Issue Briefs

Background:
As many are aware, energy, sustainability and building emissions have become major issues in both the political and social landscape of the country. As IFMA members, your facilities have great potential to be affected by federal legislation in these areas. Many of these issues were most recently addressed in the Energy Policy Act, signed into law by President George W. Bush in August 2005. This law provides incentives for businesses to install energy efficient modifications and fixtures in the areas of lighting, HVAC and building structure. Energy improvements that comply with this law and are completed in 2006 and 2007 are eligible for tax deductions, as much as $1.80 per square foot.

Activities:
On Dec. 19, 2007, President Bush signed into law H.R. 6, the “Energy Independence and Security Act of 2007.”

This legislation includes provisions to improve energy efficiency in lighting and appliances, as well as requirements for federal agencies to become more efficient through the use of renewable energy. For example, it will require all general purpose lighting in federal buildings to use Energy Star products or products designated under the Energy Department's Federal Energy Management Program by the end of 2013.

The act also amends the Energy Policy and Conservation Act by revising standards affecting efficiency for heating and cooling products and residential boiler efficiency. It also establishes the Office of High-Performance Green Buildings within the U.S. General Services Administration. This office will promote green building technology implementation in federal buildings.

In May 2008, the House passed legislation that would provide a variety of extensions for businesses related to energy efficiency. It includes a six-year extension of the investment tax credit for solar energy; three-year extensions of the production tax credit for biomass, geothermal, hydropower, landfill gas and solid waste; and a one-year extension of the production tax credit for wind energy.

There are also incentives for the production of renewable fuels such as biodiesel and biofuels, incentives for companies that produce energy efficient products and incentives to improve efficiency in commercial and residential buildings.

These extensions still face an uphill battle, as the Senate has not yet passed similar legislation and President Bush has indicated he would veto the bill, citing costs.

Background:
Greenhouse gases are another issue that has seen increased prominence in the past few years. There are several chemical compounds found in the Earth’s atmosphere that are termed GHGs. These gases include: carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hexafluoride, hydro fluorocarbons, perfluorocarbons and chlorofluorocarbons. GHGs are both naturally occurring in the atmosphere and man-made.

When sunlight strikes the Earth’s surface, the light and heat are reflected back toward space. GHGs absorb and trap some of this heat in the atmosphere. This has been attributed by some to an accelerated temperature of the Earth, as well as other harmful attributes.

The current debate in the public and Congress is the amount of GHGs that are caused by humans versus those that are naturally occurring. The burning of fossil fuel and coal by industry and emissions released from automobiles are at the center of this debate.

In April 2007, the U.S. Supreme Court ruled that the U.S. Environmental Protection Agency has the authority to regulate the emission of GHGs, linked by some to global warming. In a 5- 4 decision, the court ruled that the EPA had violated the Clean Air Act by improperly declining to regulate new-vehicle emissions standards to control pollutants (in particular, carbon dioxide). This was the first decision by the court involving global warming.

Activities:
The major piece of climate change legislation in the Senate, S. 2191 (commonly referred to as the Lieberman/Warner bill), passed an Environment and Public Works Committee vote late last year. EPW Chair Barbara Boxer (D-CA) has expressed her intent to lay the groundwork for what would be landmark legislation to curb greenhouse gas emissions by various industries.

S. 2191 aims to reduce greenhouse gas emissions by 65 percent by 2050. Some of the methods mandated to reach this goal include implementing a cap-and-trade system for greenhouse gas emissions and increasing energy efficiency standards for buildings and appliances. The bill also outlines the use of other technologies, such as carbon sequestration, to aide in the effort to reduce emissions.

The cap and trade system is one where an environmental regulator establishes a “cap” that limits emissions for certain GHG producers to levels lower than their current emissions. The emissions allowed under the new cap are then divided into individual permits — usually equal to one ton of pollution — that represent the permissible amount to emit. One advantage of a cap-and-trade system compared with other emission reduction strategies is that it gives companies flexibility in how they achieve their emission targets.

On May 18, 2008, Senator Boxer released a “manager’s amendment” to the original legislation. This amendment reflects changes sought by various industries to increase the number of allocations provided to them in the bill.

Members of the House Energy and Commerce Committee are expected to consider similar legislation. Both Energy and Commerce Chairman John Dingell (D-MI) and Subcommittee Chair Rick Boucher (D-VA) have issued white papers discussing greenhouse gas control options for House consideration. Indications are that the Energy and Commerce Committee will take up a full committee debate on the issue later this summer.

It is generally agreed by observers that the earliest legislation would be signed into law is 2009. All three remaining presidential candidates have voiced their support for GHG reductions and their willingness to sign appropriate legislation into law.

Background:
The Public Access Board is an independent federal agency devoted to accessibility for people with disabilities. It operates with approximately 30 staff and a governing board of representatives from federal departments and public members appointed by the president. Key responsibilities of the board include:

The Public Access Board is structured to function as a coordinating body among federal agencies and to directly represent the public. Half of its members are representatives from most of the federal departments. The other half are members of the public, appointed by the president to four-year terms, a majority of whom have a disability.

The board is chaired by Emil H. Frankel, U.S. Department of Transportation, and the vice chair is Jan Tuck, of Marina del Rey, Calif. The other members are:

Public Members
Douglas Anderson	Wheaton, Ill.
Pamela Dorwarth	Sarasota, Fla.
James J. Elekes	North Plainfield, N.J.
Bruce S. Growick, Ph.D.	Columbus, Ohio
James R. Harding, II Ed.D.	Tallahassee, Fla.
Tricia Mason	Cheyenne, Wyo.
Philip G. Pearce	College Station, Texas
Denis Pratt	Kennebunk, Maine
Daniel O. Rios, P.E.	McAllen, Texas
Gary L. Talbot	Ann Arbor, Mich.
Gwendolyn Trujillo	Cincinnati, Ohio
Jan Tuck	Marina del Rey, Calif.
John O. Woods, Jr., P.E.	Alexandria, Va.

Activities:
Indoor Air Quality Project
In developing and updating its guidelines, the Public Access Board has received numerous comments from individuals with an acute sensitivity to various chemicals in the environment, known as multiple chemical sensitivities, and to electromagnetic sensitivities. They report that chemicals released from products and materials used in the construction, renovation and maintenance of buildings, as well as electromagnetic fields and inadequate ventilation, are barriers that deny them access to buildings. Many of these comments identify indoor air quality as a primary concern in causing a range of debilitating physical reactions, some even life-threatening.

In response to these concerns, the National Institute of Building Sciences is bringing together building community representatives such as designers, constructors, building products and materials producers, building owners and operators, standard organizations, environmental health professionals, organizations representing people with multiple chemical sensitivities and electromagnetic sensitivities, and others with knowledge of indoor environmental quality issues in a collaborative process to undertake research on methods for improving indoor air quality that will build upon its history of working with model code and standard setting organizations.

The aim of the project is to bring together various stakeholders with a shared method to examine possible actions that can be taken to improve the accessibility of indoor environments, especially for people with MCS and EMS. The IEQ project is focused on the design, construction, renovation, operation and maintenance of non-residential buildings, including building systems and subsystems, building products and materials, and building operations and maintenance practices.

The Indoor Environmental Quality project began in the spring of 2004 and was completed in the summer of 2005. The IEQ project final report can be found at http://ieq.nibs.org/ieq_project.pdf.

New Resource Available on the Fair Housing Act
The Public Access Board regularly receives inquiries on accessible housing and the requirements of the Americans with Disabilities Act. However, while the ADA does address a wide range of facilities, it does not apply to all types of housing. Public housing and other types of housing constructed or altered by state or local governments are subject to the ADA. The ADA also applies to facilities used on a transient basis, such as dormitories and hotels. Private housing, including apartments and condominiums, is not generally covered by the ADA, except for those portions that serve as places of public accommodations, such as sales and rental offices.

The ADA's limited coverage of housing is due in part to an existing law, the Fair Housing Amendments Act, which prohibits discrimination in housing on the basis of disability, as well as race, color, gender and religion. It covers housing in the public and private sectors and bans discrimination in any aspect of selling or renting housing. Under the law, new multifamily housing must be able to be adapted for accessibility according to established guidelines known as the Fair Housing Accessibility Guidelines. The Department of Housing and Urban Development enforces the act and maintains the guidelines.

Recently, HUD launched a new education and outreach program on the Fair Housing Act and accessible housing. Known as Fair Housing Accessibility FIRST, the program provides guidance and training on the act, including its design requirements. The Web site www.fairhousingfirst.org provides information on education materials, training sessions, frequently asked questions and links to other resources. A training curriculum developed by a team of architects and housing accessibility experts includes modules covering the requirements of the act and other disability rights laws, enforcement, common design violations and solutions, and access to kitchens, bathrooms and other spaces.

HUD has seen a decrease in the filed discrimination charges. In 2007, the number of filed discrimination cases dropped to 31 from 36 in 2006. Charges for those two years combined dropped 65 percent from the last two years of the Clinton administration — 111 charges were filed in 1999 and 82 in 2000.

Background:
Automated external defibrillators are simple-to-use medical devices that allow lay people (ideally, with proper training) to administer emergency aid to victims of heart attacks. AEDs are being located in a number of facilities to be used in emergency responses to heart attacks.

The principle behind AEDs is simple. Heart attacks occur when the arteries that supply blood to the heart become blocked, the flow of blood that carries oxygen to the heart is slowed or stopped and the muscle fibers contract chaotically rather than in synch with each other as they normally do. The traditional manual defibrillators work by giving the heart a controlled electric shock, forcing all the heart muscles to contract at once, and jolting it back into a steady rhythm.

Historically, only trained medical professionals were able to interpret the heart rhythms on manual defibrillator devices. However, today's new AEDs use embedded computer chips to analyze the rhythms instantly and accurately, making it possible for non-medical professionals to administer the same vital service without risking an accidental shock.
The new AEDs are relatively inexpensive, effective and safe. The key component of efficacy for use of AEDs is proper training for potential lay responders. To this end, the Red Cross offers on-site training exercises for most facilities. The Red Cross training program includes:

In addition to CPR and AED training, the American Heart Association also recommends that a complete AED program include having physician oversight to help ensure quality control, integration of an AED program with the local emergency medical services system and using and maintaining AEDs according to the manufacturers’ specifications.
Further consideration must be given to ensure that immunity from civil liability is afforded to lay people who acquire and use AEDs on victims in medical emergencies when these responders are acting in good faith.

Activities:
Many states have been aggressive in the past few years in approving funding to increase AED implementation and provide waivers of liability for responders to emergencies. In 2001, the federal government approved $30 million in grants to state and local governments to purchase AEDs, provide AED training and provide information and materials to communities served by AED programs.

Sen. Russ Feingold (D-WI) and Sen. Susan Collins (R-ME) introduced an amendment to the Labor-Health and Human Services appropriations bill to fund the Automated Defibrillators in Adam’s Memory (ADAM) Act. On Nov. 9, 2007, Congress approved funding for this program, which will assist schools in purchasing and providing training on AEDs.

In 2007, Congress approved more than $4 million in appropriations to provide for increased funding for AED utilization in rural communities. However on Feb. 4, 2008, President Bush released his FY 2009 budget proposal that eliminated all funding for this program. The American Red Cross and other health organizations are requesting that the proposed funding be restored.

BROWNFIELDS
Background:
Brownfields are commercial and industrial properties that are vacant, abandoned or underutilized due to real or perceived environmental contamination. Among the most prevalent situations are those in which manufacturing plants or military bases have closed or relocated. Often, there is residual environmental contamination that remains on these sites. Re-use of these valuable sites cannot be realized until environmental remediation of the contaminants can be achieved.

According to the U.S. Conference of Mayors, an estimated 400,000 contaminated tracts exist in the United States. In addition to the cost of environmental clean-up, many of these properties are underutilized due to fears of additional contamination and buyers’ fears of liability under superfund law. These concerns create obstacles in the redevelopment of valuable property.

Through the Brownfields Cleanup and Redevelopment Program, the Environmental Protection Agency helps states, tribes, communities and other organizations:

The brownfields issue is one of President Bush’s and the EPA’s top priorities. In the 2004 budget, the Office of Management and Budget added $10 million to the Brownfields Initiative, which doubled the amount from the previous year.

As stated by former EPA Administrator Mike Leavitt in June 2004, communities in 42 states and Puerto Rico will share more than $75 million in brownfields grants to use former problem properties for productive community use. He is committed to “[restoring] urban communities by redeveloping abandoned brownfield sites in each state.” The current administration states that this policy continues its belief that environmental protection and economic prosperity are not mutually exclusive.

Through the last Congress — in the former VA-HUD and Independent Agencies Appropriations (which funds the EPA) and included in the Consolidated Appropriations Act, H.R. 2673 (P.L. 108-199) — $25 million was to remain available through the EPA for brownfields redevelopment until Sept. 30, 2005, as authorized by the Housing and Community Development Act of 1974. Additionally, $2,293,578,000 was to remain available until Sept. 30, 2005 under the Small Business Liability Relief and Brownfields Revitalization Acts of 2002 for environmental programs and management.

Similarly, appropriations for 2005, from H.R. 4818 (P.L. 108-447), allowed $25 million to remain available for brownfields redevelopment until Sept. 30, 2006 under the Housing and Community Development Act of 1974. $2,313,409,000 also remained available for environmental programs and management under the Small Business Liability and Brownfields Revitalization Acts of 2002 until Sept. 30, 2006.

There is additional consideration that innocent purchasers of such properties should receive an exemption from superfund liability for contamination that is found on the sites. Additionally, some proponents are seeking an expansion of the brownfields tax incentive which would allow the private sector to engage cleanup efforts without fear of liability.

Activities:
In January 2007, Congressman Gary Miller (R-CA) reintroduced the Brownfields Redevelopment Enhancement Act, H.R. 644. This proposal would establish a pool of grant funds for public entities and Indian tribes to assist in the environmental cleanup and economic development of brownfield sites. Amending the Housing and Community Development Act of 1974, the proposal would authorize the Secretary of Housing and Urban Development to make these community development block grants available without required loan guarantees to access for brownfields remediation under certain conditions.

Under current practice, in order for local communities to be eligible for such grant funds, a community must be willing to pledge community development block grant funds as partial collateral for a loan guarantee under section 108 of the Housing and Community Development Act of 1974. This requirement is a barrier to many local communities that are unable or unwilling to pledge such block grant funds as collateral.

The Miller legislation would de-link the grants for brownfields development from section 108 community development loan guarantees and the related pledge of community development block grant funds. In this way, more communities would enjoy greater flexibility for use of brownfields redevelopment funds and a greater capacity to coordinate and collaborate with other government agencies. This bill has passed the House and has been referred to the Senate Committee on Banking, Housing and Urban Affairs.

The EPA also outlined its brownfields program which includes the grants and the landowner liability protections it can provide. The EPA is working to develop and implement performance measures that will gauge the impact of EPA funding on cleanup and redevelopment. Representatives from the agency also stressed that the EPA supports the Government Accountability Office’s recommendation that legislation be enacted which revises the brownfields law to eliminate statutory restrictions on pre-January 2002 eligibility of purchasers of brownfields property. Finally, the EPA also supports closely monitoring revolving loan fund grants to determine if they have been underutilized and what changes, if any, are needed to encourage their use.

The EPA awarded two grants totaling $600,000 to help Native American tribes redevelop and return contaminated lands to productive use in April 2007. These grants will assist tribes in their efforts to identify and redevelop brownfields sites on Indian tribal land, including the less publicized brownfields issue of methamphetamine labs.

In June 2007, the EPA awarded nearly $71 million to communities in 38 states in the form of brownfields grants to help revitalize former industrial and commercial sites. Two territories and five tribal nations also will share in this money from the EPA.

BUILDING MOLD
Background:
Mold has become an increasingly vexing problem for both residential and commercial buildings, especially in certain sections of the country where humidity and water are prevalent. In fact, there are hundreds of different strains of mold that have been growing in buildings for a long time. But one fact is certain: without moisture, mold has no opportunity to develop.

Molds and mildew are fungi that grow on the surfaces of objects, within pores and in deteriorated materials. They can cause discoloration and odor problems, deteriorate building materials and lead to allergic reactions in susceptible individuals, as well as other health problems. The following conditions are necessary for mold growth to occur on surfaces:

According to the EPA, molds produce tiny spores which in turn reproduce. Mold spores waft through the indoor and outdoor air continually. When mold spores land on a damp spot indoors, they may begin growing and digesting whatever they are growing on in order to survive. There are molds that can grow on wood, paper, carpet and foods. When excessive moisture or water accumulates indoors, mold growth will often occur, particularly if the moisture problem remains undiscovered or unaddressed. There is no practical way to eliminate all mold and mold spores in the indoor environment. The way to control indoor mold growth is to control moisture.

The EPA states that the key to mold control is moisture control. The EPA's Web site lists:

Recent Activity:
An increasingly aggressive plaintiffs’ bar is pursuing thousands of complaints nationally. The sharp increase in mold claims has resulted in some insurers designating mold as a pollutant and then excluding mold from coverage under general liability policies.

Several states, including California, Texas, New Jersey, Indiana, Maryland, Louisiana and Nebraska, have passed legislation aimed specifically at the development of guidelines/regulations for molds in indoor air. Similar measures are pending in other states.

As part of H.R. 6, the recently signed energy bill, the relationship between building mold and work environments will be studied under the newly established “Office of High Performance Green Buildings.” A particular section of H.R. 6 requires that that HHS study the relationship between mold, health and productivity at school facilities and submit their findings to the states for consideration.

Background:
Depreciation recapture is an accounting rule governing the treatment of capital gains when real estate is sold. These rules are applied to the sale of all investment real estate that is held to generate rental income with no distinction between residential and commercial rental property.

Basically, the code asserts that when real estate is sold at a gain, some element of that gain is attributable to depreciation deductions taken over the years. Under current rules, commercial property has a depreciable life of 39 years, allowing the owner of the rental property, in other words, to deduct 1/39th of the original cost of a building purchased after 1993. Application of this depreciation therefore creates an adjusted tax basis of the rental property, meaning the tax basis also decreases. Because the gain is the difference between the selling price and this adjusted basis, the depreciation element of the gain is taken into account and taxed. This is called depreciation recapture and is taxed at a 25 percent rate.

In August 1997, President Bill Clinton signed into law a tax reduction bill that significantly affected the real estate industry. One of the biggest provisions in the bill was new treatment for consideration of the capital gains, reducing the capital gains tax from 28 percent to 20 percent for assets held for at least 18 months. This capital gains tax rate at 20 percent is different than the depreciation recapture tax rate of 25 percent. By taxing gains arising from depreciation (depreciation recapture) at a higher rate than appreciation gains (capital gains), the code creates a disincentive for owners of property to invest in improvements for real estate assets, especially commercial property.

This tax treatment can be confusing. But consider the following example. John buys commercial rental property for $100,000. John takes depreciation deductions of $10,000 for the years that he holds the commercial property. Those deductions reduce his basis from his original purchase price of $100,000 down to $90,000. Two years after purchasing the property, John sells it for $105,000, meaning his gain is $15,000. But this gain has two parts: $10,000 of depreciation deductions, and $5,000 in excess of the original purchase price. Under current treatment, the depreciation deductions ($10,000) are “recaptured” and are counted as part of the taxable gain and taxed at a rate of 25 percent. The additional $5,000 will be taxed under the capital gains tax of 20 percent.

Activities:
At this time, there is no legislation in the 110th Congress that levels the playing field concerning depreciation recapture and the capital gains tax. Please see the leasehold depreciation section for information on deductions for lease improvements.

Background:
Historically, the electricity industry has been vertically integrated with defined service areas for utilities. Most of these utilities owned their own power generating capabilities. They were responsible for supplying power to customers and were regulated by state utility commissions. In the 1980s, a number of unregulated and independent entities began selling power to utilities at wholesale rates. In 1992, the Energy Policy Act removed some of the regulatory barriers to allow these independent power generators to compete with existing power generating sources. In 1996, the Federal Energy Regulatory Commission instituted its “open access” rule for wholesale electricity transactions.

Together, these actions were the first steps in an effort to deregulate the electric utility industry — similar to previous efforts to deregulate the telecommunications and airline industries. By allowing utilities to purchase electricity from a supplier of their choice, the government and industry believed that consumers would benefit from the competition. In this way, electricity rates could drop, as the price of energy would be determined less by federal and state regulations and more by energy supply and demand. The federal government, state governments and state public utility commissions are now attempting to implement this deregulation process with little or no disruption to users or producers.

As deregulation in the wholesale market continues, the industry and Congress have begun exploring the possibility of electricity deregulation in the retail market that would allow residential and commercial customers to select their own utility. Currently, about half of the states have enacted legislation and/or regulations to restructure their electricity markets. In some instances — California, for example — these deregulation efforts have led to some significant problems including brownouts and erratic price fluctuations.

For competition to prevail, all power producers need open access to the power grid. Utilities that control transmission lines are now required to charge other wholesale producers the same transmission rates they charge themselves, and open access is being implemented in some retail power markets.

Activities:
The 2005 Energy Policy Act, signed into law by President Bush, addressed specific issues concerning deregulation of the utility industry. Specifically, the bill improves electricity reliability by granting FERC jurisdiction over the creation and development of reliability standards for our electricity transmission networks and encourages all transmitting utilities to volunteer to become members of regional transmission organizations.

This legislation also repealed the Public Utility Holding Company Act of 1935 which was enacted during the New Deal era. The authority previously held by the Securities and Exchange Commission over consumer protection and market integrity was transferred authority to the FERC.

A survey released in September 2007 by RKS Research indicated that support for deregulated energy markets may be waning. The survey of 96 utility commissioners in 51 jurisdictions found no measurable support for fostering or supporting retail energy competition for the foreseeable future.

This lack of support may be due to the fact that competitive markets have not necessarily provided price reductions for the consumer. Additionally, one-third of regulators in energy competitive states said they are now seriously considering re-regulating utilities in their jurisdictions.

Background:
To state the obvious, indoor air quality generally refers to the quality of the air in an office environment. A committee of the World Health Organization estimates that as many as 30 percent of new or remodeled buildings may have unusually high rates of poor air quality as evidenced by the number of “sick building” complaints. In addition, the National Institute for Occupational Safety and Health reports that poor ventilation is an important contributing factor in many sick building cases. This important issue is a continuing concern as the health, safety and comfort of office occupants is the highest priority of the facility management industry.

In addition to the health considerations, it is also generally agreed that poor indoor air can adversely affect employee productivity. A 1989 report to Congress on IAQ estimated that the cost to the industry could be in the “tens of billions of dollars per year.” Most experts believe that the key to proper IAQ is proper ventilation. Ventilation is a combination of processes which results in the supply and removal of air from inside a building. These processes typically include:

If, for whatever reason, one or more of these ventilation processes is inadequate, the quality of indoor air may deteriorate. When that happens, occupants may suffer from Sick Building Syndrome or Building Related Illness. During the development of building codes, ventilation standards called for approximately 15 cubic feet per minute of outside air for each building occupant (although this was primarily a focus not on health, but to dilute and remove body odors). However, national energy conservation measures modified this formula to 5 cfm per occupant largely as a result of the 1973 oil embargo. In many cases, these reduced outdoor air ventilation rates were found to be inadequate to maintain the health and comfort of building occupants.

Other ventilation problems may stem from intermittent air flow, inadequate distribution of air, air supply and exhaust locations, improper mixture proportion of outdoor air, improper maintenance, biological contaminants and chemical contaminants from indoor sources.

Activities:
For the most part, existing standards are based on the 1989 standards published by the American Society of Heating, Refrigerating and Air Conditioning Engineers (see Standard 62-1989: Ventilation for Acceptable Indoor Air Quality). This is a voluntary standard for “minimum ventilation rates and indoor air quality” — a standard that applies to virtually all types of facilities. The specified rates at which outdoor air must be supplied to each room within the facility range from 15 to 60 cfm/person, depending on the activities that normally occur in that room.

Because Standard 62-1989 is a voluntary standard, it becomes applicable only after a state or local jurisdiction adopts these building code standards. It should be stressed that most current ventilation standards in building codes are oriented toward building design, not building operations. However, through the use of labor agreements, pending legislation and recently promulgated regulations, many states are redirecting their building standards to operations and not design.

Members of the 110th Congress have included indoor air quality as a desired element in several pieces of the sustainability, energy and building legislation introduced. Meeting these higher indoor air quality standards would allow federal buildings and universities to apply for grants and additional funding.

Background:
Leasehold improvements are modifications made to leased office and general commercial space by a building owner as part of a lease agreement with a tenant. These improvements often include, but are not limited to, interior walls, wiring, partitions, plumbing and energy efficient heating and cooling systems. In commercial structures, leasehold improvements typically last as long as the lease — an average of five-to-10 years.

Under current law, the tax recovery of a leasehold improvement investment is set by the IRS code at 39 years, which is often longer than the economic life of the property. Limiting leasehold improvements to be depreciated at a rate of 1/39th per year, until either the tenant vacates the property or the property is sold, can create economic disparity for the owners of commercial property and can act as a disincentive for property owners to make investments in tenant occupied commercial real estate. Many commercial property owners view this as a hidden tax on the commercial real estate industry.

Many members of Congress agree with this position and have introduced legislation that would amend the Internal Revenue Code to provide a 10-year depreciation life for leasehold improvements to commercial facilities. Supporters of this legislation point out that a shorter depreciable life would more closely align tenant depreciation expenses with emerging tenant demands and building use patterns. Furthermore, many proponents point out that an additional benefit of reducing the leasehold cost recovery period to 10 years would be a greater investment in high efficiency energy systems for facility lighting, heating and air conditioning. This investment would lower building operation costs by a substantial amount.

Activities:
In 2002, Congress adopted a provision as part of the economic stimulus package that would allow for tenant improvements to be considered as an asset eligible for accelerated depreciation under specified conditions. Property owners could take a 30 percent depreciation deduction for leasehold improvements in the first year and then depreciate the rest of the basis over the asset’s normal schedule. These provisions applied to property purchased between Sept. 11, 2001 and Sept. 11, 2004, and the property must have been placed in service before Jan. 1, 2005.

The Bonus Depreciation Act of 2007, reintroduced by Congressman Joe Wilson (R-SC) would extend for two additional years special depreciation allowances (bonus depreciation) for these same specified depreciations. This bill is currently in the House Committee on Ways and Means.

H.R. 2014, introduced earlier this year by Rep. Joseph Crowley, (D-NY), seeks to permanently extend the 15-year recovery period for the depreciation of certain leasehold improvements. It is currently in the House Ways and Means Committee. There is companion legislation in the Senate.

Background:
The effect of tobacco smoke on human health has been a controversial and expensive issue. A recent report by the EPA estimated that second-hand tobacco smoke that emerges from exhaling and burning cigarettes causes approximately 3,000 lung cancer deaths and 37,000 heart disease deaths in nonsmokers each year. In fact, the EPA classified second-hand smoke as a Group A carcinogen in 1993. Many employers now are taking actions to control when and where smoking is allowed.

Workplace bans and limits on smoking are still controversial, but such bans are gaining support. According to a 1998 Gallop poll, 94 percent of Americans — smokers and nonsmokers — now believe companies should either ban smoking totally in the workplace, or restrict it to separately ventilated areas.

Although no federal law directly controls smoking at work, a majority of states protect workers against unwanted smoke in the workplace. In addition, hundreds of city and county ordinances restrict or ban smoking in the workplace. In contrast, about half the states make it illegal to discriminate against employees or potential employees because they smoke during non-working hours.

So the ongoing legal battle in most workplaces boils down to a question of what is more important: one person’s right to preserve health by avoiding co-workers’ tobacco smoke or another’s unfettered right to smoke. Because of the potentially higher costs of health care insurance, absenteeism, unemployment insurance and workers’ compensation insurance associated with employees who smoke, some companies now take a critical view towards prospective employees who admit to being a smoker on a job application.

While most states now protect workers from unwanted smoke on the job, they follow different approaches. In several states, including California, Connecticut, New Jersey, Rhode Island and Vermont, the laws limiting smoking are aimed specifically at workplaces. A large number of other states have smoking control laws that apply to everyone in public places and specified private places. In these states, nonsmoking employees are protected only if they happen to work in a place that is specifically covered by the statute. A few state laws are all-encompassing, limiting or banning smoking in both public places and workplaces.

Where smoking is limited, some states prohibit it except in a designated area within the workplace. Other states take the opposite approach, and require employers to set aside pristine areas for the nonsmokers in the work crowd.

There also are common exceptions written into anti-smoking laws. Often, their protections do not apply to:

Activities:
The main federal law covering threats to workplace safety is the Occupational Safety and Health Act of 1970. OSHA requires employers to provide a workplace that is free of dangers that could physically harm employees. OSHA rules apply to tobacco smoke only in rare and extreme circumstances, such as when contaminants created by a manufacturing process combine with tobacco smoke to create a dangerous workplace air supply that fails OSHA standards. Workplace air quality standards and measurement techniques are so technical that typically only OSHA agents or consultants who specialize in environmental testing are able to determine when the air quality falls below allowable limits.

The law quite simply requires that employers protect employees from “recognized hazards” in the workplace. It does not specify or limit the types of dangers covered, but it can include equipment that could cause injuries as well as long-term exposure to airborne pollutants.

Nearly half the states now have their own OSHA laws, most of which offer protections similar to the federal law. State laws typically concentrate on protecting workers who complain about safety violations from being demoted or fired. A few states, including California, require all employers to fashion workplace safety plans. Texas has instituted a 24-hour hotline to receive complaints; the state prohibits employers from discriminating against those who call into the hotline.

There are a growing number of states that ban smoking in public and private workplaces. Further, there are many other states working toward increasing restrictions in private workplaces and childcare facilities.

Over the past five years, cities, towns and workplaces in nearly 40 states have implemented smoking bans. Nearly every state has limitations on smoking in some fashion. California, having some of the most stringent restrictions, bans smoking within 20 feet of public building entrances and exits.

Additionally, two of the country’s largest hotel operations, Marriott International and Westin Hotels and Resorts have banned smoking everywhere on the hotel property, rooms included.

Background:
Legislation that would extend the federal backstop for terrorism insurance has been introduced in the House and the Senate giving many affected industries hope that Congress will address the issue this year.

Introduced by several House Democrats led by Michael E. Capuano (D-MA), the bill [H.R. 1153] would extend the Terrorism Risk Insurance Act, or TRIA (PL 107-297). Enacted in 2002 in the wake of the Sept. 11 terrorist attacks, the law provided terrorism coverage using federal funds and required insurers to offer terrorism coverage in policies. H.R. 1153, which was introduced on March 8, would extend TRIA for two years beyond its Dec. 31, 2005, expiration date.

The legislation is nearly identical to a bill advanced last year by Democrats on the House Financial Services Committee. The panel approved a TRIA extension bill last September, but House leadership decided not to advance it to the floor, because of partisan bickering over details of the legislation in the 108th Congress.

The insurance and real estate industries are pushing for the extension legislation, saying it would be disastrous for the nation’s economy if the backstop expires. “These lawmakers realize that Congress must act sooner rather than later to provide for the availability of terrorism insurance into next year,” said Martin L. DePoy, vice president for government relations at the National Association of Real Estate Investment Trusts.

Under TRIA, the federal government must cover 90 percent of terrorism-related losses once insured losses reach certain trigger levels, and the federal government’s responsibility tops out at $100 billion.

Activities:
On Dec. 26, 2007, the President signed into law the Terrorism Risk Insurance Act Extension of 2007, which extends the federally backed insurance program through Dec. 31, 2014.

This seven year extension was the result of a compromise between the House and Senate Committees. The House passed version of the bill granted the program a 15 year extension, as well as requiring insurers to offer insurance for chemical, biological, radiological and nuclear attacks.

The House also tried to lower the level for federal government involvement to $50 million, but the Senate maintained the $100 million threshold.

Background:
The Americans with Disabilities Act gives civil rights protections to individuals with disabilities similar to those provided to individuals on the basis of race, color, sex, national origin, age and religion. It guarantees equal opportunity for individuals with disabilities in public accommodations, employment, transportation, state and local government services and telecommunications.

According to the Department of Justice, “reasonable accommodation” is any modification or adjustment to a job or the work environment that will enable a qualified applicant or employee with a disability to participate in the application process or to perform essential job functions. Reasonable accommodation also includes adjustments to assure that a qualified individual with a disability has rights and privileges in employment equal to those of employees without disabilities.

Examples of reasonable accommodation include making existing facilities used by employees readily accessible and usable by an individual with a disability; restructuring a job; modifying work schedules; acquiring or modifying equipment; providing qualified readers or interpreters; or appropriately modifying examinations, training or other programs.

The decision as to the appropriate accommodation must be based on the particular facts of each case. To determine the particular type of reasonable accommodation to provide, test the effectiveness of whether the accommodation will provide an opportunity for a person with a disability to achieve the same level of performance and to enjoy benefits equal to those of an average, similarly situated person without a disability. However, the accommodation does not have to ensure equal results or provide exactly the same benefits.

An employer is only required to accommodate a “known” disability of a qualified applicant or employee. Accommodations must be made on an individual basis, because the nature and extent of a disabling condition and the requirements of a job varies in each case. But, an employer is not required to make an accommodation if it would impose an “undue hardship” on the operation of the employer’s business.

Undue hardship is determined on a case-by-case basis. If a particular accommodation would be an undue hardship, the employer must try to identify another accommodation that will not pose such a hardship. Also, if the cost of an accommodation would impose an undue hardship on the employer, the individual with a disability should be given the option of paying that portion of the cost which would constitute an undue hardship.

A public accommodation is a private entity that owns, operates or leases to a place of public accommodation. Places of public accommodation include a wide range of entities, such as restaurants, hotels, theaters, doctors’ offices, pharmacies, retail stores, museums, libraries, parks, private schools and day care centers. Private clubs and religious organizations are exempt from the ADA’s title III requirements for public accommodations.

The ADA expressly provides that a public accommodation may exclude an individual, if that individual poses a direct threat to the health or safety of others that cannot be mitigated by appropriate modifications in the public accommodation’s policies or procedures or by the provision of auxiliary aids. A public accommodation will be permitted to establish objective safety criteria for the operation of its business; however, any safety standard must be based on objective requirements rather than stereotypes or generalizations about the ability of persons with disabilities to participate in an activity.

Activities:
On June 25, 2004, the Office of Management and Budget approved the new ADA Accessibility Guidelines for facilities covered by the ADA. The Public Access Board released the new guidelines on July 26, 2004, the 14th anniversary of the signing of the ADA into law.

The new document overhauls and updates the ADA Accessibility Guidelines that will include updated guidelines for federal facilities, which are covered not by the ADA but by an earlier law, the Architectural Barriers Act. Both the ADA guidelines and the ABA guidelines, which the board updated jointly to make them more consistent, address access in new construction and alterations and contain scoping provisions, which indicate what has to comply, and technical specifications, which spell out how compliance is to be achieved.

Due to recent high court rulings over the past several years, concern grew with some members of Congress that many Americans were being denied their protection under the ADA due to the courts’ narrow interpretations.

In July 2007, House Majority Leader Steny Hoyer (D-MD), authored H.R. 3195, the “Americans with Disabilities Restoration Act of 2007.” This bill would amend the definition of "disability" so that more people are offered protection under the ADA.
It would also prevent courts from considering “mitigating measures” — such as eyeglasses or medication — when determining whether a person qualifies for protection under the law.

This legislation has 244 House co-sponsors. Sen. Tom Harkin (D-IA), has introduced identical companion legislation in the Senate. The Senate Committee on Health, Labor, Education and Pensions held a hearing on the legislation Nov. 15, 2007.
The U.S. Chamber of Commerce is opposing the legislation, saying the proposed qualifiers would cover nearly all working Americans, making it difficult for business owners to comply.

Background:
Forced building access refers to the practice by which telecommunications service providers are afforded access to a building — often over the objections of, or without the consent of, the owner of the facility.

Telecommunications companies argue that forced access is necessary so that tenants can get a wide range of price-competitive telecommunications services, from local and long-distance to high-speed broadband access. Without forced building access, they claimed, real estate owners would deal with only a handful of telecom carriers, resulting in high prices and little or no choice for end-users. Further, telecommunications providers have lobbied both Congress and the Federal Communications Commission for forced building access citing the need for competition among competing companies as being in the best interest of consumers and the marketplace.

Opposition to forced building entry comes primarily from building owners. Owners argue that the forced building entry privileges afforded to the telecommunications service providers are unnecessary, unmanageable and unconstitutional. Moreover, they point out that approximately 80 percent of buildings have more than a single telecommunications firm providing services to that building. Further, opponents of forced building access are not about offering phone services; rather, access to the buildings allows for telecommunications service providers to concentrate on broadband services.

Activities:
In the 107th Congress, a forced building access provision that would have mandated that the federal government require multiple service providers for buildings it occupies was included in the FY02 Department of Defense Appropriations Bill.

At the state level in Texas, Time Warner Telecommunications attempted to use a state statute to gain access to the Geoquest Center in Houston at apparent submarket rates. Property rights representatives in Texas sued the state of Texas to overturn the law and rules that allow such activities. A district court, recognizing that the case would be appealed, passed on reviewing the matter and deemed the state forced-access law and rules constitutional.

Background:
In telecommunications, the demarcation point is the juncture where a telecommunication company’s network ends and the building owner’s or occupant’s private network begins. The debate begins between the desires of most telecommunication companies that the demarcation point should be at the minimum point of entry (MPOE is the site where a provider’s wiring enters a property) versus the owner/occupant belief that the point should sometimes be farther into the building.

What is at stake here is the responsibility for providing wiring and cable, costs and maintenance for the building and its tenants. In larger facilities, these costs could be significant. Furthermore, as communications components such as video conferencing equipment, cable and DSL lines, satellite downlinks and local area networks become more prevalent and integrated into a telecommunications system, maintenance and integrity of service issues become increasingly complex and costly.

In 1990, the FCC began to allow phone companies, under limited circumstances, to relocate their demarcation points. However, the ruling specified that a phone company could establish an MPOE demarcation only in a new or renovated building. Despite this, many states have allowed telecommunications companies to relocate many, if not all of the demarcation points to the minimum point of entry thereby increasing the costs to owners/occupants and potentially compromising the quality of the service.

Activities:
The FCC made a series of rulings in 2000 to provide guidance for demarcation point considerations. The commission found that local telecommunications companies may not unilaterally leave wire management to facility owners/occupants if the telephone company provided service in the building as of 1992, the date of the original demarcation rule. The FCC also established procedures to allow for greater flexibility for telecommunications companies to work with facility owners/occupants to gain access to on-premises wiring, while at the same time recognizing the varied needs of carriers and building owners, including greater clarification of the MPOE and the demarcation points (generally upon consent of the facility owner/occupant).

Background:
Until 1970, no uniform or comprehensive provisions existed to protect against workplace safety and health hazards. At that time, job-related accidents accounted for more than 14,000 worker deaths; almost 2.5 million workers were disabled by workplace accidents and injuries; and the ratio of workdays lost from job-related disabilities to those lost from labor strikes was 10 to one. With respect to lost productivity and wages, medical expenses and disability compensation, the affliction on the nation’s commerce was astounding.

The Occupational Safety and Health Act of 1970, which established the Occupational Safety and Health Administration, was intended to assist employers and employees in reducing injuries, illnesses and deaths at work. Since then, workplace fatalities have been reduced by 62 percent and occupational injury and illness rates have declined 40 percent. Currently, employment in the United States has doubled and now includes nearly 115 million workers at seven million job sites.

Activities:
The FAIR Act of 2005, introduced by Senator Arlen Specter (R-PA), intended to “create a fair and efficient system to resolve claims of victims for bodily injury caused by asbestos exposure.” Further, it provides for enhanced criminal penalties for OSHA asbestos violations, and mandatory minimums for these violators, in addition to their contribution to the Asbestos Injury Claims Resolution Fund. This bill failed to pass the Senate and has not been reintroduced in the 110th Congress.

In March 2007, Sen. Patty Murray reintroduced the “Ban Asbestos in America Act of 2007.” Sen. Murray’s legislation, which was first introduced in the 107th Congress, would authorize additional studies to determine which commercial products today still contain asbestos, increase funding for asbestos-related diseases, and call for a national Mesothelioma registry to help public health professionals track asbestos-related disease.