[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[Extensions of Remarks]
[Pages E49-E50]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 COMMUNITY AND GREEN SPACE CONSERVATION

                                 ______
                                 

                         HON. NANCY L. JOHNSON

                             of connecticut

                    in the house of representatives

                        Tuesday, January 7, 1997

  Mrs. JOHNSON of Connecticut. Mr. Speaker, it is no secret that some 
of the Nation's most scenic open spaces are disappearing at a time when 
many cities--large and small--are decaying. This phenomenon is commonly 
referred to as sprawl. The causes are many: the development of the 
Interstate Highway System, relatively inexpensive commuting expenses, 
and tax incentives for home ownership have made it easier for people to 
live further from the cities in which they work. In more recent years, 
jobs have followed families to the suburbs, and breakthroughs in 
telecommunication have spawned telecommuting, eliminating proximity to 
the office as a factor for many people in deciding where to work or 
live. Obviously, public safety, the quality of schools, and the 
financial health of the Nation's cities figure prominently in decisions 
to move businesses and families to the suburbs.
  The situation in my hometown of New Britain, CT, illustrates another 
facet of the dilemma faced by aging, industrial cities and towns, 
especially in the Northeast and Midwest. A huge, old factory near the 
center of town sat unused for years, as fears over asbestos and 
groundwater pollution blocked rehabilitation and re-use of the building 
and adjacent property.
  Only recently, thanks to a cooperative effort that includes Federal, 
State, and local resources, is the old Fafnir site finally being 
reclaimed. A powerful incentive for manufacturers and retailers to flee 
the city is being addressed and the promise of new, centrally located 
job growth is once again on the horizon.
  In a broader sense, it is tragic that many cities are suffering at a 
time when the countryside is disappearing. The American Farmland Trust 
estimates that the United States converts to other uses 2 million acres 
of farmland annually, much of it on the edge of urban America. The USDA 
natural resources inventory found that developed land increased by 14 
million acres between 1982 and 1992.
  Many provisions of tax law have come into play as well. Last summer, 
the Ways and Means Subcommittee on Oversight held a hearing on the 
impact of tax law on land use decisions. We learned that it is 
sometimes more difficult to recover many of the costs of development in 
urban areas. We also learned that estate taxes can have a tremendous 
impact on land use decisions. According to one of our witnesses, the 
Piedmont Environmental Council, farmland that sold for $500 an acre in 
the 1960's is selling for $10,000 to $15,000 an acre today. The tax 
costs of passing along such expensive acreage to the next generation, 
coupled with the pressure for development in many areas, is a major 
reason for the disappearance of open spaces. We learned more about 
proposals to build on or expand current empowerment zones and 
enterprise communities.

  In recent Congresses, several of our colleagues introduced important 
legislation addressing these issues. The gentleman from Florida [Mr. 
Shaw] and the gentleman from New York [Mr. Rangel] introduced a bill 
providing for more realistic cost recovery for improvements to 
commercial buildings. The gentleman from Florida and my colleague from 
Connecticut [Mrs. Kennelly] introduced a bill to provide a tax credit 
for qualified rehabilitation expenditures of historic properties used 
as owner-occupied homes. Our colleague from Missouri [Mr. Talent] and 
our colleague from Oklahoma [Mr. Watts] introduced the American 
Community Renewal Act, which would create 100 ``renewal communities'' 
and provide a number of incentives for conducting business within the 
communities.
  Our colleague from New York [Mr. Houghton] introduced the American 
Farm Protection Act, to exempt from estate taxes the value of certain 
land subject to a qualified easement. The legislation targets the 
benefit to land adjacent to metropolitan areas and national parks where 
development pressure and land values tend to be greatest. Our former 
colleague from New Jersey [Mr. Zimmer] introduced two bills related to 
conservation easements. One would permit an executor to donate land or 
a conservation easement to a government agency and credit the value of 
the donation against estate taxes owed. Under current law, donations 
must be provided for before the owner's death. Mr. Zimmer's other bill 
would change the way that the gain on bargain sales of land or 
conservation easements is calculated for tax purposes.
  We should all be grateful for the many hours of hard work our 
colleagues have devoted to these initiatives. With so many factors 
contributing to urban decay and sprawl, there is not single solution. 
Certainly, I would not suggest that all of the challenges facing our 
Nation's communities can be addressed by tax policy. But there are 
several provisions of tax policy that are important. That is why 
several of our colleagues have come up with some important ideas. I 
believe several others merit consideration as well. Early this session, 
I intend to introduce a series of measures to address some of the 
factors that contribute to sprawl.
  First, I intend to re-introduce a bill I offered in the last 
Congress, related to the costs of cleaning up contaminated land and 
buildings in urban areas so that they can be put to productive use. The 
rules surrounding the tax treatment of environmental remediation 
expenses are so convoluted and confusing that it is no wonder that a 
number of businesses decide to sidestep them altogether and invest in 
previously undeveloped land and newer buildings outside of 
environmentally distressed urban areas.

  Repairs to business property can be deducted currently as a business 
expense, but capital expenditures that add to the value of property 
have to be capitalized. This means that some environmental remediation 
costs are treated as a business expense, but others are treated as 
capital expenditures, depending on the facts and circumstances of each 
case.
  The administration in its brownfields initiative has proposed to 
allow an immediate deduction for cleaning up certain hazardous 
substances in high-poverty areas, existing EPA brownfields pilot areas, 
and Federal empowerment zones and enterprise communities. This is 
commendable, as far as it goes, but there is a disturbing trend in 
urban policy to pick and choose among cities. If expensing 
environmental remediation costs is good tax policy and good urban 
policy, and I believe that it is, then it should apply in all 
communities. My bill would apply this policy to all property wherever 
located, and would expand the list of hazardous substances to include 
potentially hazardous materials such as asbestos, lead paint, petroleum 
products, and radon. This would remove a disincentive in current law to 
reinvestment in our cities and buildings.
  Another proposal would address the blight of the many boarded up 
buildings. Of course, many of these buildings should be rehabilitated. 
But many buildings that have no economic viability are still standing 
because the current tax rules provide a disincentive to tearing them 
down.
  Before 1978, costs and other losses incurred in connection with the 
demolition of buildings generally could be claimed as a current 
deduction unless the building and the property on which it was located 
were purchased with an intent to demolish the building. In that case, 
costs and other losses associated with demolition were added to the 
basis of the land.
  To create a disincentive to demolishing historic structures, the 1978 
tax bill required that costs incurred in connection with the demolition 
of historic structures would have to be added to the basis of the land.
  Under the Deficit Reduction Act of 1984, the special rule for the 
treatment of costs associated with demolishing historic structures 
became the general rule. There was concern that the old rule may have 
operated as an undue incentive for the demolition of existing 
structures. But the new rule is a disincentive for tearing down 
buildings with unrecovered basis. Many boarded up buildings are still 
standing because the owners are still depreciating them.

  My proposal would restore the old rule for nonhistoric buildings.
  While many people prefer the amenities offered by living in our 
Nation's cities, many new jobs are being created outside urban areas. 
As the cities are losing their manufacturing industries, 95 percent of 
the growth in office jobs occurs in low density suburbs. These office 
jobs accounted for 15 million of the 18 million new jobs in the 1980's. 
Mass transit is important if people in the cities are to reach the new 
jobs in the suburbs.
  Under current law, some employer-provided transportation assistance 
can be excluded from income. The value of transportation in a commuter 
highway vehicle or a transit pass that may be excluded from income was 
$65 per month in tax year 1996. On the other hand, up to $170 per month 
in qualified parking can be excluded from income. I am proposing to 
establish parity by raising the cap for transportation in a commuter 
highway vehicle or a transit pass to the same level as that for 
qualified parking.

[[Page E50]]

  Another proposal I introduced in the last Congress addresses a 
provision in current tax law that limits the deduction for a gift of 
appreciated property to 30 percent of adjusted gross income. Under 
current law, the limit for gifts of cash is 50 percent of adjusted 
gross income. This provision would raise the cap for qualified gifts of 
conservation land and easements from 30 percent to 50 percent. Under 
the bill, any amount that cannot be deducted in the year in which the 
gift is made can be carried over to subsequent tax years until the 
deduction has been exhausted. Current law gives the donor 5 years in 
which to use up the deduction.
  Conservation easements are a partial interest in property transferred 
to an appropriate nonprofit or governmental entity. These easements 
restrict the development, management, or use of the land in order to 
keep the land in a natural state or to protect historic or scenic 
values. Easements are widely used by land trusts, conservation groups, 
and developers to protect valuable land.
  The 30-percent limit in current law actually works to the 
disadvantage of taxpayers who may be land rich but cash poor.
  Our former colleague from New Jersey [Mr. Zimmer] introduced two 
proposals in the last Congress related to the donation of land or 
easements. One would encourage heirs to donate undeveloped land to the 
Federal Government. If the inherited land is desired by a Federal 
agency for conservation, the heirs would be allowed to transfer the 
land to the Government and take a credit for the fair market value. The 
other would provide for more equitable taxation of the gains from 
selling land or an easement at below market value to a government 
entity or a nonprofit organization. I intend to introduce these 
measures, with a few modifications, in the new Congress.
  Mr. Speaker, to save our Nation's green spaces, we must save our 
cities as well. There is no single, simple solution, but we here in 
Congress must do what we can to help our communities. I am looking 
forward to working with my colleagues to address these challenges in 
the coming weeks and months.

                          ____________________