Last year , Congress finally and notably passed a robust , bipartisan infrastructure bill signed into law by President Joe Biden in November 2021 . The $ 1 trillion Infrastructure Investment and Jobs Act , which includes approximately $ 500 billion in new spending , will infuse the largest new investment in decades into our nation ’ s deteriorating transportation infrastructure system . Funds will be distributed to state and local governments to repair crumbling bridges ; modernize ports , airports , and transit systems ; replace lead pipes ; and enhance broadband access in underserved areas . Some fiscal highlights include : • $ 110 billion in additional investment for roads and bridges .
• $ 39 billion to modernize public transit systems .
• $ 17 billion to modernize the nation ’ s ports and $ 25 billion to repair and upgrade the country ’ s airports .
• $ 66 billion for railroads , which represents the largest investment in rail since the creation of Amtrak in 1971 .
• $ 65 billion to upgrade the nation ’ s power infrastructure .
• $ 55 billion in clean water upgrades and lead pipe replacement .
Over the past several years , CCIM Institute and the National Association of REALTORS ® have advocated for an infrastructure bill . With the enactment , Congress is likely to tackle these other issues impacting commercial real estate this year .
BUILD BACK BETTER ACT Another major piece of legislation on deck is a $ 1.75 trillion domestic spending bill . While the infrastructure act primarily invests in transportation , broadband , energy , and water systems , the Build Back Better Act invests in the country ’ s social infrastructure and the environment , with childcare and paid leave funding , health care-related benefits , and funding for sustainability and climate risk investments . The bill expands the low-income housing tax credit and provides clean energy tax credits .
The U . S . House of Representatives passed the bill on Nov . 19 , 2021 . While
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different versions of this legislative package have been proposed , the current bill does not impact 1031 like-kind exchanges , change the tax treatment of carried interest , alter Section 199A ’ s 20 percent pass-through deduction , or raise the capital gains rate . The bill does include a 1 percent tax on corporate stock buybacks along with a corporate alternative minimum tax . By mid-January , momentum
Over the past several years , CCIM Institute and the National Association of REALTORS ® have advocated for an infrastructure bill . With the enactment , Congress is likely to tackle other issues impacting commercial real estate this year .
on the bill had stalled , with the package failing to receive sufficient support to pass in its current form , but it is still considered a top priority for the Biden administration .
NATIONAL FLOOD INSURANCE PROGRAM The National Flood Insurance Program ( NFIP ) must be periodically reauthorized by Congress in order to continue writing flood insurance , with the current deadline of Feb . 18 . Over 22,500 communities representing five million homes and businesses nationwide participate in the NFIP . The NFIP has had 18 short-term extensions since 2017 . CCIM Institute and NAR have been and will continue to educate members of Congress about the importance of a long-term
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reauthorization of the NFIP for the continued stability of real estate markets . While remaining a top priority for many members of Congress , flood insurance is competing with many other pressing items .
“ Historically , Congress has not acted on a long-term NFIP reauthorization measure until there are super majorities of support in both houses of Congress ,” says Austin Perez , senior policy representative with NAR . “ I think we need to keep pressing Congress to extend the program while coastal and inland members continue to work out their differences over a wide range of issues , including phasing out subsidized rates .”
Some coastal state members of Congress recently reintroduced a long-term reauthorization bill in both the U . S . House and Senate , effectively putting down a marker for issues they would like to discuss moving forward .
While Congress continues to consider a long-term reauthorization bill , the Federal Emergency Management Agency recently updated its rating system for the NFIP to more accurately assess an individual property ’ s flood risk . Called Risk Rating 2.0 , the new system ’ s methodology considers more flood risk variables and allows prices to capture risk more accurately . Risk Rating 2.0 pricing is based on individual properties instead of rating zones . FEMA kicked off implementing the new system for new policies and existing policies eligible for renewal last October , with all remaining policies renewing after April 1 , subject to the new system . While many policies will see increases , other could see decreases . The old rating system had been in place for over 40 years , with policies on less-expensive properties sometimes subsidizing higher-priced ones . Risk Rating 2.0 should provide better equity and transparency in premium pricing . As David Maurstad , senior executive of the NFIP at FEMA , indicated during an NFIP Senate hearing , “ Risk Rating 2.0 fixes the inequity of policyholders with lower-value homes subsidizing policyholders with higher-value homes .”
When these new premium amounts become available for policy renewals this spring , an increase in some premiums could spur a sense of urgency in a long-term
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Previous spread , photo by Steve Kelley |
34 COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE |
WINTER 2022 |