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Vermont: Developers, administration chop down forest fragmentation bill

Vermont: Developers, administration chop down forest fragmentation bill | Timberland Investment | Scoop.it

A proposal to limit forest fragmentation was thwarted by developers who oppose using the state’s land use and development laws as a tool to keep woodlands intact, according to the lead sponsor of the bill that was gutted on the Senate floor Wednesday.


“There are developers in a certain corner of the state that are very concerned that nothing gets in the way of their planned development,” said Sen. Peter Galbraith, D-Windham.


The Senate scaled back a bill Wednesday to use the state’s Act 250 permitting process to prevent forest fragmentation after the Shumlin administration called for a study on how to preserve the state’s forests in harmony with the forest products industry and future development.

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Proposed Tax Reform Includes Ending 1031 Exchange

Proposed Tax Reform Includes Ending 1031 Exchange | Timberland Investment | Scoop.it

The ninety two year old 1031 exchange statute is once again the target for abolishment in current tax reform proposals. Congressman Dave Camp, Chair of the U.S. House of Representatives Committee on Ways and Means, has a bipartisan tax reform group tasked with identifying eleven subjects including real estate tax matters as potential revenue raisers. Senator Max Baucus, Chair of the Senate Finance Committee has targeted the elimination of the 1031 exchange as one of many means of tax reform.


Section 1031 “like-kind” exchanges is estimated to cost over $42 billion over the five year period 2012-2016 by the Joint Committee on Taxation (JCT). Estimates by the JCT in prior years estimated the tax deferral to be $16.2 billion over the five year period 2010 – 2014. The two fold difference is attributed to a change in accounting methodology.


The Treasury Department 1031 Regulation is enforced by the Internal Revenue Service in Section 1.1031 stating that “no gain or loss shall be recognized on the exchange of property held for productive use in trade or business, or investment, if such property is exchanged solely for property of like kind which is to be held for productive use in trade or business or for investment.” Individuals, marrieds, partnerships, trusts, corporations use 1031 exchanges when selling and replacing real and personal property to defer federal and state capital gain and recaptured depreciation taxes. The taxes are deferred until the replacement property is sold and not replaced, effectively cashing out. The economic position of the taxpayer does not change in a 1031 exchange; they have the same amount of cash and debt if not more. If the taxpayer receives cash or reduction in debt, then a tax is due.

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Tax Plan May Provide Real-Estate Boost

Tax Plan May Provide Real-Estate Boost | Timberland Investment | Scoop.it

Despite the austerity mood in Washington, President Obama's proposed budget would provide tax relief to some foreign investors, a move the U.S. real-estate industry has been seeking for years.


As part of a larger push to spur private investment in U.S. infrastructure, Mr. Obama has proposed changes to a 1980s tax policy called the Foreign Investment in Real Property Tax Act, or Firpta, that would exempt foreign pension funds from paying taxes on gains from real-estate sales.


The proposal is still subject to congressional approval, which will likely prove tricky in the current budget-cutting climate. It also doesn't go as far as the real-estate industry would like because the proposed exemption would only apply to overseas pension funds, not all foreign investors.

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Firpta had led a number of investors to change their strategies to investing in real-estate debt in the U.S. rather than equity, said Ben Sanderson of Hermes Real Estate Investment Management Ltd., which manages money for pension funds. ***

Firpta taxes gains from foreign sales of assets including buildings, land, mines and timber, as well as stock in real-estate companies. While foreign investors consider it onerous, many still invest in the U.S. because of its clear legal system and a transparent property market, where price and performance data is easy to obtain.

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Patrick Kanters, managing director of global real estate at APG Asset Management, the fund manager that invests €329 billion ($428.9 billion) for pension funds including Dutch civil-service pension fund ABP, said the group had been investing in U.S. real estate since the late 1990s, but that the proposed change was a "great idea" that would set a more-level playing field for investors.


He said that today, domestic buyers in the U.S. are able to place higher bids in competitive tenders for properties because their future internal rates of return, or IRR, aren't affected by the added tax on future capital gains. "They can pay slightly more to get the same IRR," Mr. Kanters said.

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House Takes Up Proposals to Raise Revenue Through Logging

House Takes Up Proposals to Raise Revenue Through Logging | Timberland Investment | Scoop.it

A House panel is taking up two proposals that would increase logging in federal forests to raise money for struggling timber counties.


Washington Republican Doc Hastings chairs the House Natural Resources Committee. Hastings says Northwest timber counties are running out of money and it’s difficult for them to raise revenue, given their depressed economies.


So he’s introducing a bill that would require logging on all federal forest land unless its designated as a wilderness area and give 25 percent of the profits to the counties.

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Oregon Democratic Rep. Peter DeFazio and Republican Rep. Greg Walden have a more limited timber proposal in the same hearing. Their plan would move some Oregon forests into a trust managed for logging. It sets aside other parcels for conservation. A spokesman for the group Oregon Wild says both bills would allow clearcutting on lands the public loves and are unlikely to win support in the Senate.

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Idaho forest companies seek lawsuit protections

Idaho forest companies seek lawsuit protections | Timberland Investment | Scoop.it

Idaho's private forestry companies want to buttress their protections against federal wildfire lawsuits that they say have been costly for companies elsewhere.

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Sierra Pacific Industries paid nearly $50 million and donated 22,500 acres to settle a lawsuit over a 2007 wildfire that prosecutors said was caused by unsupervised, bulldozer-riding employees on a red-flag warning day.

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Congress and Supreme Court Address Forest Road Regulations

Congress and Supreme Court Address Forest Road Regulations | Timberland Investment | Scoop.it

The House Committee on Transportation and Infrastructure held a hearing today on H.R. 2541, the Silviculture Regulatory Consistency Act, a bill that would prevent a decision made by the Ninth Circuit Court that requires forest roads to be permitted under the Clean Water Act’s (CWA) National Pollutant Discharge Elimination System (NPDES) program. This decision, if it is allowed to go into effect, would cost from $420 million to $4 billion per year in the US South (Cubbage and Abt). In the Pacific Northwest, these costs would range from $654-$883 million per year (Forest Econ, Inc); and in Maine, the costs could total between $93-$177 million annually (Sewall).

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Jobs vs. environment at Oregon legislature

Jobs vs. environment at Oregon legislature | Timberland Investment | Scoop.it

The timber bill springs from frustration over the continued deadlock in federal forests, which make up 60 percent of Oregon's timberland but provide only 12 percent of the harvest. State forests, though only 4 percent of the land, provide 10 percent of the annual harvest. Rather than wait for a solution on federal land, advocates say the state should increase the flow of logs to mills, retain jobs and support rural communities. Industry, rural officials and union leaders back the bill.

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The bill would set timber harvests at an unsustainable level, said Ivan Maluski of the Sierra Club. "It's characterized as a major jobs bill, but to us it looks more like an ideological bill," he said.

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Chairman Camp’s Proposals Place REITs in the Crosshairs

Chairman Camp’s Proposals Place REITs in the Crosshairs | Timberland Investment | Scoop.it

On February 25, House Ways and Means Committee Chairman David Camp (R.-Mich.) proposed a dramatic overhaul of the U.S. tax code (the Code). While the “Tax Reform Act of 2014,” (the Proposals) contains a number of previously released tax law changes, it also includes an unexpected and unwelcome strike on many public REITs. The general consensus is that the Proposals are unlikely to reach a vote in the House in 2014.

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The Code requires that at least 75 percent of a REIT’s assets consist of real estate assets, cash and cash items, and at least 75 percent of a REIT’s income be derived from real estate-related sources. Under the Proposals, “real property” would be defined to exclude timber as well as all tangible property with a class life of less than 27.5 years (as defined under the depreciation rules) for purposes of the REIT income and asset tests. This provision would exclude not only timber, but also cell towers, billboards and several other real estate asset classes in which many public REITs are invested today, in many cases comprising their entire portfolios.


The provision removing timber from the definition of “real property” is particularly surprising, because the IRS first confirmed that timber companies can be REIT-qualifying in the early 1970s, and subsequent use of the REIT structure led to a revitalization of the timber industry. The provision applies beginning in 2017 and creates uncertainty for these companies.

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Endangered Species Act Working Group Releases Final Report & Recommendations

Endangered Species Act Working Group Releases Final Report & Recommendations | Timberland Investment | Scoop.it

The Endangered Species Act (ESA) Congressional Working Group, led by Representatives Doc Hastings (WA-04) and Cynthia Lummis (WY-at large), today released its final Report, Findings and Recommendations.


The report is the culmination of the Working Group’s eight-month effort to examine the ESA from a variety of viewpoints and angles, receive input on how the ESA is working and being implemented, and how and whether it could be updated to be more effective for both people and species. The report reflects hundreds of comments from outside individuals and testimony from nearly 70 witnesses who appeared before a Working Group forum and House Natural Resources Committee hearings.


The report concludes that “After more than 40 years, sensible, targeted reforms would not only improve the eroding credibility of the Act, but would ensure it is implemented more effectively for species and people.”

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The report recommends constructive changes to the ESA in the following four categories:

  • Ensuring Greater Transparency and Prioritization of ESA with a Focus on Species Recovery and Delisting

  • Reducing ESA Litigation and Encouraging Settlement Reform

  • Empowering States, Tribes, Local Governments and Private Landowners on ESA Decisions Affecting Them and Their Property

  • Requiring More Transparency and Accountability of ESA Data and Science

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Governor Proposes Changes to Wisconsin Laws Governing Foreign Land Ownership

Governor Proposes Changes to Wisconsin Laws Governing Foreign Land Ownership | Timberland Investment | Scoop.it

Wisconsin may soon allow foreign investors to purchase large parcels of land here. For more than 100 years, the state has limited foreign interests from owning more than 640 acres. However, Governor Walker’s proposed budget removes the cap, including for corporations. The Wisconsin Realtors Association asked for the change, according to spokesman Thomas Larson.


 “Wisconsin’s law has been on the books since the 1800s. It prohibits foreign investors from owning 640 acres in total. Not 640 acres that are continuous, but 640 acres that can be in different bits and pieces throughout the state,” Larson says.

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FIRPTA proposals 'important step' for US real estate

FIRPTA proposals 'important step' for US real estate | Timberland Investment | Scoop.it

The Association of Foreign Investors in Real Estate (AFIRE) has welcomed proposals to changes tax laws affecting foreign property investors.


The White House has proposed changes to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), as part of a broader infrastructure package unveiled by President Barack Obama. The proposals, known as the Rebuild America Partnership, are designed to spearhead significant new investment in US infrastructure.

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FIRPTA has long been seen as an obstacle to foreign investment in US real estate. Under the legislation, foreign firms that dispose of US real property are obligated to pay US tax on any gains realised. This is not the case for other types of US investments.


As a White House proposal pointed out, "Foreign investors, including large foreign pension funds, regularly cite FIRPTA as an impediment to their investment in US infrastructure and real estate assets".

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Timber tax passes Legislature in last-minute scramble

Timber tax passes Legislature in last-minute scramble | Timberland Investment | Scoop.it

A proposed tax on timber came back from the dead early Saturday, passing after Gov. Jerry Brown's aides muscled votes in the final minutes of a legislative session that stretched past midnight.

The bill would place a 1% tax on lumber sales to fund oversight of the timber industry. It also would limit companies' liability for legal damages in cases of wildfires caused by their practices, restricting how much government agencies could sue for negligence.

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Democrats hailed the plan's passage. "We needed critical reforms to ensure sustainable forestry management and to protect jobs in impoverished parts of our state," said Assemblyman Bob Blumenfield (D-Woodland Hills).


Federal prosecutors and Obama administration officials oppose the limits on damages out of concern that they could make it more difficult to secure money to pay for recovery from destructive blazes. The timber industry argues that prosecutors routinely sue for much more than the relevant land is worth.

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CA wildfire liability bill language emerges from the ashes

CA wildfire liability bill language emerges from the ashes | Timberland Investment | Scoop.it

California timber companies and other major landowners would pay significantly less money when found liable for wildfire damage under draft legislation that resurfaced Monday in the Capitol.

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New law shields timberland owners from permit fees for logging roads

New law shields timberland owners from permit fees for logging roads | Timberland Investment | Scoop.it
New federal legislation will help timberland owners avoid costly
permit fees for logging roads, U.S. Reps.
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