SFPE Supports Federal Legislation Aimed at Enhancing Building Safety

Each year in the United States, more than 3,000 people die, thousands are injured, and over $10 billion in property is lost as a result of fire. As a way to enhance public safety in buildings and reduce these losses from fire, a bill – the Community Building Code Administration Grant Act of 2007 – has been introduced in the U.S. Congress. The Society of Fire Protection Engineers (SFPE) supports this bill that would improve building and fire code enforcement in jurisdictions throughout the country.

“Improved code enforcement will lead to better design and construction practices,” said Chris Jelenewicz, engineering program manager with SFPE. “As a result, our nation’s schools, hospitals, shopping centers, homes, and high-rise buildings will be better protected.”

This legislation will authorize a grant program through the U.S. Department of Housing and Urban Development. If enacted and funded, this law would provide locally matched federal grants to jurisdictions that seek to upgrade their local building and fire code administration and enforcement resources. These grants would provide $100 million per year over five years to help local governments employee building and fire code officials.

“Many fire protection engineers work as building and code officials to help build and maintain fire safe communities,” said Jelenewicz. “If this bill is enacted, many communities will have the opportunity to employee fire protection engineers as part of a community’s code enforcement team.”

This House version of this legislation was sponsored by Congressman Dennis Moore (Kansas) and was referred to the House of Representatives Financial Services Committee (H.R. 4461). The Senate version (S. 2458) was sponsored by Senator Mary Landrieu (Louisiana) and was referred to the Senate Banking Committee.

Real Estate Issues Raised on Capitol Hill

The Institute of Real Estate Management (IREM® ) and the CCIM Institute recently joined forces to raise awareness on Capitol Hill of key issues affecting the commercial real estate industry. Approximately 275 IREM and CCIM Institute members representing 40 states and the District of Columbia held 220 meetings with their respective senators, representatives, and their staffs to voice the industry’s concerns about these critical topics: Energy Tax Credits; Climate Change/Energy; Natural Disaster Insurance; Leasehold Improvements; and Capital Gains/Depreciation Recapture.

Energy Tax Credits
IREM and CCIM Institute believe that incentives for energy efficiency investments are the best way to promote conservation. While many legislative proposals threaten to require mandates for green buildings and “zero-net” energy, the two organizations support positive incentives as the best way to achieve the goal.

IREM and CCIM Institute support H.R. 5351, the “Renewable Energy Conservation Tax Act of 2008.” This legislation will extend tax incentives for energy efficiency in commercial buildings and allow a five-year recovery period for the depreciation of qualified energy management devices.

Climate Change/Energy
Today, commercial buildings make up 73 billion square feet of real estate in this country. IREM and CCIM Institute believe that lawmakers need to understand the benefits of market based incentives to retrofit existing buildings for energy efficiency and the serious consequences to mandating the same.

Natural Disaster Insurance
The intensity of large natural disasters in recent years has made the acquisition of adequate property insurance very difficult in some areas. Insurers are declining to write policies, canceling existing policies, or increasing premiums on existing policies. Recently, Hurricanes Katrina and Rita have refocused attention on this issue. The viability of the insurance market is critical to real estate financing. IREM and CCIM Institute believe that both commercial and multifamily properties should be covered, in addition to homeowner’s insurance.

IREM and CCIM Institute Members lobbied their legislators to amend the “Homeowners Defense Act” (H.R. 3355 and S.2310) to include protection for commercial and multifamily properties.

Leasehold Improvements
IREM and CCIM Institute believe that it would be unrealistic to revert to the prior recovery period of 39 years depreciable life for tenant improvements. In their view, a realistic cost recovery period, such as 10-15 years, is a reasonable incentive to keep downtown office, commercial and retail space modern, efficient, and competitive with suburban space. In addition, such a change would more closely mirror corresponding lease terms for these properties.

IREM and CCIM Institute support the “Leasehold Improvement Depreciation Act of 2007” (H.R. 2014/ S. 1361), which would make the 15-year recovery period for leasehold improvements permanent.

Capital Gains/Depreciation Recapture
Under current law, capital gains are taxed at a maximum rate of 15%. This rate is temporary and will revert to 20% as of January 1, 2011. When capital gains tax rates were reduced to 15% from 20% in 2003, the depreciation recapture rate remained at 25%. Before 1997, depreciation recapture amounts were taxed at the same rate as capital gains.

IREM and CCIM Institute support a level playing field for those who choose to invest in real estate and thus oppose rates for depreciation recapture that are higher than the capital gains rate.