Advocacy Update - April 2023

BOMA’s mission is to enhance the value of commercial real estate through effective advocacy, education, information, professional development, and industry networking.

State: 

BOMA has been actively and aggressively engaged in advocacy on behalf of members and the CRE industry on three proposed tax increase bills with the potential for high impact on commercial real estate as well as other proposals. With 5 days to go in the 2023 legislative session (which ends April 24th) here is a recap of some key issues.

Victories:

House Bill 1628: The original bill would have increased state and local real estate excise taxes and created a new tier in the state-graduated REET Tax that would be the highest in America on sales over $5 million. BOMA’s advocacy began on day one with effective testimony and along with coalition partners, achieved a modification of the proposed bill to lessen the impact. 

• However, BOMA continued our efforts to kill the bill, contributing $10,000 to a fund to conduct outreach to lawmakers to vote no, and as of the date of this article, we have growing confidence the bill will not be approved.

• Senate Bill 5770: This bill was recently introduced and if passed would raise the limit on increases in state and local property taxes to 3% per year. With our immediate outreach to lawmakers, we have growing confidence the bill will not be approved as well. We will know by April 24th.

• Senate Bill 5335: This bill would have not only increased the overall capital gains tax rate from 7% to 8.5%, on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets, it would have added real estate transactions.  BOMA defeated this bill to add real estate to the list of taxable assets.

• HB 1589/SB 5562: BOMA was instrumental in defeating a bill that would have banned new natural gas installation state-wide.  

• House Bill 1117: BOMA testified in support of legislation that would study and bring clarity to our state’s power supply adequacy. This bill passed both houses of the legislature. A question remains as to whether or not the governor will sign the bill as he previously vetoed the same bill in the last session.

• House Bill 1527: BOMA supported this bill that will make technical corrections to the local tax increment financing program and it passed the legislature and is awaiting the Governor’s signature.

• BOMA has helped defeat several rent control bills this session as some could lead to efforts to impose rent control in some commercial real estate situations.

• Protecting Personal Guarantees: During the pandemic, the Governor considered making personal guarantees in real estate contracts void using emergency declaration powers during COVID. After several months BOMA’s advocacy for members and the industry convinced the governor not to enact this declaration.

• C-PACER legislation: BOMA is the champion that secured passage of C-PACER financing first in state legislation, then in King and Spokane counties, and a growing list of additional counties. Commercial Property Assessed Clean Energy + Resiliency (C-PACER) is a loan agreement between a private lender and the property owner that is an off-balance sheet lien on the property that stays with the building (unless the payoff is part of the sale agreement).

BOMA’s state engagement has included meetings with 45 lawmakers and candidates before the session began, nearly 35 lawmakers (March 22, 2023) in Olympia, and included a 35-minute meeting with Lt. Governor Heck. BOMA and our State Lobbyist, Chester Baldwin, continue to have daily contact with key decision-makers on matters important to commercial real estate. 

Federal:

• 1031 Tax-Free Exchange - BOMA International’s advocacy efforts continue to preserve the 1031 Tax-Free Exchange program from efforts to end its benefit to commercial real estate.

Federal Legislation BOMA International Supports:

• Workforce Development - gain recognition and inclusion of commercial real estate careers in federal programs funding and promoting careers in commercial real estate -  
• The Energy Efficient Qualified Improvement Property (E-QUIP) Act allows straight-line depreciation over a 10-year period of energy-efficient qualified improvement property 
• Make permanent and modify Commercial Buildings Energy Efficiency Tax Deduction, commonly referred to as 179D
• Small Business Energy Loan Enhancement Act — legislation that will expand the cap on Section 504 Loans for investments in energy-efficient upgrade projects to commercial real estate properties from $5.5M to $10M.
• Engagement in Carbon Reduction, and climate change-related legislation in many forms.

• ADA Compliance and Accessibility Act reform – addresses “Drive by Lawsuit” 
• Airbourne Act & Air filtering and retrofitting improvements - A tax credit for businesses that modernize their ventilation, filtration, and air purification systems in order to reduce the transmission of airborne diseases 
• Pandemic Risk Insurance Act
• FRESH AIR for Businesses Act (H.R. 1398 / S. 122)

Code Updates: 

The Washington State 2021 Construction Codes effective date is still July 1, 2023. During the period from July 1, 2023 through Oct 1, 2023, SDCI will accept applications using either the 2018 or 2021 suite of codes. 

The 2021 Seattle Construction Codes consist of:

 2021 Seattle Building Code

• 2021 Seattle Existing Building Code
• 2021 Seattle Residential Code
• 2021 Seattle Elevator Code
• 2021 Seattle Energy Code
• 2021 Seattle Mechanical Code
• 2021 Seattle Fuel Gas Code
• 2021 Seattle Plumbing Code
• 2021 Seattle Wildland Urban Interface Code
• 2023 Seattle Boiler and Pressure Vessel Code
• 2021 Seattle Fire Code (This code is submitted to the council under a separate ordinance)

The Value of BOMA’s Advocacy is Realized in the Magnitude of the Return on Investment.

BOMA is the Voice of Commercial Real Estate