By Joshua Burd
In just two weeks, hundreds of business and political leaders will board a southbound Amtrak train as part of the New Jersey Chamber of Commerce’s annual Walk to Washington.
And you can bet that the state’s commercial real estate sector will be well-represented.
Under a long-running effort by two firms — Sills Cummis & Gross P.C. and Langan — this year’s train will include a “developer’s car” that will serve as a focal point for the industry. The law firm and the engineering giant have been co-sponsoring the car since the late 1990s, providing a backdrop for key policy discussions amid the super-networking event.
Ted Zangari, who co-chairs the real estate department at Sills, said this year’s priorities will undoubtedly include infrastructure funding. That was likely even before President Trump’s recent budget proposal, which critics say falls far short of what’s needed to fix the state’s transportation network.
“I think it’s fair to say that most people in the real estate community, particularly those in urbanized states such as New York and New Jersey, are somewhat disappointed with the framework of infrastructure funding being proposed down in Washington,” Zangari said. “It seems like it’s going to be much more (public-private partnerships) with a lopsided emphasis on private sector investment, versus P3 with a heavy dose of public funding.
“So that’s disappointing and we’ll have to work on that.”
Through their involvement with the International Council of Shopping Centers, Sills and Langan began their sponsorship of the car with a focus on issues tied to the shopping center industry and retail development, Zangari said. But the car quickly became a magnet for other real estate developers and professionals, including public economic development officials, especially amid the shift toward mixed-use development in commercial real estate.
That has coincided with advocacy on federal policy matters such as the Endangered Species Act and landlord-lease provisions of the U.S. Bankruptcy Code, along with key provisions of the tax code such as carried interest, 1031 like-kind exchanges and the New Market Tax Credit program. The train has also provided a venue to discuss longtime state policy questions such as the so-called time of application rule and liquor license reform.
“We’ve found it very helpful just to be with the group of developers that we work with and to have the opportunity to discuss state policy aspects with them, as well as with the state policy people who walk the train,” said Michael Semeraro, managing principal and executive vice president with Langan. “Everyone is very open-minded to talk about issues with their companies and their plans. And it’s a very good venue to meet and develop relationships and to expand our relationships with our existing client base.”
ICSC and other groups have also spent years focused on what’s known as e-fairness, which concerns the issue of online-only retailers not collecting sales taxes from customers. Advocates have long argued that this puts local brick-and-mortar businesses at a severe disadvantage, calling for the federal government to level the playing field by closing the loophole.
Zangari said the battle has been a recurring theme in past years without much hope for a resolution. But that could change this year.
“Up until recently, we haven’t had much receptivity in Congress to the plight of brick and mortar merchants, but the swift rise of Amazon’s impact on retail and states’ heightened pleas to capture sales taxes lost on internet transactions has made a difference,” he said. “We now have the president’s support and a majority of Congress, so I think it’s only a matter of time.
“We’ve been working that issue aboard the train and down in Washington since the earliest days of e-commerce. E-fairness has been without question the foremost issue on our mind at the federal level.”
Recent federal tax reform was largely seen as a victory for commercial real estate, especially as it concerns provisions such as 1031 exchanges and New Market Tax Credits. But it also created uncertainty within the for-sale, single-family homebuilding industry, setting up another topic of discussion on this year’s Walk to Washington.
“We’ll all be there on the train to support the homebuilders because we’re all affected by what has happened with the limitations on mortgage interest deductibility and state and local tax deductions,” Zangari said. “What hurts homebuilders — which includes multifamily developers — hurts all businesses in New Jersey.
“The effects are not going to be limited to the housing industry. All businesses and residents will be negatively impacted by what has befallen the so-called blue states.”