News Type: Roundtable Weekly

House Tax Writers Air Priorities, Address Technical Correction for Qualified Improvement Property Provision

Posted on by Trey Jackson

The House Ways and Means Committee on June 4 held a Members’ Day Hearing to address tax legislative priorities for the remainder of the year – including technical corrections to the Tax Cuts and Jobs Act (TCJA) that would correct a drafting error affecting qualified improvement property (QIP).  Numerous other tax priorities are also expected to crowd the congressional agenda, including expired or expiring tax provisions; repeal of the state and local tax deduction cap; the national debt limit; and budget spending caps.

The House Ways and Means Committee held a Members’ Day Hearing to address tax legislative priorities for the remainder of the year – including technical corrections to theTax Cuts and Jobs Act(TCJA) that would correct a drafting error affecting qualified improvement property (QIP).

  • A coalition of businesses and trade groups, including The Real Estate Roundtable, urged all members of Congress in April to cosponsor the Restoring Investment in Improvements Act (H.R. 1869 /  S. 803) – a bill that would correct the QIP drafting error.  The legislation would give qualified improvement property a 15-year depreciation period and restore its eligibility for accelerated bonus depreciation. (QIP Policy Comment Letter and Roundtable Weekly, April 26)
  • The QIP error has resulted in a significantly longer 39- or 40-year cost recovery period for interior improvements to nonresidential property, such as tenant build-outs.  The intent of Congress was to allow the immediate expensing of QIP – or provide a 20-year recovery period in the case of taxpayers electing out of new limitations on the deductibility of business interest.
  • During the hearing, Rep. Adrian Smith (R-NE) said that QIP should be addressed as soon as possible and technical corrections should reflect the intent of lawmakers.  Rep. Roger Marshall (R-KS) discussed how QIP’s 39 depreciation adversely impacts small businesses, suggesting it should be dropped to 15 years.  And Rep. Jackie Walorski (R-IN) emphasized the need for a QIP fix, advocating for H.R. 1869. 
  • Reps. Walorski and Jimmy Panetta (D-CA) introduced the Restoring Investment in Improvements Act on March 26. The Senate companion bill (S. 803) was introduced earlier that month by Sens. Pat Toomey (R-PA) and Doug Jones (D-AL).  (Roundtable Weekly, March 15) 

    Ways and Means Chairman Richard Neal (D-MA) will discuss tax policy with Roundtable members on June 11 during the organization’s Annual Meeting in Washington, DC.

  • Beth Bell, Democratic tax counsel for Ways and Means, acknowledged many committee members are interested in TCJA technical fixes, including QIP.  Yet she emphasized during a May 30 Federal Bar Association meeting, “I think we need to get through processing or considering what to do with an extenders package before we get to a technical corrections package.” (BGov, May 30)
  • In the Senate, Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) last month announced the formation of several bipartisan taskforces to examine and help permanently resolve the fate of 42 expired and expiring tax provisions.  (Senate Finance Committee Announcement, May 16 and Roundtable Weekly, May 17)
  • A preliminary draft of House legislation obtained by Bloomberg Tax last week would pay for the extension of temporary tax provisions through 2019 by changing the expiration date of estate tax relief included in TCJA. 

House Ways and Means Chairman Richard Neal (D-MA) will discuss tax policy with Roundtable members on June 11 during the organization’s Annual Meeting in Washington, DC.  QIP and tax extenders will be among several tax policy issues discussed in detail during The Roundtable’s Tax Policy Advisory Committee (TPAC) meeting on June 12.

Real Estate Coalition Opposes FCC’s Notice That May Permit Broadband Equipment on Private Property Without Owner Consent

Posted on by Trey Jackson

Installation of certain communications equipment on leased property to enable expansion of wireless networks should not be allowed without owner consent.  That is the message submitted on June 3 to the Federal Communications Commission (FCC) by an industry coalition that includes The Real Estate Roundtable.  (Joint Industry Comments to FCC).

The installation of certain communications equipment on leased property to enable expansion of wireless networks should not be allowed without owner consent.  (Joint Industry Comments to FCC, June 3)

  • The coalition’s comments come as the FCC considers whether to expand its interpretation of federal law regarding consumer home antennas, spurred by the development of 5G technology for the next generation of advanced communications equipment. 
  • Current FCC rules allow residential and commercial tenants to install in leased spaces certain types of “customer-end” antennas and satellite dishes known as Over-the-Air-Reception Devices (“OTARD”).  The current scope of the OTARD rules is designed to enable consumer choice for tenants to select the kinds of cable and broadband services they desire. 
  • The FCC’s Notice of Proposed Rulemaking (announced on March 22) suggests a regulatory expansion outside the existing scope of “customer-end” devices in leased residential apartments and indoor office spaces.  The agency’s proposal would confer a broad grant of rights on broadband providers to access rooftops and other common areas – without the building owner’s consent – for the dense deployment of “hub and relay” antennas and other fixed wireless devices attendant to 5G infrastructure. 
  • The real estate coalition believes new FCC rules are not necessary because apartment residents, commercial tenants, and other customers demand fast and reliable Internet service in the 21st century marketplace.  “[C]ompetitiveness … has driven property owners to ensure that broadband infrastructure is available in their communities and other buildings,” the industry’s comments state.  “This deployment has taken place without government mandates, and the Real Estate Associations strongly believe that government intervention is not needed.”   

    The Real Estate Associations’ opposition to the Over-the-Air-Reception Devices (“OTARD”) rule’s expansion is detailed in expansive comments. 

     

  • According to the coalition, property owners have invested in excess of half a billion dollars over the past decade – a low-ball estimate – of their own capital to deploy broadband infrastructure in their assets.  Additionally, a basic exercise of building management is to enter into mutually beneficial arrangements with broadband providers to provide tenants with Internet access.  Government intervention – and regulation of rooftops and other building spaces – is not necessary because the market is already functioning and thriving. 
  •  The real estate groups’ comments acknowledged that broadband deployment in the nation’s rural areas (81.7 percent coverage) lags considerably behind urban coverage (99 percent).  Strides need to be made to “close the gap between urban and rural deployment.  But we also think it is important to note that existing rates of deployment were achieved with cooperation of the real estate industry,” the groups explained to the FCC.         

The Real Estate Associations’ opposition to the OTARD rule’s expansion is detailed in its expansive comments.  For more information, see the National Multifamily Housing Council’s resources on telecommunications issues.

Treasury Releases Proposed Regulations on FIRPTA Foreign Pension Fund Exemption

Posted on by Trey Jackson

The Treasury Department yesterday issued proposed tax regulations clarifying the scope and operation of the foreign pension fund exemption from the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).  (Federal Register, June 7)  The proposed rules appear to be overwhelming positive and likely to resolve most, if not all, of foreign investors’ remaining concerns.

The Treasury Department  issued proposed tax regulations clarifying the scope and operation of the foreign pension fund exemption from the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).  (Federal Register, June 7)  The proposed rules appear to be overwhelming positive and likely to resolve most, if not all, of foreign investors’ remaining concerns.

  • FIRPTA imposes U.S. capital gains tax on the sale of a U.S. repeal property interest by a foreign investor.  FIRPTA results in a discriminatory tax on foreign investment in US real estate and infrastructure that does not apply to any other asset class.  The FIRPTA regime is an anti-competitive outlier that deflects global capital to other markets.
  • With the strong support of The Real Estate Roundtable, Congress passed in 2015 the first major reforms to FIRPTA since its enactment in 1980.  The changes included a new exemption from FIRPTA for qualified foreign pensions funds and doubled the amount a foreign interest may invest in a U.S. publicly traded REIT.  (Roundtable Weekly, Dec. 18, 2015) 
  • After passage of the 2015 PATH Act, some questions remained regarding whether certain foreign entities and arrangements would qualify for the foreign pension fund exemption.  The Roundtable encouraged Congress to clarify that the foreign pension fund definition covers a number of number of different arrangements, including:  governmental, Social Security-type plans; plans established for the self-employed; multi-employer plans; plans sponsored by political subdivisions; and situations where an entity pools retirement assets from multiple pension plans.
  • In March 2016, the Joint Committee on Taxation provided support for a broad interpretation of the FIRPTA foreign pension fund exemption with its “Blue Book” on tax legislation enacted in 2015.  (Roundtable Weekly, March 18, 2016)  In March 2018, Congress passed FIRPTA technical corrections legislation codifying many of The Roundtable’s recommendations.  (Roundtable Weekly, Mar. 23, 2018; The Blue Slip, Mar. 2018)
  • The newly proposed regulations adopt a broad view on what constitutes a qualified foreign pension fund.  According to the regulations’ preamble, “[t]he Treasury Department and the IRS have determined that the purpose of section 897(l) is best served by permitting a broad range of structures to be eligible to be treated as a qualified foreign pension fund.”  This sentiment is then extended in the proposed rules to a wide range of pension arrangements, including multi-employer and government-sponsored public pension funds, as well as retirement funds organized by trade unions, professional associations, or similar groups. 
  • Additionally, the proposed regulations confirm that entities wholly owned by multiple foreign pension funds can qualify for the exemption.  Similarly, entities can qualify for the exemption indirectly through a chain of ownership.  These were important clarifications for common foreign pension fund structures.  

Building on the success of the PATH Act reform, The Roundtable and other stakeholders are encouraging Members of Congress to repeal FIRPTA entirely by passing the bipartisan Invest in America Act sponsored by Representatives John Larson (D-CT) and Kenny Marchant (R-TX).  (Roundtable Weekly, Apr. 12, 2019)  FIRPTA will be one of several tax topics discussed during The Roundtable’s Annual Meeting on June 11 in Washington, DC and at the Tax Policy Advisory Committee meeting on June 12.

Roundtable Urges Treasury to Clarify Tax Consequences of Transition Away from LIBOR as Reference Rate

Posted on by Trey Jackson

The Real Estate Roundtable yesterday asked the U.S. Treasury Department and IRS to reduce the risk of market disruption by clarifying the tax treatment of financial contracts that replace the expiring London Inter-bank Offered Rate (LIBOR) with a substitute reference rate.  Over $200 trillion of LIBOR contracts are outstanding, including roughly $1.3 trillion of commercial real estate debt. (Roundtable LIBOR letter, June 6)

The Real Estate Roundtable yesterday asked the U.S. Treasury Department and IRS to reduce the risk of market disruption by clarifying the tax treatment of financial contracts that replace the expiring London Inter-bank Offered Rate (LIBOR) with a substitute reference rate. (Roundtable LIBOR letter, June 6). 
  • The United Kingdom’s Financial Conduct Authority (FCA), which regulates LIBOR, announced in 2017 that it is phasing out the global borrowing index by the end of 2021.  LIBOR will need to be replaced in both new agreements and innumerable existing legacy contracts.
  • Several factors may necessitate or accelerate parties’ adoption of alternative reference rates on existing contracts well before the end of 2021.  To facilitate the transition, the Federal Reserve Bank of New York in 2018 began publishing an alternative U.S. benchmark to work alongside LIBOR – the Secured Overnight Financing Rate (SOFR).  (See: A User’s Guide to SOFR  and SOFR: A Year in Review)
  • However, several issues may be contributing to the reluctance of market participants to use SOFR, including the absence of necessary internal infrastructure to support its accounting and trading, and the lack of tax guidance. 
  • Roundtable President and CEO Jeffrey DeBoer noted in the comment letter, “If the terms of a debt instrument are significantly modified, for Federal income tax purposes there is a deemed exchange of the old debt for a new (modified) debt instrument.”  Without relief, this deemed exchange could trigger the recognition of taxable gain or loss for the lender, or debt discharge income for the borrower.
  • “Moreover, the tax consequences of the deemed exchange can arise without generating actual cash to pay any ensuing tax liability,” wrote DeBoer. 

    Randal Quarles – the Fed’s vice chairman in charge of financial regulation – reiterated the urgency of moving forward on the transition to SOFR. 

  • The Roundtable’s June 6 comments recommend that a safe-harbor rule confirm that a replacement index or formula identified by regulators, broad industry groups, or similar objective sources-or by the parties themselves in good faith-is not considered an alteration or modification of the original instrument.  The Roundtable letter states, “Instead, the replacement should be treated for Federal tax purposes as a continuation of the instrument’s original terms.”
  • This week, Randal Quarles – the Fed’s vice chairman in charge of financial regulation – reiterated the urgency of moving forward on the transition to SOFR:  “I believe that the ARRC has chosen the most viable path forward and that most will benefit from following it, but regardless of how you choose to transition, beginning that transition now would be consistent with prudent risk management and the duty that you owe to your shareholders and clients …. With only two and a half years of further guaranteed stability for LIBOR, the transition should begin happening in earnest.”  (Bloomberg, June 3)
  • The Wall Street Journal reported last July that companies were adopting SOFR sparingly –  despite regulators urging banks and traders to stop launching new Libor-based contracts ahead of the 2021 deadline. (WSJ, July 12 and Roundtable Weekly, July 13, 2018) 

The Roundtable letter was developed by a task force that included Tax Policy Advisory Committee (TPAC) Chairman Frank Creamer Jr., TPAC member Don Susswein, and chair of the Real Estate Capital Policy Advisory Committee (RECPAC) Working Group on LIBOR, Joseph Philip Forte.  On June 11, at The Roundtable’s Annual Meeting in Washington DC, Joseph Forte will lead a RECPAC discussion on real estate’s concerns with the LIBOR transition. 

President Trump Requests Democrats Pass USMCA Before Infrastructure Bill; House Ways and Means Member Introduces Gas-Tax Infrastructure Bill

Posted on by Trey Jackson

On the eve of a May 22 White House meeting to discuss a national infrastructure improvement package, President Trump sent a letter to Democratic congressional leaders requesting they first approve his trade deal with Canada and Mexico before taking up infrastructure legislation. (Bloomberg, May 21)

Legislation introduced May 22 by Rep. Earl Blumenauer (D-OR) would gradually increase gasoline and diesel taxes to invest in the nation’s infrastructure.  Blumenauer is a member of the tax-writing House Ways and Means Committee.

  • “Before we get to infrastructure, it is my strong view that Congress should first pass the important and popular [United States-Mexico-Canada Agreement (USMCA)] trade deal,” Trump wrote. “Once Congress has passed USMCA, we should turn our attention to a bipartisan infrastructure package,” he added.
  • Democrats and Trump agreed during a meeting last month to pursue a $2 trillion infrastructure package and meet again this week to discuss funding.  (Roundtable Weekly, May 3).  Trump cancelled the May 22 White House meeting and the talks failed to move forward.
  • In the House, legislation introduced May 22 by Rep. Earl Blumenauer (D-OR) would gradually increase gasoline and diesel taxes to invest in the nation’s infrastructure.  Blumenauer is a member of the tax-writing House Ways and Means Committee.
  • The Rebuild America Act would raise the fuels’ tax by five cents a year over five years, index it to inflation, and aim to replace it with a more stable source of funding within 10 years. (Blumenauer press release, May 22) 
  • The Roundtable on April 29 submitted infrastructure policy recommendations to House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) and Ranking Member Sam Graves (R-MO).  As part of a suite of infrastructure recommendations, The Roundtable also proposed a gas “user fee” increase that aligns with Blumenauer’s bill.  (Roundtable Weekly, May 3)

House Ways and Means Committee Chairman Richard Neal (D-MA) is scheduled to discuss tax policy with Roundtable members on June 11 during the organization’s Annual Meeting in Washington, DC. 

 

2018 Ushers In Sweeping Tax Code Changes and a Loaded Congressional Agenda Under Threat of Jan. 19 Government Shutdown

Posted on by Trey Jackson

With sweeping tax code changes enacted last month now in effect, both chambers of Congress are returning to a packed legislative to-do list and looming policy deadlines – including the expiration of the latest round of government funding on Jan. 19. 

  With sweeping tax code changes enacted last month now in effect, both chambers of Congress are returning to a packed legislative to-do list and looming policy deadlines.

As businesses and individuals adjust to the new tax law’s various provisions, it is expected that the IRS will issue guidance on the largest change to the tax code in 31 years – including the 20 percent deduction for qualified business income; limitation on deductibility of business interest and losses; and deprecation and expensing of assets. The Roundtable will participate throughout 2018 in the regulatory and rulemaking process as technical questions and detailed tax guidance affecting commercial real estate are addressed by policymakers in Washington. (Roundtable Weekly, Dec. 22) 

This week, congressional leaders and Trump Administration officials met to discuss the need for a government spending measure to avoid a shutdown when the current “Continuing Resolution” (CR) expires Jan. 19.  Policymakers will seek to link other issues to a funding deal, such as overhauling the nation’s immigration system; funding for a border wall; and the status of  “Dreamers” – undocumented immigrants brought to the country as children. 

Other pressing policy issues needs that may be wrapped into the spending debate include disaster relief, electronic surveillance laws and the Children’s Health Insurance Program. Senate Minority Leader Chuck Schumer (D-NY) said on the Senate floor last month, “We can’t leave any of those issues behind.” (BNA, Jan. 3) 

The budget also affects issues of importance to CRE such as the National Flood Insurance and  EB-5 foreign investment programs. 

Since only eight scheduled legislative days are available for Congress and the Administration to agree on a new spending measure before the Jan. 19 expiration, another short-term CR may be passed to keep the government open – or a shutdown will result.    

This week also saw two new Democrats join the Senate, narrowing the Republican majority to 51-49.  After Sens. Doug Jones (D-AL) and Tina Smith (D-MN) were sworn in yesterday, the ability of Senate Majority Leader Mitch McConnell (R-KY) to attract 60 votes to pass most legislation in the Senate will become a greater challenge. 

In the House, Republican Speaker Paul Ryan (WI) has a 239-193 majority, yet pushback from certain Republican coalitions may necessitate Democratic votes to pass legislative initiatives.

Rep. Mark Meadows (R-NC), the chairman of the conservative House Freedom Caucus, recently told Bloomberg, “People are not going to come back singing the Sound of Music together. January is going to be contentious.”  (Bloomberg Government, Jan..2) 

The upcoming Roundtable State of the Industry Meetings will take place just days before President Trump’s first State of the Nation address on Jan. 30, when he may emphasize his infrastructure initiative.

Additionally, House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) announced this week that he will not seek re-election, but emphasized he will be dedicated to passing an infrastructure bill this year.  Shuster, who addressed the Roundtable last spring (see Roundtable Weekly, April 7, 2017) said upon announcing his retirement, “About a week or so ago I had a private meeting with the president at the White House. Now when I say private meeting, it was the president and I in the Oval Office with his senior advisers and some of my senior people, and we talked about the infrastructure bill. He’s very excited. He seems to be ready to go, as we are, and so I think we’re going to have a good working relationship as we move forward.” (Washington Examiner, Jan. 2.) 

President Trump met yesterday with governors and local government leaders about nationwide infrastructure improvements.  Trump also will meet with Republican congressional leaders this weekend to discuss making infrastructure a top legislative priority this year. According to USA Today, the Administration will issue a new proposal later this month that would shift infrastructure project responsibilities to states and private investors by leveraging 200 billion dollars in federal funding to leverage 1 trillion in improvements. (USA Today, Jan. 5) 

Details of the new tax overhaul law, along with the budget outlook, immigration, infrastructure and other policy topics will be discussed in detail during The Roundtable’s State of the Industry and Policy Advisory Committee meetings on Jan. 24-25 in Washington. The meetings will take place just days before President Trump’s first State of the Nation address on Jan. 30, when he may emphasize his infrastructure initiative. 

Roundtable Member Joe Stettinius – Cushman & Wakefield’s CEO of Americas

Posted on by Trey Jackson

The Real Estate Roundtable is saddened by the recent passing of real estate industry veteran Joe Stettinius.  An active Roundtable member, he was most recently named executive vice chairman of strategic investments for the Americas at Cushman & Wakefield.

Joe Stettinius – Cushman & Wakefield’s CEO of Americas

Since the mid-1980s, Joe worked in every aspect of commercial real estate – from financing to development to research and leasing.  In 2010, he helped launched Cassidy Turley from a network of brokerages affiliated with Colliers International and his former employer, Cassidy & Pinkard. 

He played a key role in two significant mergers – Cassidy Turley’s merger with DTZ in January 2015, followed by DTZ’s merger with Cushman & Wakefield, which created a 43,000-employee global giant. (Biz Journals and BizNow, Feb. 2)

Cushman & Wakefield issued a statement that included, “Joe was committed to his friends and colleagues, helping them transform into the best version of themselves.  He will be remembered for his dedication to diversity – building a culture where all could succeed.” (Cushman & Wakefield, Feb. 2)

Commercial Real Estate Executives Positive Despite Cautious 2019 Outlook

Posted on by Trey Jackson

Commercial real estate industry leaders continue to acknowledge positive conditions in the economy and current real estate markets, while expressing some caution about 2019, according to The Real Estate Roundtable’s Q1 2018 Economic Sentiment Index released yesterday. 

Participants in the Q1 survey responded they are feeling comfortable about the stability of the real estate market in 2018, but many expressed concerns about what the market may look like in 2019.

— Full Report — 

 “As our Q1 Index shows, commercial real estate executives continue to anticipate strong near term asset values and capital availability,” said Roundtable President and CEO Jeffrey DeBoer. “Strong, growing commercial real estate markets go hand in hand with overall positive economic growth.  Moreover,  healthy commercial real estate markets directly benefit local communities by providing significant revenue to support local budgets and services,” DeBoer added.

The report’s Topline Findings include:

  • While the Q1 index came in at 54, there is a noticeable gap between the scores for current conditions (57) and future conditions (51). Responders are feeling comfortable about the stability of the real estate market in 2018, but many expressed concerns about what the market may look like in 2019.

  • With asset values nearing perceived peaks in gateway cities, the real estate community has demonstrated discipline many feel was absent in the previous cycle. Debt and equity sources of capital are making thoughtful, risk-weighted decisions.

  • Asset values continue to increase in secondary and tertiary markets as investors chase yield. In gateway and coastal cities, many responders feel that markets are nearing peak values.

  • For high quality investments in primary markets, responders feel there are many sources of debt and equity capital. Many responders suggested alternative lending platforms are providing increased competition.

President Trump Signs Budget Deal That Extends Government Funding Until March 23, Lifts Debt Ceiling for One Year and Sets Two-Year Budget Agreement

Posted on by Trey Jackson

During a week of thousand-point gyrations in the stock market and last-minute congressional votes to keep the government open, President Trump this morning signed a budget deal into law that ended a nine-hour government shutdown.  [Bipartisan Budget Act  legislation (H.R. 1892)]

The budget deal and spending measure – which passed the Senate today just before 2:00 AM, followed by a narrow approval vote in the House about 5:30 AM – includes:

The Congress passed the budget deal and spending measure early on the morning of Feb. 9, hours after the government technically shut down.

  • Another short-term Continuing Resolution funding the government through March 23;

  • An increase in the debt ceiling that is expected to last one year, addressing the matter until well after the mid-term elections;

  • An agreement to increase budget caps – and significantly increase spending – by $320 billion over the next two years, split between defense and non-defense domestic spending;

  • Disaster relief funding and renewal of a slew of expired tax provisions.  (The bill does not address the controversial DACA issue – the status of immigrants brought to the U.S. as children.)

Although the measure includes a clean, one-year retroactive extension of the Section 179D tax deduction for energy efficient buildings through 2017, it does not include any technical corrections to the landmark tax overhaul enacted in December. Those corrections are expected later this year in separate legislation.

Next, President Trump is scheduled to submit the Administration’s 2019 budget proposal as House and Senate appropriators begin work on 12 bills that may fund the government beyond March 23 – until the remainder of FY2018 through September 30.

The Senate Finance Committee released its Summary of the Tax Extenders Agreement explaining the extension of several temporary tax provisions.  The Joint Committee on Taxation issued JCX-4-18, estimating that the tax provisions in the Bipartisan Budget Act of 2018will cost about 17.4 billion dollars over the next decade. 

Other real estate-related tax provisions in the bill extend tax credits for energy-saving improvements to homes, continue the income exclusion when home mortgage debt is forgiven, and extend the individual deduction for home mortgage insurance. 

The National Flood Insurance and EB-5 programs are also extended through March 23, 2018.  This is the 12th short-term, status quo extension of EB-5 since Sept 2015.

Next, President Trump is scheduled to submit the Administration’s 2019 budget proposal on Monday as House and Senate appropriators begin work on 12 bills that may fund the government beyond March 23 – until the remainder of FY2018 through September 30.

House Passes ADA Reform Bill to Counter “Drive-By” Lawsuits

Posted on by Trey Jackson

The House of Representatives on Wednesday passed legislation (H.R. 620) to reform the American With Disabilities Act (ADA) to curb unscrupulous lawsuits alleging minor and easily correctable impediments to building access.  

The House of Representatives on Feb. 14 passed legislation (  H.R. 620  ) to reform the American With Disabilities Act (ADA) to curb unscrupulous lawsuits alleging minor and easily correctable impediments to building access.

Approved by a 225-192 vote, The ADA Education and Reform Act (H.R. 620), attracted 12 Democratic votes to address the rise in so-called “drive-by” lawsuits where disabled individuals never actually seek access to properties that are allegedly ADA non-compliant.  A 60 Minutes  segment in 2017 reported on lawyers filing ADA complaints simply after driving by a business or reviewing properties online via Google Earth.  Many business owners subjected to such “drive-by” ADA claims have found it less costly to settle complaints and avoid the litigation process. (International Council of Shopping Centers, ADA Lawsuit Reform) 

Under H.R. 620, individuals intent on suing hotels, restaurants or other businesses over an ADA violation must first give the business 60 days to address specific complaints, detailed in an initial written notice, about physical barriers that prevent access or otherwise discriminate against disabled customers. Before a law suit can be filed, another 60 days must be allowed for the business to make “substantial progress” toward remedying the problem. (Washington Post and BNA, Feb. 15) 

House Judiciary Committee Chairman Bob Goodlatte (R-VA) noted, “All this bill does is require those unscrupulous trial lawyers to do what ethical lawyers already do: give fair notice of a violation before thousands of dollars in attorneys’ fees are racked up against a small business, diverting money from accessibility where it belongs,” Goodlatte said.  (The Hill, Feb. 15, 2018) 

Tom McGee, president and CEO of the International Council of Shopping Centers (ICSC), applauded policymakers for “ensuring that the landmark [ADA] continues to protect disabled people from discrimination in their everyday life – from employment to accessing public places.  The retail real estate industry is fully committed to the collective goals of more accessibility and ensuring fair compliance with this important law,” he said.  (Roundtable Weekly, Sept 8, 2017) 

ICSC and other real estate groups intend to pursue a strategy to pass ADA litigation reform in the Senate in the coming months.