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BOMA LI leader lobbies congressmen.

Gary Rodolitz, P.E., president of the Long Island chapter of the Builders and Owners Management Association (BOMA) and co-partner of Rodolitz Associates, Garden City, is keeping up the political pressure on members of Congress in an effort to dramatically bolster the sagging real industry.

In telegrams to two key members of the Long Island congressional delegation who sit on the powerful Ways and Means Committee, Rodolitz writes to Congressmen Raymond McGrath and Thomas Downey, "Simultaneously cursed and coveted, the real estate industry continues to play an enormous role in Long Island's economy, comprising as much as one third of the economic activity in the bi-county region. It is as much part our economic fabric as high-technology, defense and tourism and it cannot be ignored by anyone who lives and works on an island of 2.7 million people."

Rodolitz believe that key to pulling Long Island out of one of the more painful recessions in recent memory, will be the ability to restore memory, trust and vitality back into the national real estate market.

Rodolitz is proposing the recapitalization of the commercial real estate industry throughout the country through a mechanism of federally isued mortgage backed bonds. With limited tax exempt status, a 4 percent interest and 90 percent of the instrument guaranteed by Washington.

"These bonds would be available to refinance up to one third of the existing mortgage on an existing commercial property. Implementation of a recapilization program would have as dramatic an effect as FDR's first 100 days in office," stated the BOMA regional president.

"The result would be that banks and insurance companies would become "liquid" again, with one-sixth of their real estate investment portfolio becoming cash and one-sixth government backed bonds as a portion of their first mortgages are acquired. These institutions would be able to begin pumping some several hundred billion dollars back into the nation's economy, making loans to sound, profitable businesses who have been redlined by the economy. And this program would provide just enough breathing room needed to return value to real estate investments so crucial to the region's economic base," he continued.

Rodolitz explained that the need for such affirmative financial action is based on an explosion of debt that has been inflicted on the nation. He notes that in the space of ten years the national debt burden has tripled, from $1 trillion in 1980 to $3 trillion in 1990.

"But the economy has the double whammy of a 1986 Tax Reform Act, where Congress effectively devalued $7 trillion worth of commercial real estate by 30%. Inadvertently, they put another $2 trillion anchor on the economy by destroying what had been a safe investment for banks, pension funds, insurance companies and individuals," he explained.

In addition, some landlords, desperate to attract any tenant at any price, began renting below the cost of carrying the building, setting the stage for future financial disaster.

"Yet the retreat into bankruptcy for these major regional centers of commerce is not even a partial solution. Bankruptcy creates enormous economic wreckage for the region, rattling confidence in the business sector, leaving vendors and suppliers in debt and further stressing the banks that must now assume management of hundreds of thousands of square feet," Rodolitz writes to the Congressional delegation.

"The arrival of the R.T.C. on the scene is the economic equivalent of injecting a corpse with antibiotics - too little too late and at an enormous cost to the taxpayer," he noted.

Already the strategy of allowing buildings to fail is proving a disastrous course as what had been projected as an expense of several billion dollars is now over $100 billion and projected to top $500 billion. Rodolitz's warning that the R.T.C., charged with recovering the assets of failed banks, has become history's most expensive undertaker with the taxpayer as the pall-bearer, seems to have been ignored.

"Through intelligent recapitalization we can begin to end the cardiac arrest that is contorting the face of America. We can restore the investment confidence of millions of people who thought real estate was as sound as a Treasury note. And we can begin to break the ice jam on credit that is threatening to end the livelihoods of tens of thousands of Americans. But it will take new, innovative programs if we expect to make a substantive difference in turning our economy around," he concluded.
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Title Annotation:Builders and Owners Management Association, Long Island chapter, New York, New York
Publication:Real Estate Weekly
Date:Aug 12, 1992
Previous Article:Building Congress: 'let Riverside South be built'.
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