House Bill: H.R. 1616
June 21, 1999
The Honorable Bill Archer
Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515
Dear Chairman Archer:
The undersigned organizations urge the House Ways and Means Committee to include H.R. 1616, the Real Estate Investment Trust (REIT) Modernization Act, in the upcoming budget reconciliation bill.
Like other major sectors of the economy in the United States in the 1990s, the real estate industry is rapidly evolving into a customer-oriented service business. Unfortunately, current rules governing our industry limit a REIT's ability to provide leading edge services to their tenants and to use their expertise to serve third parties. As a result, these barriers have made it difficult for REITs to compete with others in the marketplace.
Representatives Bill Thomas (R-CA) and Ben Cardin (D-MD) have introduced H.R. 1616, the REIT Modernization Act, which is designed to remove several unnecessary barriers in the tax laws that make it difficult for REITs to compete. Specifically, H.R. 1616 would permit REITs to establish a taxable REIT subsidiary (TRS) to provide non-customary services to their tenants and to provide services to third parties. The TRS would be subject fully to corporate taxes as well as to a number of rules designed to ensure no income can be inappropriately shifted out of the taxable subsidiary to the REIT. When enacted, REITs will be in a better position to attract and retain top-quality tenants, maintain better quality control over the services rendered to their tenants, and produce greater customer loyalty.
Building on a similar proposal contained in the Administration's budget package, H.R. 1616 has the support of over two-thirds of the members on your committee. Identical legislation introduced in the Senate (S.1057) enjoys similarly strong bipartisan support among Finance Committee members. Given the breadth of the support for REIT modernization and the legislation's importance to the continuing competitiveness of the publicly traded real estate industry, we encourage you to include H.R. 1616 in your Chairman's mark.
American Seniors Housing Association
International Council of Shopping Centers
Mortgage Bankers Association of America
American Resort Development Association
National Apartment Association
National Association of Industrial and Office Properties
National Association of Realtors
National Multi Housing Council
National Association of Real Estate Investment Trusts
National Realty Committee
cc: The Honorable William M. Thomas
The Honorable Benjamin L. Cardin