Advocacy Update – July 2023
This Month in Advocacy: Design Review Legislative Package passed, Revised Federal Research & Development Tax Credit Update, and Updates to Architects are Environmentally Responsible Policy
AIA National Revised Federal Research & Development Tax Credit Update
AIA National has shared an important update regarding the revised federal research and development (R&D) tax credit, which came into effect on January 1, 2023. Due to the increasing number of inquiries from concerned parties, AIA wants to ensure that everyone is well-informed about the latest updates on this matter.
In 2017, the Tax Cuts and Jobs Act (TCJA) brought about significant changes to the U.S. tax code. One of these changes involves an amendment to Section 174, which now requires taxpayers to capitalize and amortize R&D expenditures for tax years beginning after December 31, 2021. This change has a notable impact on firms involved in R&D activities.
Impact on R&D Tax Credit:
Additionally, the TCJA affects the eligibility for the R&D tax credit. The definition of “qualified research” has been modified to align with the new rules under Section 174. Taxpayers must now classify expenses as “specified research or experimental expenditures” under Section 174 in order to claim the Section 41 tax credit. This emphasizes the need for careful validation of Section 41 expenditures to comply with the revised requirements.
AIA’s Active Engagement:
AIA has been actively engaged on this issue since last year, working to address the challenges faced by firms. AIA continues to collaborate with business groups, collect stories from AIA members, and advocate for revisions to the new law in order to achieve statutory corrections (including retroactive measures).
Encouragingly, a bipartisan bill known as the American Innovation and Jobs Act (S. 866) has been reintroduced in the Senate, with a House bill recently introduced (bill number pending). While these reintroductions are positive steps, further action is necessary. Member participation and advocacy can significantly influence the progress in resolving this issue
Call to Action:
AIA National urges members to take the following actions:
- Write to Members of Congress: Utilize AIA National’s Action Alert to convey the impact of the changes on your firm and emphasize the importance of addressing the issue.
- Share your stories: AIA is seeking stories from affected members and firms to highlight the urgency of the issue to Congress. Email Sarah Dodge for further follow-up.
- Engage with House Ways and Means Committee and Senate Finance Committee Members: If you have connections with policymakers on these committees, reach out to them. Their support plays a vital role in rectifying this issue.
Your engagement and advocacy are key to achieving a favorable outcome. With possible decisive action in fall 2023, the collective efforts of AIA members can make a significant difference.
Call for Feedback: Updates to Architects are Environmentally Responsible Policy
We are excited to announce that AIA National is undertaking an important initiative to update the Architects are Environmentally Responsible section of the AIA Public Policy statements and accept feedback from members.
Recognizing the urgency of climate action, AIA declared it a priority in 2019. However, the current Architects are Environmentally Responsible policy was last reviewed and approved by the Board of Directors in 2017, predating this priority declaration. To bridge this gap and ensure this policy aligns with recent AIA statements, a subgroup of the Committee on the Environment (COTE) was assigned the task of leading this effort.
Your input is crucial in shaping the direction of this policy. We invite you to review the proposed updates, which are available in two formats: a redlined version highlighting the changes and a clean version for easy reading.
To provide your feedback, you can send your written comments directly to Anne Law. All feedback must be submitted by the close of business on Thursday, July 27th.
In addition to written feedback, AIA National is hosting virtual Zoom feedback sessions to facilitate interactive discussions. These sessions will provide you with an opportunity to engage with fellow AIA members and share your thoughts on the proposed updates. Join us at the final Zoom feedback session: July 27 (Thurs) 5:00 – 6:30 pm EST/
Design Review Legislative Package Passed by Seattle City Council
Seattle City Council, led by Mayor Bruce Harrell, recently passed a crucial legislative package to address the pressing issue of affordable housing. The initiative aims to boost affordable housing production by streamlining permitting processes, which have been a major bottleneck in construction.
The package consists of two key bills: Council Bill 120591 and Council Bill 120581. Council Bill 120591, now in effect permanently, builds on successful temporary exemptions from design review implemented during the COVID-19 pandemic. These exemptions sped up the opening of affordable housing projects, offering much-needed relief to the community. Under the new bill, rental and home-ownership projects with 40% of units affordable at up to 80% of the Area Median Income (AMI) will be exempt from design review. It’s important to note that though design review is no longer mandatory for these projects, they still meet stringent building and land use codes, ensuring high standards for health and safety.
The second bill, Council Bill 120581, introduces temporary provisions to the permit review process, allowing housing projects to meet the City’s Mandatory Housing Affordability (MHA) requirement through on-site performance, earning an exemption from design review. This bill also permits projects to receive departures from design standards, streamlining the process and facilitating more efficient construction. By eliminating outdated language in the City’s Land Use code, the legislation provides a clearer definition of affordable housing, fostering an environment that encourages more affordable housing developments in Seattle.
The impact of these bills has been met with widespread praise from various organizations and individuals invested in affordable housing. By simplifying the permitting process and providing incentives, the City aims to increase the production of affordable housing and address the critical housing needs of its residents. While more work may still be needed, the approval of these bills represents a significant step forward in tackling Seattle’s affordable housing crisis.