{"id":1004519680,"date":"2021-04-01T04:49:56","date_gmt":"2021-04-01T12:49:56","guid":{"rendered":"http:\/\/internal.cpexecutive.com\/?p=1004519680"},"modified":"2021-05-15T10:21:32","modified_gmt":"2021-05-15T18:21:32","slug":"does-cre-benefit-from-the-2-trillion-federal-infrastructure-plan","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/does-cre-benefit-from-the-2-trillion-federal-infrastructure-plan\/","title":{"rendered":"Will CRE Benefit From the $2T Infrastructure Plan?"},"content":{"rendered":"
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Image by Francine Sreca via Pixabay<\/em><\/p><\/div>\n

Asked about President Joe Biden\u2019s wide-ranging $2.3 trillion infrastructure plan released Wednesday, economist Hugh Kelly said, \u201cIt\u2019s way overdue.\u201d<\/p>\n

Kelly, curriculum chair at the Fordham Real Estate Institute, said the commercial real estate industry<\/a> should be able to process the massive spending bill very well, comparing it to \u201cdeferred maintenance\u201d in buildings.<\/p>\n

\u201cThis is something that the real estate industry should understand really easily and support enthusiastically,\u201d added Kelly, a columnist for Commercial Property Executive<\/em>.<\/p>\n

Barry LePatner, a veteran real estate and construction attorney and principal of LePatner & Associates LLP, said the U.S. has had failing infrastructure for 40 years but that the problem has been ignored by politicians. \u201cWhen the government comes up with robust funding for infrastructure, we should be happy about it, but we have to look critically at the details or we will see how easy it is to make mistakes and the funding won\u2019t go where it\u2019s really needed,\u201d he said.<\/p>\n

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READ ALSO:<\/strong> Analysis: COVID-19 Relief Signals New CRE Policy Regime<\/a><\/p>\n

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Some commercial industry and multifamily leaders expressed concern about how to pay for the sweeping proposals that range from $621 billion on improvements for roads, bridges, railways, ports, airports, public transit and the electric grid to $213 billion to address affordable housing issues for low- and middle-income renters. Among other proposals, it also calls $400 billion to expand home care services for the elderly and disabled and increase wages for those who care for them, $300 billion for manufacturing, $180 billion for research and development, $100 billion to build new public schools and upgrade facilities including ventilation systems, $12 billion for community colleges and $25 billion for child care facilities.<\/p>\n

Biden said that most of the funding for the biggest federal spending plan in decades would come from raising the corporate income tax from 21 percent to 28 percent and increasing the global minimum tax on U.S. corporations to 21 percent. He also pledged not to tax people making less than $400,000. But some commercial real estate industry leaders worry that the administration could turn to tax-related incentives used by multifamily and CRE investors. During the campaign, Biden had proposed eliminating the 1031 exchange and raising capital gains taxes for individuals with incomes higher than $1 million.<\/p>\n

\u201cTransaction volume would drop. It would really alter the industry,\u201d Andre Soroudi, director of acquisitions for the West Coast, CGI Real Estate Investment Strategies, said of Biden\u2019s earlier proposal to take away the 1031 exchange. \u201cWe work with a lot of private investors that want a 1031.\u201d<\/p>\n

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READ ALSO:<\/strong> The Benefits of Section 1031 No One\u2019s Talking About<\/a><\/p>\n

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JLL Chief Economist Ryan Severino said the administration may have been looking for parts of the tax code that are the least counterproductive to economic growth. \u201cMarginally raising corporate taxes and marginally raising taxes on wealthy individuals is less disruptive,\u201d he said.<\/p>\n

Stephen Sandherr, CEO of the Associated General Contractors of America, disagreed, arguing that the president\u2019s proposal to finance the new investments primarily through a corporate tax hike would \u201clikely undermine many of its economic benefits.\u201d Furthermore, this would limit the ability of many employers to invest in capital improvement and could ultimately America\u2019s global competitiveness. He also criticized Biden\u2019s plan to couple the infrastructure proposal with the PRO Act, which would ban right-to-work laws nationwide.<\/p>\n

The U.S. Chamber of Commerce also opposed the tax increase proposals,<\/a> saying the financing plan was \u201cdangerously misguided\u201d and would slow the economic recovery and make the U.S. less competitive globally. The organization did applaud Biden for making infrastructure a priority and called on Congress to work in a bi-partisan manner during what is expected to be a long process.<\/p>\n

Other key parts of the proposal include:<\/p>\n