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REAL ESTATE INDUSTRY JOINS PRESIDENT TO DISCUSS ECONOMY

 REAL ESTATE INDUSTRY JOINS PRESIDENT TO DISCUSS ECONOMY
 WASHINGTON, Dec. 2 /PRNewswire/ -- Leaders of the nation's real estate trade groups today presented their concerns to President Bush that the credit crisis poses the most serious threat to housing and commercial real estate markets, which is in turn restraining the overall economy.
 "We appreciate the President's willingness to meet with us and address our issues head-on. Clearly, we all recognize that work needs to be done in the weeks ahead to get our economy on course," according to a statement issued by the group.
 "Real estate values are down, construction starts have dropped dramatically, bankruptcies are rising fast, and financial institutions are in crisis. The real estate industry is vital to a sound and healthy economy, and the current climate is affecting our basic institutions and our work force. Plumbers, carpenters, retail workers, electricians, painters, truck drivers, and numerous other workers are affected by the real estate industry. Housing production is at its lowest point since World War II, with multi-family housing actually losing more units than are being built. We need to address these problems."
 Members of the coalition, comprised of elected leaders of 12 national trade associations with some 2 million members, said tax law changes in 1986 and unworkable regulatory burdens have crippled the real estate industry. The group called on the administration to support a growth package that includes changes in the tax code to create a level playing field for the real estate industry and to remove disincentives to real estate lending.
 "In order to have economic recovery, we believe that the key is to stabilize real estate values, and pass an economic growth package for the nation. A centerpiece of the package should address the tax inequity created in the 1986 tax reform act.
 "The credit problems facing our nation's financial institutions are in large part the result of the loss of values occurring since the 1986 tax act. That act went too far in its effort to cure the abuse of tax shelters. Action must be taken to address this damage and prevent further deterioration of values, and with them the stability of our lending institutions. Additionally, this legislation is critical to increasing the marketability for all properties, including those held by the government's Resolution Trust Corporation.
 "Studies have shown that the industry-backed passive loss bill (H.R. 1414 and S. 1257) would boost commercial real estate property values from between 3 and 7 percent, including property held by the RTC. Increased RTC property values along with the economic incentive to work out troubled properties, rather than deed them back to the lender, will save taxpayers enormous sums of money.
 "Under current law, all rental real estate owners are deemed to be passive investors irrespective of their day-to-day involvement in the rental real estate business. Since a passive loss on rental income may not be deducted against active income, real estate professionals are subject to a tax on the gross income of their overall real estate business operations, and not on their net incomes, as are other types of businesses.
 "The cost of fixing windows, turning on lights and repairing a roof are legitimate business expenses and ought to be deductible. The passive loss bill would amend the tax code to allow real estate professionals to operate on a level playing field with other taxpayers, and would not reinstate tax shelters."
 The group discussed the need to ensure prudent oversight by the nation's bank regulators, and applauded recent clarifications issued by the Treasury Department in an effort to improve communication to field examiners. "We support the move to bring senior regulators together in Baltimore on Dec. 16 to discuss the need for consistent, rational and responsible oversight of the banking system. This cooperative spirit should continue in the weeks ahead," the group said.
 The real estate coalition also applauded the President's efforts to stimulate capital investment by backing a cut in the capital gains tax; however, the group said that other key elements need to be part of any economic recovery package.
 "The problems plaguing the economy will not go away without constructive, positive action, and the real estate industry is committed to restoring fairness in national policies and confidence in real estate and financial markets," said the group.
 Participating in the meeting were Malcolm Riley, president of the International Council of Shopping Centers; Robert C. Larson, chairman of the board of the National Realty Committee; Angelo R. Mozilo, president of the Mortgage Bankers Association of America; Bert Blicher, chairman of the American Resort & Residential Development Association; Stephen P. Hokanson, CPM, president of the Building Owners & Managers Association; Samuel Weidner, chairman of the board of the Manufactured Housing Institute; John Smehyl, president of the National Apartment Association; Mark Tipton, president of the National Association of Home Builders; Ernest H. Randall Jr., president of the National Association of Industrial and Office Parks; William Newman, chairman of the National Association of Real Estate Investment Trusts; Dorcas T. Helfant, president of the National Association of Realtors; Kelley A. Bergstrom, chairman of the board of the National Multi Housing Council.
 -0- 12/2/91
 /CONTACT: Brian Detter of the International Council of Shopping Centers, 703-549-7404; Cary Brazeman of the National Realty Committee, 202-785-0808; or Jane DeMarines of the Mortgage Bankers Association of America, 202-861-6554/ CO: National Association of Realtors ST: District of Columbia IN: SU: ECO


SB-DC -- DC020 -- 8414 12/02/91 14:15 EST
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Date:Dec 2, 1991
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