Have You Benchmarked Your Building’s Energy Performance? – Join Your Peers as BOMA STARS
FIRPTA Legislation Introduced in Congress
Legislation that will help increase foreign investment in U.S. real estate was introduced last week in both the House and Senate. Like similar legislation that passed the House overwhelmingly last summer, H.R. 2989 and S. 1616 would increase (from 5% to 10%) the ownership stake that a foreign investor may hold in a publicly-traded real estate investment trust (REIT) without being subjected to onerous reporting and administrative requirements under the Foreign Investment in Real Property Tax Act (FIRPTA). In countries where it is consistent with U.S. tax treaties, when applying this ownership test, H.R. 2989 and S. 1616 would “look-through” to the individual investors in foreign mutual funds that, in turn, invest in U.S. REITs.
The legislation also would reverse an onerous 2007 ruling by the Internal Revenue Service (IRS Notice 2007-55) that expanded FIRPTA’s reach — applying the law to liquidating distributions received by foreign investors from private, domestically-controlled REITs.
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Broad Coalition Supports Changes to Energy Tax Incentives
On May 5, BOMA International joined a group of over 85 real estate owners, builders, contractors, building managers, energy service companies, building efficiency manufacturers and suppliers, energy efficiency financing sources, environmental and efficiency advocates, architects and engineers, and other stakeholders to call on Congress to make improvements to the Energy Efficient Commercial Buildings Deduction (Section 179D of the Internal Revenue Code).
Under current law, building owners may qualify for a tax deduction of up to $1.80/sf for energy efficient upgrades that achieve a 50 percent reduction in annual energy cost to the user, compared to a base building defined by the ASHRAE/IESNA 90.1-2001 Standard. Partial credit is also available for the 3 major subsystems of the building (lighting, envelope, and HVAC and hot water systems). BOMA International lobbied hard for this tax incentive, but in practice the bar has been set so high that it is extremely difficult to achieve, especially for existing buildings.
In February, President Obama announced his Better Buildings Initiative, and one of the major planks of this effort was to call on Congress to modify 179D. The May 5 letter to key Senate leaders includes ideas for restructuring the deduction to make it more useful and beneficial to the commercial real estate industry, and in turn, promote energy efficiency retrofits.
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Legislation to Expedite Depreciation of Fire Sprinklers Introduced
Last week, Representatives Aaron Schock (R-Ill.) and James Langevin (D-R.I.) introduced legislation (H.R.1792) to allow buildings to choose whether or not to classify certain sprinkler systems as Section 179 property, which would allow for the cost to be expensed in the year the system is placed in service, or depreciate it over 15 years. The Small Business Jobs Act (SBJA) of 2010 allows a business to expense up to $500,000 of section 179 property for tax years beginning in 2010 and 2011. Rep. Langevin has introduced similar legislation in past sessions of Congress that would allow a building to depreciate fire sprinkler systems over 5 years rather than 39. BOMA International will keep you informed as this legislation moves through Congress.
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Senate Energy Bill Introduced
On May 16, Senators Shaheen (D-N.H.) and Portman (R-Ohio) introduced S. 1000, the “Energy Savings and Industrial Competitiveness Act of 2011.” Though the bill’s sponsors believe it will promote energy savings in buildings, utilities, industry and transportation, BOMA International has concerns that its approach in regard to commercial buildings will lead to building codes that are not cost effective and leave the door open for the Department of Energy (DOE) to produce a national model building code, an outcome that BOMA vehemently opposes.
For the better part of the past decade, BOMA International has been working to educate Congress that overly aggressive and arbitrary energy efficiency targets in building codes are an ineffective way to legislate energy efficiency. Senators Shaheen and Portman provided opportunities for the real estate community to provide comments on their legislation before its introduction and incorporated some of our modifications into the bill, thus vastly improving the language over its predecessors. For example, in previously failed legislation, Congress would have set the energy efficiency targets (30% and 50%), though S. 1000 allows DOE to do so through a regulatory rulemaking. However, we still believe that DOE’s appropriate role in the building code development process is to provide technical support and DOE should not be given expanded authority that could potentially allow them to develop future model building codes.
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President Declares National Hurricane Preparedness Week
President Obama has declared this week to be “National Hurricane Preparedness Week.” June 1 is the official kickoff of the 2011 Hurricane Season; how prepared are you for a hurricane or other natural disaster? With Hurricane Preparedness Week running from May 22-28, now is the perfect time to check if your preparedness plan is up to date. BOMA International can help with everything you need to develop, assess or re–evaluate your emergency preparedness plan is available in The Property Professional’s Guide to Emergency Preparedness.
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Fire Sprinkler Legislation Introduced in Senate
The Senate has followed the House with the introduction of legislation that would allow for quicker depreciation or expensing of the installation of fire sprinklers in existing buildings. Senators Tom Carper (D – Del.), Frank Lautenberg (D – N.J.) and Susan Collins (R – Maine) recently introduced S.1035, a companion bill to H.R.1792, which allows buildings to choose whether or not to classify certain sprinkler systems as Section 179 property, which allows for the sprinkler installation cost to be expensed in the year the system is placed in service, or to depreciate it over 15 years. The Small Business Jobs Act (SBJA) of 2010 allows a business to expense up to $500,000 of section 179 property for tax years beginning in 2010 and 2011.
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BOMAPAC Supports Democratic and Republican Leadership
BOMAPAC, BOMA International’s political action committee, has recently supported some of the top leadership in both the Democrat and Republican parties in the House. On the Democratic side, BOMAPAC lent support to Congressman Steny Hoyer (Md.). The second-ranking member of the House Democratic Leadership, Hoyer has represented the fifth district of Maryland since 1981 and previously held the position of Majority Leader during the 111th Congress when the Democrats controlled the House. On the Republican side, BOMAPAC supported Congressman Peter Roskam (Ill.). Rep. Roskam, the Chief Deputy Whip of the House Republican Leadership, has represented the sixth district of Illinois since 2007 and also serves on the tax-writing Committee on Ways and Means.
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Have You Benchmarked Your Building’s Energy Performance? – Join Your Peers as BOMA STARS
Since its launch in January, the BOMA STARS initiative, an effort to promote the importance of benchmarking energy management data using the U.S. Environmental Protection Agency’s ENERGY STAR® Portfolio Manager and sharing that data with BOMA, has seen tremendous success, nearly doubling the number of buildings that have shared their data. To date, nearly 3,000 facilities have shared their energy management data with the BOMA International Master Account, representing more than 690 million square feet of space.
While this is a major step forward, this only accounts for six percent of the nine million square feet owned or managed by BOMA’s members. We still need your help in reaching our goal. By agreeing to share their energy management progress, BOMA members help us show policy makers that the commercial real estate industry can reduce energy consumption without new mandates and demonstrate the effectiveness of the voluntary marketplace. All data shared with BOMA is kept confidential and only used in aggregate, and we do not identify submitters by name or location within a market. Visit the BOMA STARS resource site to learn how to benchmark your building and share your data with BOMA International.
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