[Congressional Record Volume 151, Number 18 (Thursday, February 17, 2005)]
[Senate]
[Pages S1632-S1633]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KYL:
  S. 419. A bill to amend the Internal Revenue Code of 1986 to modify 
the treatment of qualified restaurant property as 15-year property for 
purposes of the depreciation deduction; to the Committee on Finance.
  Mr. KYL. Mr. President, today I am introducing legislation to make 
the 15-year depreciation recovery period for improvements to 
restaurants permanent, and to extend this treatment to cover new 
restaurant construction as well. Last year, in the American Jobs 
Creation Act of 2004 (Public Law 108-357), Congress set the 
depreciation recovery period for renovations and improvements made to 
existing restaurant buildings at 15 years, but this treatment only 
applies to property placed in service before the end of 2005.
  The legislation I am introducing today will permanently set the 
depreciation recovery period for new restaurant construction and for 
improvements to existing restaurants at 15 years. It simply makes no 
sense that the current law providing a 15-year life for improvements to 
restaurant properties expires at the end of 2005. Restaurants are 
businesses, and they need the certainty to plan investments several 
years in advance. Further, Congress should expand the treatment to 
apply to new construction, as well as to improvements.
  Restaurants are high-volume businesses. Every day, more than half of 
all Americans eat out. Restaurants get more customer traffic and 
maintain longer hours than the average commercial business--many 
staying open 7 days a week. This tremendous amount of activity causes 
rapid deterioration in a restaurant building's systems, from its 
entrances and lobbies to its flooring, restrooms, and interior walls.
  Restaurants improve and renovate constantly to accommodate the wear 
and tear of heavy customer traffic and to keep pace with changing 
consumer preferences. Clearly, a 39-year depreciation recovery period--
which is what the recovery period will revert to after 2005--does not 
match the economic life for new restaurant buildings or for 
improvements to existing structures.
  Moreover, permanently setting the depreciation recovery period at 15 
years will encourage significant economic activity. According to the 
National Restaurant Association, a 15-year depreciation recovery period 
for

[[Page S1633]]

new restaurant construction and improvements to existing properties 
would generate an additional $3.7 billion in cash flow for the 
restaurant industry over the next 10 years. If restaurants use just 25 
percent of this influx of cash to expand and undertake additional 
renovations, the Restaurant Association study predicts that the 10-year 
economic impact would be $853 million.
  I hope all of my colleagues will join me in this effort to bring 
certainty and a rational depreciation recovery period to the restaurant 
industry so that restaurant owners can continue to expand their 
businesses and provide good jobs to American workers.
                                 ______