The Treasury Department and Internal Revenue Service (IRS) issued six separate notices this week to gather public input regarding the clean energy tax credits and deductions in the Inflation Reduction Act (IRA). (Treasury Fact Sheet, Oct. 4 and Roundtable Weekly, Sept. 30)

CRE Impact

• The Treasury and IRS notices most relevant to the real estate industry concern the new law’s provisions regarding:
  
  
  • Incentives to improve energy efficiency such as the tax deduction for commercial buildings (Section 179D) and the credit for single- and multi-family residential construction (Section 45L);
    
    
  • Credits for specific clean energy technologies like solar panels, energy storage, combined heat and power systems, dynamic glass, and grid interconnection property (Section 48);
    
    
  • Credit monetization which can allow businesses to transfer the amount of certain credits to third parties; and
    
    
  • Enhancements to boost the value of certain credits where projects are located in economically distressed areas, or that meet labor requirements for prevailing wages and apprenticeship hiring.
    
    
• Comments are due to the Treasury and IRS by November 4.
  
  
• Roundtable fact sheets detail the IRA’s Clean Energy Tax Incentives (Sept. 20) and Revenue Provisions (Aug. 17).

Rapid Implementation

• Congress authorized $270 billion to the IRA’s clean energy tax incentives – putting Treasury and the IRS, in coordination with the Energy Department and the Environmental Protection Agency, at the forefront of implementation. (E&E Greenwire, Oct. 5 and Roundtable Weekly, Aug. 12)
  
  
• One of Treasury’s guiding principles for the public comment process is to “provide clarity and certainty” for businesses and other taxpayers to access the incentives, “so the climate and economic benefits can take effect as quickly as possible.” (Treasury Fact Sheet)
  
  
• White House Senior Adviser John Podesta said, "We have to get implementation right. That means we have to listen, engage, and move quickly to translate policy into action." (Reuters and Bloomberg Law, Oct. 5)

The Roundtable, working through its Sustainability and Tax Policy Advisory Committees (SPAC and TPAC), will coordinate with industry partners to develop comments to the Treasury and IRS notices that highlight CRE clean energy priorities.

#  #  # 

• The Treasury Department’s Federal Insurance Office (FIO) and the Cybersecurity and Infrastructure Security Agency (CISA) are seeking comments by Nov. 14 on the structure and scope of a federal response. (FIO request for comments and Inside Cybersecurity, Sept. 12)
• The FIO-CISA request for comments follows a June Government Accountability Office (GAO) recommendation that the federal government assess the need for a potential insurance backstop for cyberattacks. (GAO, Cyber Insurance: Action Needed to Assess Potential Federal Response to Catastrophic Attacks, June 21)
• Cyber insurance is a growing market, with approximately $4 billion in direct premiums written in 2020. (FIO’s Effectiveness of the Terrorism Risk Insurance Program, June 2022)
• Lloyd’s of London announced in August that it is set to introduce cyber insurance exclusions for coverage on “catastrophic” state-backed attacks from 2023. (Lloyd’s Market Bulletin, Aug. 16 and Industrial Cyber, Aug. 18)

• The Roundtable and its partners in the Coalition to Insure Against Terrorism (CIAT) have raised concerns about the need for effective insurance products to help manage the risks of catastrophic cyberattacks. (CIAT comment letter on the 2022 Report on the Effectiveness of the Terrorism Risk Insurance, May 16)
• Insurers and the federal government's Terrorism Risk Insurance Program (TRIP) may not cover the expanding range of such losses. For example, TRIP may only cover cyberattacks if they can be considered "terrorism" under its defined program criteria. (Roundtable Weekly, June 24)

• Separately, CISA is requesting input on the implementation of cyber incident reporting requirements (due Nov. 14). CISA is also hosting a series of public listening sessions in cities throughout the nation as an additional means of gathering stakeholder responses on definitions for the proposed rules, the form and content of reports, enforcement procedures, and information protection policies. (Federal Register and Notice of Public Listening Sessions, Sept. 12)

The catastrophic damage revealed this week in the wake of Hurricane Ian shows the need for Congress to address natural catastrophe risk and pass a long-term reauthorization of the National Flood Insurance Program (NFIP). The Real Estate Roundtable has long advocated for a long-term program extension to avoid lapses that create uncertainty in both the insurance and housing markets.

NFIP & CRE

• Originally enacted in 1968, the NFIP has been extended under 22 short-term congressional reauthorizations, including last week’s stopgap funding bill that extended government operations until Dec. 16. (Congressional Research Service report, Oct. 3 and Roundtable Weekly, Sept. 30)

• The total potential debt exposure to properties in the path of Ian could be as high as $52 billion. (Trepp, Sept. 29 “Hurricane Ian Makes Landfall: Mapping the Commercial Real Estate Exposure”)
  
  
• Recovery from storms could take longer and cost more to rebuild amid continued supply chain constraints and inflationary pressures. Media coverage included:
  
  
  • “Property Damage from Hurricane Ian Now Estimated Between $41 Billion to $70 Billion” (WorldPropertyJournal, Oct. 7)
    
    
  • “The Impact Hurricane Ian Could Have on CRE” (GlobeSt, Oct. 3)
    
    
  • “'Never Seen Anything Like This': CRE Assesses Impact Of Hurricane Ian” (BisNow, Oct. 2)
    
    
  • “Ian will 'financially ruin' homeowners and insurers” (PolitcoPro, Oct. 1)

The Roundtable continues to work with lawmakers and coalition partners to address catastrophic risk issues and enact a long-term extension to the NFIP that includes effective reforms.

#  #  #