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WASHINGTON, DC-The Mortgage Bankers Association of America has released evidence indicating that $8.2 billion worth of commercial property developments have been eliminated, delayed or altered due to the high price tag on terrorism insurance or its unavailability altogether. MBA’s survey of 25 commercial real estate firms concluded that $3.7 billion in deals have been canceled and $4.5 billion in such arrangements have been postponed or have suffered a change in pricing. The numbers represent activity since the first of the year and are only partially a result of the slumping economy.

“We are looking at billions of dollars in commercial financing that has been killed in the first half of the year because thus far Congress has been unable to reach agreement on a bill,” MBA chairman Jim Murphy says in response to the survey results. “The delay has been costly, and those costs will continue to go up the longer the delay.” While the Senate, trailing the house by months, finally passed terrorism insurance legislation in June, the congressional chamber has yet to take the legislation up in conference. The Senate is scheduled to retire for its month-long summer recess on August 5, leaving real estate industry officials holding their breath.

“Everyone acknowledges that it’s not a matter of if, but a matter of when and where the next terrorism attack will take place,” National Association of Industrial and Office Properties VP of government affairs Reba Raffaelli tells GlobeSt.com. In the meantime, as the survey concludes, the real estate industry is taking a big financial hit. “Deals aren’t getting done and deals are being canceled; it’s hard to get funding,” she says. “If you can’t get terrorism insurance, are you going to loan the money for development? By law, you can force insurance companies to sell a policy but you can’t tell them what to charge for it.” The insurers are trying to steel themselves from a repeat of the estimated $40 billion to $70 billion loss incurred in damages from the World Trade Center attack. Raffaelli and NAIOP members say the only thing the real estate industry and relevant organizations can do is keep the pressure on the leadership to appoint conferees, or to bypass the process with an informal conference to produce a compromise package that can move forward.

Industry executives are not the only ones putting pressure on the Senate. In a recent speech, President George W. Bush urged Congress to make the passing of terrorism legislation a priority. “There’s an issue that the Congress needs to get to my desk quickly that’ll show good judgment and a way to help our economy recover, and that is to pass a terrorism insurance bill,” he said. “It is important that we pass this so that major construction projects which cannot get insurance can go forward. And when those construction projects go forward all across the country, it means somebody is going to be able to find work.

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