WASHINGTON, DC-One of the last bills the House of Representatives passed before it convened for August recess was the Real Estate Jobs and Investment Act of 2010--a wide sweeping name for a bill that is very narrowly defined. Its targeted approach may well have been the reason why it passed the usually fractious House with an overwhelming 401 to 11 vote. However, when the campaign bill is introduced in the Senate, industry advocates are hoping to see its reach broadened. 

Even as is, however, the bill is a pleasing accomplishment for the real estate industry. It advances the long-held goal of increasing foreign investors’ allowable ownership interest in a REIT. The bill doubles that level to 10%. Anything over that amount is then subject to the Foreign Investment in Real Property Tax Act.

Getting this expansion was one of the Real Estate Roundtable’s legislative goals for the year. Still, though, chairman Jeff DeBoer tells GlobeSt.com that the bill is also valuable because it will give the industry another legislative vehicle on which to attach additional reforms as it moves into the Senate and then onward through the rule-making process. "The bill itself is good but it is targeted and narrow,” he says. “I think it will really pay off if more meaningful measures are attached.” 

The driver behind the bill’s passage in the House stemmed, in large part, from the hope that it would spur additional foreign investment in US commercial real estate with minimal fiscal impact. In a GlobeSt.com blog published earlier this year, Sam Chandan, head of Real Capital Analytics, pointed to an analysis by Martin Neil Baily of the Brookings Institution and Matthew Slaughter of Dartmouth College--both of whom have served on the Council of Economic Advisors. In their report, entitled "How FIRPTA Reform Would Benefit the US Economy," Chandan wrote, "the authors recommend reforming the current system: outright repeal or, less dramatically, an initial holiday could be implemented: e.g., declare that new foreign investments in US commercial real estate over the next five years would be exempt from FIRPTA. We think that the sizable economic benefits of reforming FIRPTA would exceed the small fiscal costs it would entail."