Achieving legislative progress is a key priority for CARW. As we enter the fall and continue conversations with members and legislators about the next legislative cycle, we close on one of the most prolific and successful sessions in 2015/16. Commercial economic development involves initiatives that extend to all areas of real estate including residential, industrial and commercial. Our efforts hit on local, state and national initiatives. Now, more than ever, CARW is in a position to affect change for the benefit of our communities and our members which are initiatives you invest in through your RPAC contribution each year. Please find a brief update on local, state and national programs and ways for you to be a part of them going forward.
On a local level, we have been involved in issues related to the Park East development, Bucks arena and Waukesha Water proposal, as well as a variety of transit and transportation initiatives. We will continue to meet with local officials to proactively move pro-real estate issues and influence actions as they fit into CARW’s overarching legislative goals. We continually aim to reform unreasonable regulation and encourage economic development. Your input at all levels is encouraged and your involvement in the public affairs committee where these issues are discussed, is invited. Contact Tracy if you are interested in learning more about those opportunities on the committee and/or task-forces.
State Affairs: We are working with the WRA lobbyist Tom Larson on gathering ideas for the upcoming 2017-18 legislative agenda and seeking input from CARW members. Specifically, we are looking for ideas that will improve the commercial real estate market, reform unreasonable regulations, and encourage economic development. So far, the list of ideas includes the following:
1. Transportation funding – Provide an adequate and permanent increase in funding for transportation infrastructure projects to maintain existing and provide new highways, roads, airports, railroads, public transit, bike paths and bridges that support our state’s economic development and quality of life.
2. TIF Legislative Council Study Committee recommendations:
a. Vacant Land Test — Eliminates the 25% vacant land test, which prohibits inclusion of an area of vacant land comprising more than 25% of the total area of the TID land in a blight or rehab district.
b. Increases 12% Limit — Increases from 12% to 15% the limit on the amount of taxable property permitted to be within a TID or TIDs at the time a TID is created or territory is added.
c. Distressed TID Sunset– Extends the sunset date for declaring a TID distressed or severely distressed from October 1, 2015 until October 1, 2020.
d. Redetermination of Base Value – Provides municipalities with more flexibility for redetermining TID base values when the current value of the TID has fallen at least 10% below its base value.
* also related to TIF, there will be a guide for legislators ready for distribution in the next several weeks. We will be using this guide to educate decision-makers on the benefits of TIF; additionally, WRA and others will be engaged in further research to evaluate the effectiveness of TIF
3. Infrastructure financing – Provide local units of government with additional tools to finance infrastructure necessary for economic development projects, such as:
- Certificates of participation
- Community development districts
- GARVEE Bonds (Grant Anticipation Revenue Vehicles)
- Municipal lease finance
- School partnership
- Small-scale water and wastewater systems
- Special district financing
- Installment purchase contract arrangement (Iota Management Advisors)
4. Broadband access – Provide necessary funding to expand broadband in underserved communities such as northern and rural Wisconsin.
If you have ideas for the upcoming legislative session, please let us know by contacting Adam Williquette at or Tracy Johnson. We need to hear directly from you as to what regulations need to be changed to help strengthen commercial real estate markets throughout Wisconsin.
National Affairs: On a national level, we are involved in many issues from drones to crowdfunding. Below, find updates on several issues we are following:
1. EB-5: The EB-5 Regional Center Program was originally set to expire last September. Six distinct reauthorization bills were introduced in 2015, all attempting to usher in reforms that would make the program more transparent, accountable and permanent. In spite of intense negotiations with the EB-5 Investment Coalition (NAR is a member of this coalition) and other stakeholders, it became clear that the details of a complex and difficult EB-5 immigration reform bill could not be resolved prior to the deadline. At the last moment, the EB-5 Regional Center Pilot Program was extended until September 2016, giving the U.S. Congress more time to hammer out permanent reforms.
2. 1031 Like Kind Exchanges: Tax reform proposals released in the 113th Congress repealed Section 1031, and the President’s budget for Fiscal Year 2015 proposes limits on the deferral provisions of it. Although none of these proposals progressed, if tax reform plans are introduced in the 114th Congress it is likely that they will borrow heavily from the previous ones, meaning Section 031 is still at risk. Thus far, no tax reform plans have been introduced in 2015. NAR participates in multiple coalitions to protect Section 1031 from repeal or limitation.
3. Lease Accounting: Financial Accounting Standards Board (FASB), the US standard setting body for the accounting industry, released its new standards for lease accounting. This project has been in the works for decades, as the FASB attempted to get its standards in line with its international counterpart, the International Accounting Standards Board (IASB). Those attempts failed and each were issued new standards. The new standard on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other organizations, the new standard will take effect for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. NAR is working with a real estate coalition to petition the FASB for an exemption for privately held companies. While the intent of the standards change is to bring more transparency to the market by requiring companies to disclose more about their leasing activities, the actual result is that it will change many businesses’ bottom lines by changes how their leases are accounted for. Many leases that had previously been left off of balance sheets will now be included. Throughout the standards convergence project, NAR has been active on its own and in coalitions to express concern the new lease accounting proposal would be detrimental to the economy by reducing the overall borrowing capacity of many commercial real estate lessees and lessors. NAR continues to work on getting an exemption for privately held companies from this standard.
4. Marketplace Fairness: In March 2015 S. 698, the “Marketplace Fairness Act of 2015,” was introduced. It would create authority for state governments to collect sales taxes on Internet sales for goods delivered to their states, which would level the playing field between brick-and-mortar and e-commerce retail businesses while assisting the states in collecting billions of uncollected state sales taxes; in June, the House version, H.R. 2775, the “Remote Transactions Parity Act” was introduced. NAR joined a coalition letter in support of H.R. 2775 and sent a letter thanking its sponsors for introducing it. NAR participates in the Marketplace Fairness Coalition, and will continue to support S.698 and H.R. 2775, and urge Congress to pass this legislation.
5. Marketplace Lending: The Department of Treasury put out a Request for Information (RFI) in July 2015 about marketplace lending. Marketplace lending describes practices such as online banks, peer-to-peer lending, and crowdfunding that are alternative lenders to small businesses and others. The Request focused mainly on the lenders’ business practices, especially dealing with evaluating borrower creditworthiness. It is not known what the Department will do with the information gathered through the RFI process but given the exponential increase in this type of lending it makes sense that the Department would want to learn more about what those lenders are doing. NAR submitted a letter highlighting the growing role that these lenders play in real estate and the need for balancing innovation and regulation. The letter also referenced NAR’s commitment to innovation and data privacy.
Click HERE for more information about our national initiatives.
We look forward to your feedback and encourage you to complete the legislative affairs priorities survey coming in early September. Also, when you receive your dues in the next few weeks, please participate in the voluntary $35 payment for RPAC – those dollars make advocacy on all of these issues possible. Let us know if you have questions, comments or concerns!