What We Are Looking for
in 2017?
A
Number of Policy Changes That Will Impact the Real Estate Industry
[This article originally appeared in the New England Real Estate
Journal,
January 6, 2017.]
With new
administrations in Washington and Concord, we approach 2017 with certain hopes,
and fears, for the real estate industry.
We are expecting a number of policy changes at the federal and state
level which will be sure to specifically impact real estate ownership and
development. Here are some things we
will be looking for in the New Year:
Changes in Environmental Regulations. We think that a Trump administration is more
likely than not to relax the burden of federal environmental regulations, and
we expect that the regulatory agencies (the EPA and Army Corps of Engineers)
will take a more constrained view of the limits of their jurisdiction,
particularly with regard to wetlands. At
the very least, property owners should be secure in knowing that the scope of the
existing regulations will not be expanded.
In Concord,
Governor Sununu will have the opportunity to put his stamp on the Department of
Environmental Services by naming a replacement to outgoing Commissioner
Burack. We thank Commissioner Burack for
being a steady and fair hand at the helm for the past decade. A new Commissioner can take further steps to
make DES a more user-friendly agency with respect to permitting and enforcement,
and with the new Governor’s engineering background, we believe he has a clear understanding
of the real-world effect of the bureaucracy on economic growth.
Tax Changes. The election of President Trump and a return
of Republican control to Congress has created a lot of talk about tax reform,
both at the corporate and individual levels.
While a reduction in marginal rates and simplification of the tax code
should be good for economic growth in general, we also will be looking to see
how such reforms effect real estate-specific provisions, such as the mortgage
interest deduction and Section 1031 like-kind exchanges. Even minor changes in the tax code can have
big impacts on the real estate industry and on individual circumstances.
At the
state level, we might expect the Republican majorities in the State House to
push for accelerated reductions in the business tax rates, an effort that began
in the past budget cycle and appears to be successful. Until the election, we had feared that the exemptions
to the real estate transfer tax created in 2016 for certain internal
reorganizations might be reversed or cut-back.
Fortunately, we now think that this window of opportunity will remain
open for some time.
Energy Policy. Recent reports continue to conclude that
New England, and New Hampshire in particular, have the highest utility rates in
the country, which impedes all types of economic development. We will expect the Sununu administration and
Republican legislature to craft a comprehensive energy policy for the state,
which strikes the correct balance between the need to increase the supply of both renewable and carbon-based energy
and preserving an attractive way of life.
Housing
Policy. The
need for more affordable housing in New Hampshire begs for innovative policy
solutions. Last year, the legislature
created additional opportunities for alternative housing arrangements with the
passage of Senate Bill 146, the Accessory Dwelling Unit law, which will go into
effect on June 1, 2017. We will be
looking to see whether the legislature takes further steps to create flexible
approaches to zoning and curb the sometimes excessive limitations put on the
housing supply at the local level.
In
Washington, President Obama’s HUD has been pushing under-the-radar regulations,
in the guise of “Affirmatively Furthering Fair Housing”, which if fully-implemented
would effectively extend the federal government’s reach into local housing
policy. We hope that this federal
overreach will be curtailed.
Infrastructure Spending. President-elect Trump seems to be preparing
for a fairly large-scale infrastructure spending program. We can hope that such funding will give as
much flexibility as possible to the states to direct the money to those bridge
and road projects that are most in need and are not unnecessarily targeted to
projects favored by the bureaucrats in Washington.
2016 was a
year of surprises. While we will monitor
the developments discussed in this article, we are mindful that the New Year is
likely to have its share of surprises as well.
A team of high-quality real estate professionals can help guide you
through whatever 2017 has in store.
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