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Shopping Centers Today -> May 2003
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E-COMMERCE TAX, BANKRUPTCY TOP ICSC AGENDA
BY IAN RITTER
WASHINGTON, D.C. — Bankruptcy reform, taxation of e-commerce, the Americans with Disabilities Act and the Endangered Species Act topped the agenda again this year at ICSC’s Congressional Contacts Meeting in March. The conference was attended by 128 retail development professionals who came to lobby on behalf of the industry. It was the highest attendance in seven years.
Though a handful of retail chains made a deal in February with 37 states and the District of Columbia to voluntarily collect state and local Internet sales taxes, state governments and the retail real estate industry say that’s not enough. They continue to push for legislation that would require retailers to collect tax on all online sales.
“This is about equity, this is about fairness,” Sen. Norman Coleman, R-Minn., a keynote speaker, told delegates at the March meeting. Brick-and-mortar retailers, he argued, need to be on a level playing field with those that sell goods over the Internet.
Retail real estate owners contend that by not charging taxes, e-tailers have an unfair advantage over shopping centers and their tenants, who lose sales as a result. For their part, states and municipalities, many of which face massive funding deficits, are missing out on sales tax revenues at a time when they can least afford it. The National Governors Association estimates that state governments will lose $27 billion in uncollected online sales taxes this year. That will grow to $41 billion by 2005, the association says.
On the bankruptcy front, in March the House of Representatives overwhelmingly approved a bankruptcy reform bill that would limit the amount of time shopping center tenants have to assume or reject a lease after declaring bankruptcy. At press time, the bill was awaiting action by the Senate. The measure would allow tenants 120 days to decide, plus an additional 90 days if approved by a judge. Currently, tenants have 60 days, but a judge can extend the time period indefinitely. As a result, landlords cannot sign replacement tenants.
Just as important, the bill would also give landlords a say in the choice of tenants to which bankrupt businesses may sublease their empty stores. Currently, if a bankruptcy court approves a sublease, the landlord has no power to block it, however unsuitable the tenant might be deemed to be.
Developers are also in support of a proposed change to the Americans with Disabilities Act. The change would give landlords 90 days to fix any violations found on their properties before they face penalties. Rep. Mark Foley, R-Fla., has introduced a bill to make this change.
Centers and stores have been victimized by lawyers looking for technical violations of the act — such as handicapped signs that hang a few inches lower than stipulated — to win payments and contingency fees, said William A. Shiel, CLS, senior vice president of facilities development at drugstore chain Walgreens.
“It has spun a cottage industry of attorneys,” Shiel said. “If we made a mistake, we want to find out about it and cure it in 90 days.”
ICSC is also working to have the Endangered Species Act altered to require additional scientific research before plants and animals are listed as endangered. Currently, about 2,000 species are listed, some of which are no longer actually endangered, ICSC contends.
“The anti-development groups actually use this act to stop development,” said James E. Maurin, chairman and CEO of Covington, La.-based Stirling Properties. “What we want, simply, is sound science.”
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