Thursday, January 23, 2014

BOMA International Advocacy Update - Tax Reform, Leasehold Depreciation, Energy Efficiency and Code Development Victory

BOMA Issues Comments on Senate Finance Draft Tax Proposal

Last week, BOMA International issued comments on Senate Finance Committee Chairman Max Baucus’ (D-Mont.) draft tax reform legislation released prior to the Thanksgiving recess. The focus of BOMA’s comments was the proposed policy of depreciating the building and any building improvements, including leasehold improvements, over 43 years, as opposed to 39. BOMA also took issue with the Chairman’s repeal for the deduction for energy efficiency improvements to commercial buildings.

In addition, BOMA joined the Depreciation Fairness Coalition to send comments regarding the longer timeline for depreciation of leasehold improvements. BOMA also was among the signatories on a real estate industry comment letter covering the draft’s depreciation proposal, repeal of Section 179D and repeal of Section 1031, commonly known as 'like-kind' exchanges. Given that Senator Baucus has been nominated to be ambassador to China, soon removing him from the Senate tax discussion, it is unclear just how his proposal will be considered as the tax reform debate evolves in Congress.

Coalition Weighs In on Tax Deductions for Energy Efficiency

BOMA International, in coalition with more than fifty real estate, construction and manufacturing organizations, has signed on to a comment letter urging the Senate Finance Committee to consider an extended and improved 179D tax provision that will allow for greater investment in energy improvements for commercial and large multi-family buildings. This provision would ultimately lower energy bills and carbon emissions.

BOMA and its partners urged Senator Max Baucus to look to the Commercial Building Modernization Act (S. 3591, which was introduced in the 112th Congress) as an example for how 179D can be better written to save money and encourage deep retrofits. Baucus has discussed repealing 179D altogether.

The current deduction of up to $1.80 per square foot expired at the end of 2013. It provided a tax deduction for building owners to recover some of the costs for high-efficiency components and systems that meet certain energy savings performance targets.

BOMA Scores Victory on Economic Parameters

ASHRAE held its winter conference in New York this past weekend, and the project committee for ANSI/ASHRAE/IESNA Standard 90.1 – Energy Standard for Commercial Buildings met to set, among other things, economic parameters for the current 90.1-2016 development cycle.

The economic parameters that the committee uses to determine life-cycle cost-effectiveness are of great importance to BOMA members because they essentially set the bar for new items to be included in the standard. Mike Erbesfeld, BOMA International’s Director of Codes and Standards, is a voting member of the project committee and worked on an Economics Working Group for the past three months to ensure that the parameters were truly reflective of the industry both today and three years from now. BOMA is pleased to report that the committee voted for the parameters we suggested, including a 9.34 percent pre-tax discount rate. These parameters were based upon numerous investor surveys provided by BOMA members. BOMA International thanks all of those who contributed to this effort.

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