Stimulus Act - Impact on Commercial Real Estate

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March 18, 2009

The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) offers multiple opportunities for property owners, developers and other stakeholders in the commercial real estate arena. This advisory briefly highlights some of those opportunities in affordable housing and green building provisions, with one specific change in the tax code regarding debt forgiveness that may greatly benefit many real estate developers during these challenging times. Many of the provisions are complex and some of the details have yet to be fully provided, so it is impossible to accurately summarize the details of each item. Frost Brown Todd will be embarking upon a series of seminars to discuss the provisions of the Recovery Act in greater detail. We will be contacting you soon with information with respect to dates and locations for these seminars.

Some of these beneficial changes are:

  • Affordable Housing: The Recovery Act contains approximately $13 billion in funding initiatives for housing programs and projects including: (i) low income housing grants to act as a substitute for low income housing tax credits, (ii) billions of dollars in additional rental assistance payments to property owners receiving Section 8 project-based rental assistance, and (iii) a public housing capital fund to retrofit public housing projects. A specific client advisory on Affordable Housing will be sent next week.
  • Green Building: The Recovery Act contains tens of billions of dollars in funding initiatives for green building including: (i) $4.5 billion in funds are allocated to the U.S. General Services Administration (the “GSA”) to make federal buildings more energy efficient, (ii) the creation of an Office of Federal High Performance Green Buildings within the GSA and (iii) $6.3 billion in grants to aid state and local governments in making investments that result in more energy efficiency buildings. A specific client advisory on Green Building will be sent next week.
  • Tax Treatment of Debt Forgiveness: Companies may be able to delay paying taxes on income from debt that is forgiven until 2014, and then to spread the taxes on that income from 2014 to 2018. This revision to the tax code is effective in taxable years ending after December 31, 2008.

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