The Arizona Chapter of NAIOP, otherwise known as the Commercial Real Estate Development Association, has released its 2022 legislative public policy agenda which seeks to continue the momentum of recent sessions, NAIOP Arizona’s CEO Suzanne Kinney announced this week.
“With the monumental changes of the past two years, 2022 presents a unique opportunity for our market to break away from the pack,” Kinney said. “We will aggressively pursue legislation that will help accelerate our movement towards Tier 1 status for business attraction and job creation.”
Leading NAIOP Arizona’s legislative efforts will be its 2022 Executive Committee comprised of Kinney; Board Chair Rusty Kennedy of CBRE; Board Vice Chair Cathy Thuringer of Trammell Crow Company; Treasurer John Orsak of Lincoln Property Company; Programs Chair Phil Breidenbach of Colliers International; and Secretary Derek Flottum of Irgens. The group’s immediate Past Chair is Danny Swancey of ViaWest Group, who was preceded by Jim Wentworth of Wentworth Property Company.
NAIOP Arizona’s guiding principles involve supporting policies that drive demand for commercial real estate in Greater Phoenix and throughout Arizona, promote legislation that positions Arizona to be the preferred choice for corporate locations and expansions, and encourage “organic business growth through public policies that encourage entrepreneurship and new business formation.”
According to Kinney, the Arizona Legislature made significant progress this past year to blunt the impact of income tax increases imposed on small businesses and other taxpayers through Proposition 208. Another achievement was a two percent reduction of the commercial property tax assessment ratio, which remains a top policy priority in an effort to achieve parity with other types of property owners.
Kinney also said NAIOP Arizona will continue to oppose legal efforts and new ballot initiatives that would reduce Arizona’s economic competitiveness. And in response to recent lawsuits about economic development incentives, NAIOP will work to refine the system so that complicated development projects which bring value to the community can avoid time-consuming and costly litigation.
On the federal front, NAIOP will work with Arizona’s Congressional delegation to prevent damaging tax policy proposals from going into effect. Of particular concern are restrictions on 1031 like-kind exchanges, the taxation of carried interest as ordinary income rather than capital gains, elimination of the stepped-up basis for inherited assets, and removal of tax deductions for qualified pass-through entities.
The 900-member NAIOP Arizona is part of the main 19,000-member NAIOP, considered the leading association for developers, owners, and related professionals in office, industrial, retail and mixed-use real estate. The state chapter is the fifth largest out of 53 chapters across the United States and Canada.
“The growth of our chapter underscores its importance and relevance in Arizona’s commercial real estate industry,” said Kinney. “We’re extremely proud of what the chapter has accomplished considering the economic challenges of the past year and a half. We are a resilient industry.”
In 2021, NAIOP supported the development of CRE leaders through Diversity Student Scholarships for those pursuing a graduate degree in commercial real estate. One of the four scholarships was awarded to NAIOP Arizona member Margarita Effron, a graduate student in Arizona State University’s Master of Real Estate Development program.
Other members of the NAIOP Arizona board include Jenna Borcherding of VanTrust Real Estate, LLC; Matthew Krause of Krause Architectural & Interiors; Chris Anderson of Hines; Chris Burson of Alliance Bank of Arizona; Danielle Feroleto of Small Giants; Jeff Foster of Prologis; Tom Jarvis of Willmeng; Jeff Moloznik of RED Development, LLC; Kate Morris of Transwestern; Michael Olsen, of Globe Corporation; CJ Osbrink of Newmark Knight Frank; Darren Pitts and Velocity Retail Group; and Candace Rosauro of Layton Construction.
The No Surprises Act passed by Congress in the waning days of Donald Trump’s presidency to better inform patients of the costs of medical procedures and other services doesn’t take effect until Jan. 1, but the Biden Administration is already getting pushback on how it intends to implement one provision of the new law.
That pushback is coming from health care providers who recently blanketed federal officials with negative comments about a regulatory rule issued by U.S. Department of Health and Human Services (HHS) the providers claim goes against the language of the Act, which was passed to formulate a nationwide process for resolving “surprise” or unexpected medical bills.
The two most common expected billing problems patients face in Arizona result from being treated by an out-of-network doctor at a medical facility within their network, or when a patient requires emergency or urgent care at an out-of-network facility.
For those in rural areas, a third common surprise billing issue involves charges for out-of-network air ambulance, or medical evacuation, services.
Under the new law, a patient’s copayment for an out-of-network bill will be limited to roughly what the patient’s copayment would be had the service or procedure been fully conducted in-network. Any unpaid balance can be challenged by the out-of-network provider, who must first attempt to negotiate the matter with the patient’s insurer or commercial health plan.
The rule also establishes an arbitration process the provider must follow if an agreement cannot be reached with the insurer / health plan. And after that, according to the American Hospital Association and other provider groups, is where the rule as currently written verves away from the intention of the new law
As put forth by HHS Secretary Xavier Becerra, the rule requires an arbitrator to consider an insurer or health plan’s in-network median payment rate for the service or procedure in question as the “presumptively correct” rate. Priority is given to that rate over other factors mentioned in the Act, such as complexity of the billed procedure or service, whether a party engaged in good faith during negotiations, and the health care provider’s training and expertise.
“By directing arbiters to presume that the plan’s or issuer’s median contracted rate is the appropriate out-of-network reimbursement rate and creating a significantly higher bar for consideration of other factors means that the [independent dispute resolution] process effectively will be unavailing for providers,” according to Stacey Hughes, AHA executive vice president.
But not everyone in the health care industry is opposed to the rule’s presumption of the reimbursable rate during arbitration. Insurance companies and commercial health plan support the arbitration rules which make it harder for out-of-network providers to receive payment.
It is also seen as a way to force providers to sign on to more networks to reduce the cost of getting paid.
“The approach taken in the interim final rules is a clear win for hardworking people,” said Matthew Eyles of America’s Health Insurance Plans, a national association whose members provide health care coverage. “This is the right approach to encourage hospitals, health care providers, and health insurance providers to work together and negotiate in good faith. It will also ensure that arbitration does not result in unnecessary premium increases for businesses and hardworking American families.
For now, the Biden Administration appears to be standing behind the rule even though 35 percent of the U.S. House of Representatives signed off on a letter in November urging the presumptive rate rule be reconsidered.
The Biden-Harris Administration will continue implementing federal regulations from the No Surprises Act to not only protect the patients but also curb rising costs in health care,” Becerra said in response to the pushback. “We want costs to go down. When the arbitration process is wide open, no boundaries, at the end of the day health care costs go up, not down.”
The No Surprises Act was passed as part of the Consolidated Appropriations Act.
The decision by President Joe Biden to sharply increase the tariff on Canadian softwood lumber to 17.99 percent is threatening housing affordability and has prompted calls from The Wall Street Journal and homebuilders for the White House to take quick action to reverse course.
More than one-quarter of softwood lumber—such as pine, cedar, fir, and spruce—used in America comes from Canada. The new tariff is twice the 8.99 percent rate in effect when Biden took office in January. It comes on the heels of wholesale lumber prices which tripled from July 2020 to July 2021, adding nearly $30,000 to the average cost of a new home, according to the National Association of Home Builders (NAHB).
The NAHB says the increased tariff is adding on average another $9,000 to the price of a new home compared to July. It is also pushing up prices of renovation and remodeling projects that are critical for ensuring affordable housing options in many communities.
“The doubling of duties on Canadian softwood lumber is ill-timed and ill-advised,” NAHB Chairman John C. Fowke wrote to Biden on Dec. 3. “As has been the case for decades, the domestic lumber industry cannot, nor will not, produce enough lumber to meet U.S. consumer demand. We rely on lumber from Canada to fill the production gap, so punitive tariffs on our closest and best trading partner on a product that American consumers desperately need defies logic.”
Top NAHB officials met at the Canadian Embassy in Washington DC last week to discuss the tariffs. After the meeting, Fowke send his letter to Biden, calling on U.S. trade officials to negotiate with the Canadian government for a lumber trade agreement that eliminates tariffs and ensures a fairly priced supply of lumber.
“The tariffs harm housing affordability by acting as a tax on American home builders and home buyers, and contribute to huge price volatility in the lumber market by putting upward pressure on lumber prices,” Fowke wrote.
The association, which has 140,000 members across the country, also called on Biden to support efforts to increase domestic lumber production. “Improving the health of our nation’s forests and increasing the supply of domestic timber are not mutually exclusive goals,” Fowke wrote.
Last month the Wall Street Journal’s editorial board noted that prices for U.S.-produced lumber is at more than 75 percent above pre-pandemic levels.
“For decades U.S. sawmills haven’t been able to meet domestic demand, but they’ve leaned on government to protect their market share,” the WSJ’s opinion stated. “The shortage would be much worse if not for Canadian lumber, which backs up U.S. output.”
The tariffs, the WSJ wrote, “will raise building costs in an already strained housing market.”
Then last week, The Washington Post’s editorial board published an opinion succinctly titled “Biden is hiking lumber tariffs at the wrong time.”
And the editorial board for the Las Vegas Review-Journal wrote that driving up the cost of lumber via tariffs will discourage construction and worsen inventory shortages for southern Nevada. “Much like the weather, politicians love to talk about affordable housing but none of them want to do anything about it. Put the Biden administration firmly in that camp,” the Review-Journal noted.
Data from the Census Bureau and the Centers for Disease Control (CDC) indicated that nearly 1.2 million Arizona workers would lose their jobs under President Joe Biden’s vaccine mandate. Senator Rand Paul’s (R-KY) office conducted the research, published through the U.S. Senate Committee on Small Businesses & Entrepreneurship days before Thanksgiving.
The 1.2 million workers account for 33 percent of Arizona’s workforce. Compliance would further cost Arizona businesses at least $70 million total. The main types of workers impacted come from America’s backbone: wholesale trade, retail, and manufacturing. These three categories of workers were largely classified as “essential workers” throughout 2020 and this year. Arizona ranked 12th for the number of workers it may lose, after California (nearly 4.8 million), Texas (over 4.5 million), Florida (over 2.9 million), New York (over 2 million), Ohio (nearly 1.9 million), Georgia (over 1.8 million), Illinois (nearly 1.7 million), Pennsylvania (under 1.7 million), North Carolina (under 1.6 million) Michigan (under 1.5 million), and Tennessee (over 1.2 million).
According to the research, nearly 45 million workers nationwide are at risk of losing their jobs: about 22 percent of the nation’s entire workforce, ringing in at a compliance cost of at least $1.29 billion.
According to Senator @RandPaul and the @SmallBizCmteGOP, over ONE MILLION Arizona workers are at risk of losing their jobs because of Biden's unconstitutional COVID-19 vaccine mandates.
That's why our office continues to take action to protect hardworking taxpayers. pic.twitter.com/OMq0CJ64vJ
Biden’s vaccine mandate relied on the Department of Labor’s Occupational Safety and Health Administration (OSHA) to require companies with 100 or more employees to have employees fully vaccinated or following standard COVID-19 safety protocols: masking and weekly testing. The mandate would require companies to provide paid time off for workers who get vaccinated, but it wouldn’t require costs of acquiring tests – though individual states or local laws might.
Based on recent court rulings, it’s unclear when the vaccine mandate would be implemented. A federal appeals court halted Biden’s vaccine mandate last month. Another federal court also halted a similar Biden mandate requiring Medicare and Medicaid health care workers to get vaccinated, in a case launched by a coalition involving Attorney General Mark Brnovich. Following that ruling, OSHA decided to suspend enforcement of the mandate.
The vaccine mandate also may face a challenge in the legislature. The Senate will vote on a resolution to effectively bar Biden’s vaccine mandate. Through the Congressional Review Act (CRA), the House and Senate may overturn a federal regulation without presidential approval. However, such a resolution would likely not advance in the Democrat-controlled House.
Last month, one of Biden’s chief economic advisors, Jared Bernstein, toldCNBC that adverse financial impacts due to the mandate would be overshadowed by the economic growth afforded by vaccinations. When asked if the Biden Administration expected companies to sacrifice their revenue growth, Bernstein said that he couldn’t speak for individual companies and that many would face “a very different outlook.”
“Those forecasts are for 4.5 and 6 percent. The connection between a strong economy and vaccinations and the trajectory of the caseload is extremely clear to me – and, in fact, quite elastic, it happens very quickly. And, of course, that is the motivation behind the vaccination program,” said Bernstein. “I’ve looked at almost every important variable I could find. Yet that does certainly make the case that vaccines, economic progress, strong growth, revenue growth, income growth, wage growth, jobs, GDP, industrial production – every variable I look at seems highly and positively elastic to these wiggles in the caseload.”
Bernstein serves on the Council of Economic Advisors (CEA) alongside Chairwoman Cecilia Elena Rouse and fellow member Heather Boushey. Rouse served under Presidents Bill Clinton and Barack Obama on the National Economic Council (NEC) and CEA, respectively. Boushey would have served as the chief economic advisor for failed presidential candidate Hillary Clinton’s transition team.
According to the CDC, a vast majority of the elderly are either partially or fully vaccinated. 88.8 percent of individuals aged 50 to 64, 99.9 percent of individuals aged 65 to 74, and 97.7 percent of individuals over 75. About 10 percent of those from each age range are awaiting their second dosage.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
As if small business owners haven’t had enough to deal with, now comes word that Congress pulled the rug out from under a major COVID-19 relief program that was supposed to run through the end of 2021.
Instead, many business owners are left scrambling to adjust their business plan with just three weeks left in the year.
The Employee Retention Tax Credit (ERTC) program was approved by Congress in 2020 to allow many small business owners to offset much of the cost of payroll taxes for those employees who were retained despite the pandemic. The program was to run through Jan. 1, 2022, allowing employers to claim credits of up to $7,000 per employee per quarter for all four quarters this year.
But that abruptly changed when President Joe Biden recently signed the Infrastructure Investment and Jobs Act.
According to the White House-supported legislation, the ERTC program came to a halt as of Sept. 30. That retroactive end means business owners who developed their budget based on claiming the credits Congress previously approved for the fourth-quarter will have a rude awakening at tax time.
Restaurants, retail, and professional services businesses are among the industries expected to be hardest hit by ERTC’s early termination, which was not previously publicized by the Biden Administration. It has fallen on business and trade associations to get the word out after the fact, but it is feared the message will be too late for many small businesses.
The National Federal of Independent Businesses is encouraging impacted business owners to notify their U.S. Representatives and Senators in hopes Congress will address the problem by restoring the original end date.
In October, the National Retail Federation projected nearly $860 billion in 2021 holiday sales, bolstered by customers planning to spend more than 2020. Online retailers and the brick-and-mortar type retailers were also told to expect one-half of shoppers to begin their holiday purchases even before Thanksgiving.
Many economists also forecasted that holiday shoppers will be purchasing fewer items but would be willing to spend money for better quality and more substantive items, if supply chain problems don’t get in the way. All of which means a lot of eyes were focused on the results from the key Thanksgiving holiday shopping days including Black Friday, Small Business Saturday, and Cyber Monday.
Sensormatic Solutions provides services to retailers in the areas of inventory intelligence, shopper experience, loss prevention, and operational effectiveness. According to Sensormatic, shopper activity on Nov. 26 through Nov. 28 increased more than 34 percent compared to 2020. During the same three days, however, traffic at brick-and-mortar stores was 21 percent lower than in 2019.
It is unknown whether the decision by most major retailers to remain closed all of Thanksgiving Day had any impact on buyer decisions. But one retail executive says December 2021 still provides unique opportunities and challenges for retailers.
“Shoppers are returning to stores, but there are still lingering health and safety concerns making some cautious of traditionally crowded shopping days,” said Brian Field, senior director of global retail consulting for Sensormatic. “With a data-driven understanding of customer concerns, retailers can implement processes to help make shoppers feel comfortable in stores – via occupancy monitoring, temperature checks, extended hours and a seamless contactless shopping experience.”
Sensormatic also looked at Cyber Monday data. One change over 2020 is that many retailers with physical stores made their online sales pricing and special offers available to in-store shoppers. But those Cyber Monday offers did not help generate additional foot traffic, which ended up being similar to a typical fall day.
“Though the mix of weekday shopping had been on the rise throughout the pandemic as shoppers take advantage of more flexible work schedules and try to avoid weekend crowds, Cyber Monday typically has no impact on in-store traffic and the same was true of this year,” Field said.
Yet according to Field, the overall data shows retailers should breathe a sigh of relief with the direction holiday sales are taking.
“Over the past month, in-store traffic has progressively improved as consumers have started their holiday shopping early,” Field said. “Retailers are seeing positive change year over year, and the Black Friday weekend data shows an upward trajectory toward pre-pandemic levels.”
