Reit Energy Grants

* Ms. LINDA T. SÁNCHEZ of California. Madam Speaker, I rise today to introduce the ``Sustainable Property Grants Act of 2009,'' legislation that would allow real estate investment trusts (REITs) to fully benefit from the energy grants included in the American Recovery and Reinvestment Act of 2009 (the Recovery Act).

* Congress created REITs in 1960 to enable investors from all walks of life to own professionally managed, income-producing real estate. REITs combine the capital of many investors to benefit from a diversified portfolio of income-producing real estate, including apartments, health care facilities, hotels, offices and warehouses. REITs are required to distribute at least 90 percent of their taxable income. Most distribute their entire taxable income.

* Buildings represent about 40 percent of all energy use and approximately 70 percent of all electricity consumption in the United States, but REITS, which own 6 billion square feet of commercial real estate, cannot currently access tax incentives designed to reduce their energy use. Providing incentives for REITs to engage in energy efficiency projects could significantly contribute to achieving our energy reduction goals.

* That is why I am introducing legislation today to amend the Recovery Act to allow REITs to participate fully in the energy grants in lieu of tax credits program.

* Section 1603 of the Recovery Act provides Energy Grants to companies that invest in qualifying renewable energy projects. These grants are intended to encourage qualifying investments by taxpayers whose tax liability is not sufficient to benefit from existing energy credits. In fact, the Recovery Act Energy Grants were designed as a substitute for energy credits during the current economic downturn since many taxpayers have inadequate tax liability to use the credits. Despite being designed for this purpose, the Energy Grants provision in the Recovery Act have been interpreted to benefit a REIT only to the extent it retains taxable income, which most do not.

* This legislation would further existing Congressional policy and promote the greatest possible participation in efforts to increase the use of renewable energy. REITs would be afforded the same economic incentives as other property owners to make investments in renewable energy projects. With enough critical mass, these types of investments should help fuel the U.S. economy's growth, create additional jobs and, over time, reduce American reliance on foreign oil.

* I hope that you will join me in supporting this legislation.

Source