Governmental Affairs Rochester Chapter

September 7, 2018

From the Desk of John Rynne, MAI, RAC NYSCAR Governmental Affairs Chair:

There was a lot to like in the Federal Tax Cuts & Job Act which was passed in December, 2017, which reduced the corporate tax rate from 33% to 21 % along with a provision which will benefit pass-through businesses (i.e., Subchapter S Corporations) with 20% deductions on business income. It also preserved like-kind tax free exchanges for real property, carried interest for real estate projects, cost recovery, low income housing tax credit and the exclusion for capital gains on primary residences. One of the few negative aspects of the Tax Cuts & Job Act, which hurt higher income tax payers in high taxed states like New York, was the issue of State and local taxes (SALT) deductions. The legislation limited the deductions for high-income earners. As an example, the standard deduction for a single household was increased to $12,000 and $24,000 for a married household. This put a ceiling on SALT deductions for higher-income households. To combat this, New York State instituted a complex change in the tax code which effectively would reinstate the SALT deductions. However, IRS has proposed regulations which block most of that change. Governor Cuomo has stated that New York State will sue the Federal government over this issue. Another negative part of the Tax Cut legislation was that the mortgage interest deduction was reduced by 25% to $750,000, which also hurts high income earners and ultimately the high-end housing market. Recently, Congress passed legislation extending the National Flood Insurance Program for four months. It was signed by the President. The long-term plan is to have the private sector participate more in the program, which will reduce premiums through more competition.

In May, I outlined the tenuous hold that the Republicans had on the NYS Senate with the help of the Independent Democratic Conference (IDC). This is important because the NYS Assembly is heavily controlled by the Democrats approximately 2-1. The Assembly is heavily controlled by Downstate legislators who support many types of legislation, which are detrimental to property rights, promote high taxes and promote more onerous regulations. The Senate has been controlled over many recent decades by the Republicans except for a brief period. This has been a positive for the real estate industry because the NYS Senate has blocked many harmful pieces of legislation to our industry and property rights. Over recent years, the Republicans have lost the majority in the Senate only to be kept in power by the IDC. The IDC recently has disbanded at the behest of Governor Cuomo, which theoretically should put the Senate into Democratic control. There is one Democrat, Senator Felder, from NYC who continued to vote to keep the Republicans in control of the Senate, which ended in June. However, next year, Senator Felder has declared he will caucus with the Democrats. So next year, both the Assembly and the Senate will be controlled by the Democrats unless there are some upsets in the November elections. The New York State Association of Realtors (NYSAR) have a number of NYS legislative issues, which have been lying around for many years; both pro and con. Because of Senator Felder's decision, there was almost an unprecedented road block at the end of the session to the 11 pieces of legislation, which NYSAR supports and the 15 pieces that NYSAR opposed. Most of the bills did not advance or were defeated. The First Time Homebuyer Savings Account Program Study is still awaiting the Governor's signature along with the Appraisal Management Company (AMC) legislation. As has been cited in my previous Governmental Affairs reports, most of this legislation has been lying around for many years. The newest legislation on the agenda over the past year is the AMC, the First Time Homebuyer study, NYC Flip Tax and NYC Neighborhood Integrity Act.

In summary, these only touch the surface of the many real estate issues in the State and Federal legislatures. We must stay involved and informed, so property rights can continue to be bolstered as one of our most important freedoms.


May 23, 2018

From the Desk of John Rynne, MAI, RAC NYSCAR Governmental Affairs Chair:

As usual, our umbrella organization, the New York State Association of REALTORS® (NYSAR) has a number of NYS legislative issues, which have been lying around for many years, both pro and con. One of the most noteworthy issues in Albany is the maintenance of control of the Senate by the Republicans. This is important because the NYS Assembly is heavily controlled by the Democrats by approximately 2-1. The Assembly is heavily controlled by Downstate legislators, who support many types of legislation, which are detrimental to property rights, promote high taxes and promote more onerous regulations. The Senate has been controlled over many recent decades by the Republicans except for a brief period. This has been a positive for the real estate industry, because the NYS Senate has blocked many harmful pieces of legislation to our industry and property rights. However, over recent years, the Republicans have lost the majority in the Senate only to be kept in power by a group of Democrats known as the Independent Democratic Conference (IDC). The IDC realized that one party control could be detrimental to the State. The IDC recently has disbanded at the behest of Governor Cuomo, which theoretically should put the Senate into Democratic control. There is one Democrat, Senator Felder, from NYC who has declared he will continue to vote to keep the Republicans in control of the Senate through the end of this session, which is in June. However, after this session, Senator Felder has declared he will caucus with the Democrats. So next year, both the Assembly and the Senate will be controlled by the Democrats. If that happens, hopefully, Upstate Democrats in the Senate will align with the Republicans to preserve property rights, oppose tax increases and oppose burdensome over regulation.

Some of NYSAR and NYSCAR support focuses on the Scaffold Law (Labor Law 240-241) reform, which currently gives a form of absolute liability to contractors and some property owners in case of any type of construction accident from any positive height. This is one of the most archaic laws in the country. It creates an atmosphere producing the highest liability insurance costs in the United States. Western New Yorkers, Democrat Assemblyman Joe Morelle and Republican Senator Pat Gallivan, are the legislative leaders behind its passage. Also, Vested Rights for Property Owners will protect developers, who have already received approvals and have started projects, from being stopped or sidetracked by newly passed legislation during their project’s development. Also, NYSAR and NYSCAR will continue to support tax credit legislation for fire sprinkler systems.

NYSAR and NYSCAR opposition goes to a proposed newly imposed real estate transfer tax to create a Community Preservation Fund on the basis of redundancy and existing high taxation. Also, establishing a source of income as a protected class is being proposed. This would interfere with property rights by forcing owners to select purchasers and/or renters who are low income and can’t afford the living unit. If passed, this would discourage multiple-family investment and supply. Also, NYSAR and NYSCAR are against more avenues for citizen suits via the Environmental Conservation Law (ECL). It will create more avenues against developments, which already face many headwinds.   NYSAR and NYSCAR are against reducing the ceiling of wetland oversight authority by the NYSDEC from 12.4 acres to 1 acre. This will create more government interference and bureaucracy to thousands of properties and property owners.

In summary, these only touch the surface of the many real estate issues in the NYS Legislature. Remember to stay involved and informed so property rights can continue to be bolstered as one of our most important freedoms. 


March 23, 2018

From the Desk of John Rynne, MAI, RAC NYSCAR Governmental Affairs Chair:

The New York State Association of Realtors (NYSAR) has a number of issues, which have been lying around for many years; both pro and con.  However, the newest proposed legislation is Flood Insurance Tax Credits, which is supported by NYSAR.   NYSAR is opposing two of the newest proposals in New York City.  Obviously, this doesn’t affect us directly in Upstate New York.  I bring it up to show the insanity of Downstate politicians.  The Neighborhood Integrity Act would prohibit licensed Real Estate Brokers and Salespersons from selling or listing any property for sale or for rent in a New York City neighborhood that is not a traditionally recognized neighborhood.  The second new bill is called the Flip Tax, which will also be unique to New York City if passed.  This would impose a 15% real estate transfer tax on residential properties sold within one year and a 10% transfer tax on residential properties sold after one year, but less than two years from the prior purchase or conveyance. 

One of the biggest national events in Governmental Affairs is the recently passed Tax Cuts and Job Act legislation (December, 2017).  The biggest benefit was the reduction in the corporate tax rate from 33% to 21%.  This will invigorate the economy by moving assets to the more efficient private sector from the inefficient government sector.  In addition, there is a provision, which will benefit independent contractors and pass-through businesses with significant deductions on business income.  The legislation retains the previous maximum rates on net capital gains. The legislation preserved the Like-Kind Tax Free Exchanges for real property, carried interest for real estate projects, cost recovery, low income housing tax credit and the exclusion for capital gains on the primary residence.  The standard deduction was increased to $12,000 (single) and $24,000 (married).  However, much of this will be neutralized by the mortgage interest deduction which was reduced by 25% to $750,000. Also, the State and Local tax (SALT) deduction was lowered to $10,000, which will have a negative effect on higher income households with no effect on low-income households.  Historic tax credits were reduced but not eliminated.  Gary Keith an economist for M&T Bank and others have stated that the Tax Cuts & Job Acts will benefit over 80% of tax payers. However, real estate will be negatively affected primarily on the single family, residential part of the spectrum.

In summary, remember to stay involved and informed so property rights can continue to be bolstered as one of our most important freedoms.

View 2017 Governmental Affairs Archive