regulations, emerging issues at the state and local level were also important topics for discussion. Restrictions on warehouse development, bills to reform and streamline permitting, and the growth of local ordinances and initiatives banning the use of natural gas are all part of policy challenges facing the industry. The lack of supply of affordable housing, usually the province of groups focused on the residential sector such as realtors, homebuilders and developers building multifamily housing, has also become a prominent issue for commercial real estate as a whole, as local governments look to the commercial sector to fund affordable housing initiatives. As members concerned for their communities, NAIOP members desire to be part of the solution to these local problems. But many of the barriers to affordable housing development are local zoning and land use policies, opposition to increased density, and other factors that local officials find politically difficult to address. Forum members heard of NAIOP’s contributions as part of a coalition of national real estate groups dedicated to addressing the lack of affordable housing. Ideas being developed include providing federal incentives to facilitate conversion of unused office properties into affordable housing units.
Finally, politics and the upcoming congressional midterm elections were a topic of discussion. Members heard about the historical record of the president’s party in congressional midterm elections (not good), and how Biden’s approval ratings (the lowest of any president at this point in his term except for one: Donald Trump), and the level of voter dissatisfaction with the direction of the country (75% reporting dissatisfaction) all point to Republicans probably winning a majority in the House of Representatives this November, and the implications for legislation.
Undoubtedly, those Forum members who heard from NAIOP’s government affairs staff walked away knowing a little more of what has been going on in Washington and their states. But the real value is gained by the government affairs staff, which has the privilege of gaining from the knowledge, experience, and insights that come from our interaction with NAIOP’s Forums members.