Grassroots Carried Interest Campaign Working

That effort entailed beseeching member companies of both groups tocontact their Congresspeople to warn them of the adverse affects sucha change will have on the commercial real estate industry. "The word our members and lobbyists are getting is to 'call off the dogs,' " Kercheval tells Globest.com. "To me that is a very good sign." He adds that the campaign was done is a positive spirit. "I think there are many people on the Hill that don't realize the severe unintended consequences if thiswere to pass. What we are doing is trying to educate them."

Most industry associations have launched campaigns against theproposal either at the grassroots or lobbying level, henotes. Most recently, the Conference of Mayors urged the Senate toleave carried interest as it is, citing the need for developers to beable to take risks in rehabbing brownfield sites and developing urbanlocations.

The Hill newspaper also reported that there is talk the tax increase on carried interest might be substituted with a tax increase on foreign insurers. It is not for certain, the paper said, citing an unnamed source, but apparently legislators are getting pushback against the change.

Senators are increasingly becoming aware that this bill is not what itseemed to be at first--that is, an increased tax on hedge funds thatonly modestly hits real estate, Jeff DeBoer, chairman of the RealEstate Roundtable, tells GlobeSt.com. "They are beginning to realize that what it really is is a huge real estate tax increase that will only modestly affect hedge funds."

The issue could still go either way, DeBoer adds, which is why he says itis important for people to keep up their contacts with the Hill. "Thisprocess is not being given a public hearing--in fact the last timethere was a public hearing on carried interest was close to threeyears ago. So it is important for people in the real estate industryto continue to offer their viewpoint to Congress at everyopportunity."