LEGISLATIVE AFFAIRS: Tax Reform Victories for Commercial Realtors

Philip Weiden | March 2018

Commercial brokers fared well in the recently passed “tax reform bill”. Specifically, 1031 like kind exchanges were kept intact and middle-income housing tax credits were kept that encourages developers to build affordable housing in expensive housing markets.

Still on the drawing board is the ADA Education and Reform Act (2018). The original Americans with Disabilities Act was passed under President George H.W. Bush; it was landmark legislation that was badly needed at the time.

The ADA Education and Reform Act was passed by a vote of 225-192 in the House of Representatives. The bill allows a certain period of time for owners of commercial buildings to correct violations of the ADA of which they had no prior knowledge. Currently the ADA is enforced and lawsuits can be pursued without giving the building owner a chance to bring the property into compliance with federal regulations.

In recent years, a small number of attorneys have taken advantage of the ADA’s lack of a notice requirement and filed lawsuits indiscriminately against commercial property owners under the ADA rules. Those business owners, who often in good faith believe they are in compliance, then have the choice of paying a settlement or hiring an attorney and taking the time to deal with a costly legal proceeding. The bill has bipartisan support with 10 Democrats joining Republicans in the House in order to support the bill.

Oftentimes in these cases attorneys notify a business owner that they are not in compliance with ADA regulations thus forcing the business owner to pay a settlement without first being given an opportunity to correct the violation. The ADA should truly be about helping the disabled and not about lawyers receiving fees. The building owners can either go to court or try to settle the complaint without a fair hearing. NAR issued a commercial-targeted “call for action” in support of the bill, and the FPCs, GADs, and state associations were involved as well. Now that HR 620 has passed the House, we will move on to focus on companion legislation in the Senate.

Other issues that are important to commercial Realtors are 1031 like kind exchanges referred to above. Realtors won a big victory in the tax reform fight and the exchanges ended up not being modified in the tax debate. This fight was successful with the help of your RPAC dollars, and commercial Realtors speaking out against repealing or changing this part of the tax code. If this did not happen, redevelopment projects in local communities could be threatened.

Finally, the aforementioned tax credits for middle and lower income housing properties were preserved for developers, which is a big victory for building more rental housing. If this did not remain in the tax code, developers would not be able to set aside a certain number of units deemed affordable. This, in turn, would have negative consequences on the cost of rent, and ultimately the cost of saving for a first home. Stay tuned for future updates on commercial real estate issues.

Philip Weiden
Legislative Affairs columnist Philip Weiden is the Government Affairs Director for the Hudson Gateway Association of Realtors.