RCA Technology & Intelligence Briefings Issue 4

Interview with Jeff DeBoer — Third Quarter 2006

Jeff DeBoer has served as President and CEO of The Real Estate Roundtable since 1997. In addition to his position at the Roundtable, he serves as Chairman of the Real Estate Industry Information Sharing and Analysis Center (RE-ISAC). Also as co-chairman of the Advisory Board of the RAND Corporation’s Center for Terrorism Risk Management Policy and is chairman of the National Real Estate Organizations. He is also a founding member of the steering committee of the Coalition to Insure Against Terrorism (CIAT). Contact him: President@rer.org

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1. The mission of the Real Estate Roundtable is to bring positive results to public policy issues in Washington, D.C. that affect the broad real estate industry; it is a single, coherent voice for the industry.
2. Formed eight years ago, the Roundtable brings together 100 leaders in the industry—chairmen, CEOs and presidents of large, national real estate entities and the elected heads of the 15 real estate trade associations.
3. The Real Estate Roundtable brings together leaders of the nation’s top publicly owned and privately-held real estate ownership, development, lending and management firms with the elected leaders of major national real estate trade associations to jointly address national policy issues relating to real estate and the overall economy.
4. The Roundtable and NAR are complementary in working in the best interest of commercial practitioners; through its Commercial Division and the Realtors’ Commercial Alliance, NAR is able to identify and clarify important issues to bring to the Roundtable.
   

1. This topic was a major policy issue emerging for the industry last year; any big commercial project requires having proper insurance, which now must include terrorism insurance.
2. Because the private insurance industry could not provide adequate terrorism coverage, a federal program was instituted to help insure such losses; that program (even with its two-year extension) expires at the end of 2007.
3. If Congress does nothing further, the real estate industry will face tremendous contractions in its ability to get terrorism insurance; major legislative discussions will be taking place on the federal government’s role in terrorism insurance and the related topic of catastrophic insurance.
4. The Roundtable will be working closely with the NAR and others to find a solution.

1. The Roundtable has worked with the Department of Homeland Security to develop the Real Estate Information Sharing and Analysis Center; other major industries have done so, too; the Real Estate ISAC involves all the trade associations working together.
2. The purpose of the center is to facilitate direct, two-way communication for trading information about security threats and best practices for protecting assets; the center provides a way for the government to share relevant information without going public.
3. The ISAC helps people in the industry to be prepared for emergencies—e.g., with evacuation plans.

1. Eminent domain has been used for decades by states and localities to facilitate such things as road construction, public transit and even urban redevelopment.
2. It is a hot issue because of the Supreme Court’s decision in summer 2005 that essentially allows property to be taken from one private owner and given to another private owner providing the result is an increase in the locality’s tax base; Congress since then passed a law preventing such transfers from one private party to another.
3. The Roundtable is a pro-property rights organization; however, its view is that in certain circumstances this kind of transfer can be good for communities, but there needs to be some reasonable rule on when eminent domain can be used.
4. The Roundtable’s position is that the issue should be decided on the state and local level, not in Congress; the organization is encouraging legislation that will support that middle ground.

1. Extension of the 15% capital gains tax rate until 2010 is a positive development.
2. A long-term solution for depreciation is another issue important to the real estate industry.
3. The leasehold improvement rule (building out office or retail space to accommodate a tenant) should have a 15-year time frame; DeBoer is optimistic about success with this.
4. Another area in which the Roundtable is making good progress is in getting a write-off for a developer’s expenses for cleaning up an environmentally contaminated property.
5. A resolution of the estate tax issue does not appear likely any time soon—more public debate is needed; for now the law remains in place gradually reducing the estate tax until 2010, when it goes to zero—in 2011 it is due to revert to the old levels.
6. The Roundtable is monitoring tax reform closely, but nothing appears imminent; a situation like the reform of 1986 needs to be avoided; Congress acted then in an uninformed way, and it took the real estate industry six to eight years to recover from the damage.

1. The Thrift Savings Plan is the retirement plan that covers 3.2 million government workers and the military; as with 401(k) plans, investment options are limited—there is no option under the federal plan to invest in a real estate index.
2. The Roundtable is working with Congress to amend the plan to include real estate as an investment choice; federal pension money is potentially a good long-term capital source for the industry.

1. Residential and commercial buildings account for about 34% of total energy consumption in the U.S.; as Congress and the White House develop a long-term energy program, they need to consider the real estate point of view.
2. Positive elements that impact real estate include more energy-efficient building skins and on-site fuel generation.
3. A few years ago, the Roundtable got the Dept. of Energy and the EPA to put an Energy Star designation on energy-efficient buildings—an attraction for investors and tenants.
4. Environmental issues being watched by the Roundtable include wetlands and the endangered species act.

1. Real estate issues have not historically been partisan—a healthy real estate market is good for the general economy, jobs and tax revenues; representatives of the Roundtable tend to be well received in both Democratic and Republican offices.
2. However, Washington has become increasingly partisan, which makes achieving results more difficult; actually getting legislation enacted is hard—few solutions lend themselves to a simple, 51% majority decision.
3. The Roundtable works to bring about bi-partisanship efforts.

1. By being a member of any real estate trade association, you are tangentially a member of the Roundtable.
2. The web site www.rer.org offers extensive information on issues; DeBoer and others on the staff are accessible through the web site, by phone and by email—they like to hear from people in the industry about their perspective on public policy.
3. In addition to the main Roundtable membership, there is a related group, the Presidents Council, which is open to wider participation; contact DeBoer if you are interested in joining it.