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OFFICE BUILDING INDUSTRY CAUTIOUS OVER CLINTON ECONOMIC PLAN

 WASHINGTON, March 8 /PRNewswire/ -- The leadership of the Building Owners and Managers Association (BOMA) International, along with representatives from 11 other real estate organizations, met with Deputy Treasury Secretary Roger Altman today to discuss the Clinton administration's economic plan and the value of its provisions for promoting real estate recovery.
 "Although we are waiting for details regarding the administration's proposed plan overall, we have strong reservations concerning four issues, specifically passive loss rules, recovery of leasehold improvement costs, pension fund investments and new building projects by the federal government," said Stephen P. Hokanson, RPA, CPM, president of BOMA International. "Corrections to the passive loss rules would permit professionals active in real estate to use the inevitable losses occurring in the early years of an investment to offset those losses against other income, as is the case in any other business.
 "Under current law, the cost of improvements to buildings held for lease must be recovered over a stated period -- today 31.5 years, even though such improvements (partitions, wiring, plumbing, etc.) generally have little value beyond the expected term of the lease. We'd like to see these rules tied into the life of the lease, not into an arbitrary period of time," Hokanson stressed.
 The current passive loss relief proposal would provide a special rule for real estate professionals. The rule would allow an eligible taxpayer to deduct the net loss for the taxable year from rental real estate activities in which he/she materially participates. The proposal would ameliorate the disadvantageous treatment of real estate professionals under current law. This may encourage owners to hold troubled properties and make needed renovations and make it easier for financial institutions, including the Resolution Trust Corporation, to dispose of troubled properties. The limited relief provided by the proposal will not undermine the important purpose of the passive loss rules, that of curbing tax shelters.
 BOMA encourages proposals to relax restrictions on debt-financed real estate investments by pension funds and others. The current investment rules impede legitimate leveraged acquisitions of real estate.
 Another major aspect of the problem is that many qualified organizations consider it inappropriate to make any investment that generates unrelated business taxable income (UBTI), even if the amount of potential UBTI is economically insignificant.
 The federal government continues to build new office space under the auspices of the General Services Administration. With readily available office space across the country, BOMA strongly encourages the federal government to look into leasing existing space as an economically prudent move to save money and increase absorption of current office space.
 Founded in 1907, BOMA International is the oldest and largest trade association exclusively representing the office building industry. The members of its 86 United States local associations own or manage over 5 billion square feet of North American office space.
 -0- 3/8/93
 /CONTACT: Jeanie Markel or Lisa Simpson of Building Owners and Managers Association International, 202-408-2686/


CO: Building Owners and Managers Association International ST: District of Columbia IN: SU: EXE ECO

TW -- DC028 -- 4219 03/08/93 16:44 EST
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Publication:PR Newswire
Date:Mar 8, 1993
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