IRC Section 1031

Response to a guest editorial by Bill Blomberg: I read with interest the column by Blomberg entitled “How the tax code drives up the cost of real estate”. His assessment and conclusion on the Colorado “housing dynamic” leads to a suggestion that the tax code, specifically IRC Section 1031, is a factor in causing homelessness.

This view is not backed by data.

Based on my years of experience in the commercial real estate industry, participating in thousands of real estate transactions, and after reviewing recent macroeconomic studies, academic studies, and Colorado data, this conclusion is both flawed and wildly inaccurate.

Under IRC Section 1031, taxes are merely deferred, not eliminated. One third of all exchanges pay some tax in the year of the exchanges. The Ling/ Petrova academic study concludes that 80% of exchangers did one Section 1031 exchange, then sold their property in a taxable sale.

Like-kind exchanges fill a gap in housing supply not covered by other incentives for the development of affordable housing. Multifamily housing transactions represent 40% of real estate like-kind exchanges. Tax incentives like the Low-Income Housing Tax Credit do not apply to land acquisition costs. Investors use IRC Section 1031 to acquire new land for multifamily and affordable housing.

Eliminating or capping IRC Section 1031 would raise rental costs. The Ling/ Petrova academic study concludes that real rents would, in the long run, increase by 8 to 13 percent.

Repeal would negatively impact the State of Colorado. Local governments collected nearly $4 million in transfer taxes and fees over a recent 5-year period, while the state saw more than $22 billion in like-kind exchanges.

Repeal would negatively impact employment and liquidity in the Colorado commercial real estate market, which has been impacted by high interest rates and remote work. The Ernst and Young macroeconomic studies show that elimination of IRC Section 1031 would hurt employment, economic growth, and negatively impact tax revenues.

Scott Saunders

Palmer Lake

Gas vs. electricity

I read your recent article on gas-powered lawn equipment and as a business owner, would like to set the record straight.

I lead a nationwide franchise of electric lawn care businesses, headquartered in Fort Collins. Clean Air Lawn Care has been operating in Denver since 2007 and exclusively uses electric lawn mowers, leaf blowers, trimmers, chainsaws and more.

Companies can make the switch to cleaner, quieter electric equipment. In our experience, the cost of electric blowers, trimmers, and small mowers is usually about the same as the gas equivalents. When the price is higher, it amounts to $50-$200 per tool. The electric equipment reduces operating costs by not requiring gasoline or other parts like filters and spark plugs. Fellow landscaping business owners should also know there are grants available to make the switch to electric equipment.

More information is at www.MowDownPollution.org.

As for charging, there are lots of ways to do it. You don’t need a generator. Our operators switch out multiple batteries among different pieces of equipment throughout the day. We use a truck-mounted solar panel system that costs about $2,000 to recharge batteries while we’re out on the job so we never run out of power. We have found that this system pays for itself in reduced gas costs within about 10 months.

I hope other companies will join us in using equipment that is cleaner and quieter — for employees and customers, and for the greater health of our communities.

Kelly Giard

Fort Collins

Xcel investing in hydrogen

Why does Xcel Energy keep building gas lines to new homes, when we know gas needs to be phased out? There are big profits to be made with gas. Xcel’s profits increased over 10% last year as we shivered, and many of our power bills tripled.

Now Xcel wants to dress its emperor in new clothes, with hydrogen.

Why is Xcel Energy investing in hydrogen blending for our homes when the American Medical Association (AMA) passed a resolution saying it is dangerous and bad for the environment? There are big profits to be made with hydrogen.

We all remember the middle school experiment when our teacher ran electricity through water, and made hydrogen. It was so clean! While Xcel is banking on that memory, they are hiding that more than 99% of hydrogen produced in the US comes from fossil fuels, worsening climate change.

Hydrogen is so explosive, it makes rocket fuel. None of us want a hydrogen blend piped into our homes, where it leaks from pipes and explodes at 4x the rate of ‘natural’ methane gas. It’s also bad for our health. Burning hydrogen results in more dangerous NOx (an ozone precursor) than methane alone. Asthma patients like me know how that endangers our health.

The AMA condemned hydrogen blending because it’s dangerous and unhealthy. It’s leakier, more explosive, more corrosive, more expensive, and worse for our climate than methane gas. Xcel needs to tell us the truth, and keep hydrogen out of our homes.

Ruth Hund

Golden

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