With billions of dollars worth of commercial real estate around the country "underwater" as the underlying properties languish with too few tenants, a bipartisan pair of U.S. lawmakers from hard-hit parts of the country are hoping to lure private investment dollars into the rehabilitation of distressed properties with proposed tax breaks.

But whether the Community Recovery and Enhancement (CRE) Act, introduced this month by Reps. Shelley Berkley, D-Nev., and Devin Nunes, R-Calif., would succeed in stimulating investor equity into struggling commercial property owners is a matter of debate.

One of the measure's chief backers is the International Council of Shopping Centers, which represents thousands of smaller retail mall owners struggling with high debt loads, shrinking property values and scarce bank financing for tenant improvements.

Others doubt the measure would do much to fill in the financing gaps left by lenders, especially in areas where community banks -- traditionally the go-to resource for smaller retail developments -- were themselves too invested in real estate. Many banks are only now recovering from the real estate bubble bursting.

The measure comes as an estimated $1.4 trillion in commercial property loans coming due by 2014 are worth less than what is owed on them, according to the congressional panel overseeing the U.S. Treasury's Troubled Asset Relief Program.

Touted as a bipartisan "private sector solution" to the problem that avoids direct government bailouts, the CRE Act proposes to allow investors in troubled commercial assets to reap an immediate bonus depreciation of up to 50 percent (or $10 million, whichever is less) on equity sunk into "underwater" properties -- if at least 80 percent of the cash is used to pay down a property's debt load and restructure the mortgages.

The remaining 20 percent can be used for property rehabilitation, such as making it energy-efficient or sprucing it up to attract new tenants in an ultra-competitive marketplace.

Berkley, whose district includes Las Vegas -- the city probably hardest-hit by the collapse of the real estate bubble -- says the bill "gives an attractive incentive for new investments in shopping centers, office buildings, malls and other commercial real estate." The goal, he said, is to "encourage businesses to seek out private sector sources of funding for their commercial property by providing them an incentive."

While the Twin Cities area certainly doesn't the face same scale of vacant commercial real estate as does Las Vegas or many parts of California, the metro area still has plenty of struggling retail centers and empty former big box stores whose owners can't get investors or bank refinancing to rehab them.

That lack of lender interest is still the No. 1 problem facing commercial property owners "underwater" on their mortgages, said Herb Tousley of the Shenehon Center for Real Estate at the University of St. Thomas.

"The depreciation aspect of this is good, but the crux of the problem is that property values have gone down a lot and it's hard to get financing if you want to do a rehab on a property," he said. "Something in the form of a loan guarantee that could encourage more financing may help more."

Tousley said the Twin Cities is full of "mom and pop" owners with distressed commercial properties who'd like to do competitive upgrades if loans were available.

"This may spur development because values are down and investors can claim depreciation right away, which is a good tool," added Dean Dovolis, a principal with Minneapolis-based DJR Architecture, whose client list includes many smaller developers.

Dovolis said the proposed law could be a boon for owners of distressed properties in urban cores, where the quick depreciation from the mortgage write-down combined with tax credits for restoring an historic building could be combined for a "dramatic" incentive.

"It satisfies both sides politically, because it's a private sector investment that Republicans like and would create jobs under a Democratic government," he noted.

Community banks, meanwhile, say they support the legislation, although they see it as aimed at empowering private equity investors rather than small lenders.

Even with about 7,000 community banks nationwide, "the bill's authors come from California and Nevada -- states where there are very few community banks at all," said David Skilbred, vice president of government relations for the Independent Community Bankers of Minnesota.

He said that despite tightened lending requirements many "underwater" property owners can still obtain refinancing through banks and the U.S. Small Business Administration's 504 Certified Development Company program.

A recent change to the 504 program -- which is used to finance the purchase of real estate and other fixed assets -- allows small business owners for the first time to use the low-interest, government-backed loans to refinance existing commercial mortgages, Skilbred said.

Don Jacobson is a St. Paul-based freelance writer.