Author: Trey Jackson

EPA Launches Voluntary “ENERGY STAR Tenant Space” Program to Certify High Performance Leased Office Suites

Posted on by Trey Jackson

EnergyStar Tenant Space

The Environmental Protection Agency (EPA) on Oct. 13 launched its voluntary “ENERGY STAR Tenant Space” labeling program to recognize tenants who collaborate with their landlords on design and construction of high performance leased office spaces. (Download EPA’s Oct. 15 webinar slides – How to Apply for ENERGY STAR Tenant Space Recognition.)

  • EPA’s new certification for office tenants is now a permanent ENERGY STAR program offering, to complement the agency’s popular “whole building” label. The ENERGY STAR label is a key marketplace influence to signal energy efficient assets, impacting nearly 35,000 buildings and plants nationwide that represent more than 5 billion square feet of commercial space. (ENERGY STAR Facts and Stats)
  • “ENERGY STAR Tenant Space” recognition requires office tenants to estimate their suites’ energy use, separately meter their spaces, use efficient office equipment, and share energy usage data with their landlords. (See EPA’s guide, “How to Prepare for Tenant Space Recognition.”)
  • EPA will also offer access to a new online tool for estimating lighting energy usage within its commonly used Portfolio Manager benchmarking platform. Use of this new lighting assessment function, and requiring an office suite to meet a lighting efficiency “target,” will be a prerequisite for the voluntary Tenant Space label.
  • The Tenant Space label is currently available to office tenants. EPA explained to SPAC members that it intends to expand the program to provide recognition opportunities to retail and warehouse tenants in the coming months.
  • ENERGY STAR building ratings and the corollary Tenant Space program were part of a discussion held October 1 at The Real Estate Roundtable’s offices in Washington, D.C., between EPA Administrator Andrew Wheeler and Roundtable President and CEO Jeffrey DeBoer. 
  • In a video of the discussion, Wheeler stated he is a “strong” ENERGY STAR proponent and that the agency’s expansion of the label to cover tenant spaces was “the right thing to do.” Wheeler also emphasized these platforms must remain voluntary to encourage additional private-sector technological innovations in buildings and manufacturing. (See video at 12:40 and Roundtable Weekly, Oct. 2)

EPA’s tenant recognition efforts are authorized by the so-called “Tenant Star” law, passed by Congress in 2015 with The Roundtable’s strong backing. (Commercial Property Executive, May 4, 2015)

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Shifting Negotiations Aim for Uncertain Pandemic Relief Deal, Legislation Unlikely Before Election; Fed Chairman Warns Lack of Fiscal Support Risks ‘Tragic’ Consequences

Posted on by Trey Jackson

Negotiations about a pandemic relief package shifted dramatically this week in Washington, ranging from complete cancellation to industry-specific assistance to discussions reported today about a new $1.8 trillion White House proposal.  (Wall Street Journal and PoliticoPlaybook Oct. 9)

  • President Trump tweeted today, “Covid Relief Negotiations are moving along. Go Big!”
  • A framework for an agreement before the election is possible, yet the timeline for developing specific legislation and passing a broader package remains doubtful. 
  • Senate Majority Leader Mitch McConnell (R-KY) today called coronavirus negotiations “murky” and added, “I think the murkiness is a result of the proximity to the election, and everybody kind of trying to elbow for political advantage.  I’d like to see us rise above that … but I think that’s unlikely in the next three weeks.”  (The Hill, Oct. 9)
  • The Senate this week is focusing most of its attention on confirmation hearings for Supreme Court nominee Amy Coney Barrett, despite three GOP Senators having tested positive for COVID-19 and an additional three in quarantine.  (The Hill, Oct. 8)
  • Another challenge among GOP senators is attracting support for any pandemic relief package over $1 trillion. (Roundtable Weekly, Oct. 2)
  • White House support for a $1.8 trillion package reported today remains below the $ 2.2 trillion coronavirus relief bill passed last week by House Democrats.  Policy differences also remain on key areas such as liability protections for business, aid for state and local governments and the specific structure for additional federal unemployment benefits.  (Associated Press, Oct. 9)
  • House Speaker Nancy Pelosi (D-CA) on MSNBC today said, “You know, the devil and the angels are in the details. And so it—part of it is about money, and part of it is about policy,” she said.  (Wall Street Journal, Oct. 9)
  • Pelosi earlier in the week suggested that if no stimulus deal can be reached before the election, virus relief funding could be added to a must-pass spending bill needed to keep the government open after Dec. 11 during a post-election, lame-duck session of Congress.  (Roundtable Weekly, Oct. 2 and BGov, Oct. 7)
Fed Chair Jay Powell
  • Federal Reserve Chair Jerome Powell, above, on Tuesday encouraged Congress and the White House to pass greater fiscal support for the economy, households and businesses. 
  • Powell stated, “… a prolonged slowing in the pace of improvement over time could trigger typical recessionary dynamics, as weakness feeds on weakness. A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy. That would be tragic, especially in light of our country’s progress on these issues in the years leading up to the pandemic.”  (Fed speech, Oct. 6)

Powell also warned that the economic expansion and recovery from the coronavirus is far from complete.  “Even if policy actions ultimately prove to be greater than needed, they will not go to waste. The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods,” he said.

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Roundtable Commends Aspects of Proposed Carried Interest Regulations While Recommending Further Clarifications and Improvements

Posted on by Trey Jackson

The Real Estate Roundtable on Oct. 5 submitted detailed comments to the Treasury Department and IRS on proposed regulations implementing the 3-year holding period requirement for carried interests to qualify for long-term capital gain treatment.  (Roundtable comment letter)

  • Treasury on July 31 released the proposed rules under IRS Section 1061 to address the specific conditions that apply to the 3-year holding period requirement passed by Congress in the Tax Cuts and Jobs Act (TCJA) of 2017.  (Roundtable Weekly, Aug. 7)
  • The Roundtable commended the agencies for a balanced approach on certain key issues addressed in regulations – yet recommended further clarifications and improvements to the proposed rules to retain the original intent of Congress.  
  • The Roundtable’s comments note that the IRS rules include a number of well-designed provisions that should help avoid unintended consequences when the 3-year holding period is implemented, including:

—  The 3-year requirement is limited to the gain from a sale or exchange of a capital asset – and excludes gain from property used in a trade business (Section 1231 gain). 

—  A useful “look-through” rule to help ensure REIT dividends paid to shareholders receive the same long-term gain treatment that would apply to assets owned individually or in partnership form.

—  A sensible exclusion to ensure a partner’s own capital contributions to the partnership are not subject to re-characterization under section 1061.

Recommendations for Additional Clarifications and Improvements

The Roundtable comment letter also recommends certain changes to the proposed regulations to bring the rules more in line with the legislative intent when Congress enacted section 1061.  The Roundtable recommendations include the following:

  • Provide a safe harbor to allow funds borrowed by a general partner to qualify as a capital interest in the partnership.  Investors frequently require a general partner to co-invest in the partnership to align the parties’ interests.  These co-investments often are financed with loans from the investors.  The proposed regulations would undermine the economics of these arrangements. The 3-year holding period would apply when an investment is made with funds borrowed from the other investors in the partnership.  The Roundtable recommends that the Treasury narrow the broad restriction on borrowed funds by creating a safe harbor for non-abusive situations.
  • Prevent improper acceleration of tax liability when a partnership interest is transferred in a nonrecognition transaction.  Section 1061(d) creates certain tax consequences for transfers of partnership interests to related parties.  The proposed regulations broadly interpret section 1061(d) to override other nonrecognition provisions in the tax code by requiring the inclusion of gross income as a result of such transfers.  The Roundtable recommends that Treasury narrow its current interpretation of the provision to avoid accelerating tax liability in the case of transfers of partnership interests to related parties in nonrecognition transactions.
  • Avoid casting too broad a net on partnerships covered by the 3-year holding period.  Congress limited section 1061 to partnership interests in businesses that raise or return capital on a regular, continuous, and substantial basis.  The proposed rules, however, largely disregard this prong of the test and could capture many real estate arrangements unintended by lawmakers, including joint ventures, operating partnerships, and others.  The Roundtable recommends that Treasury limit application of the provision to businesses that meet the statutory requirements. 

Roundtable President and CEO Jeffrey DeBoer concludes the letter by noting, “Congress . . . narrowly drafted section 1061 to apply to specific situations.  Our comments our aimed at preserving the drafters’ intent while avoiding unnecessary disruption to common, everyday real estate partnerships—small and large—throughout the country.”

The recommendations were developed by The Roundtable’s Tax Policy Advisory Committee (TPAC).

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Stopgap Funding To Keep Government Open Until Dec. 11; House Democrats Pass Revised COVID-19 Stimulus Bill as Pandemic Relief Negotiations Continue

Posted on by Trey Jackson

Capitol Dome Dusk

A stopgap measure to fund the government until Dec. 11 at current spending levels passed the Senate Wednesday and was signed by President Trump early Thursday morning, narrowly avoiding an Oct. 1 government shutdown before the election.  (Reuters, Sept. 30 and Bloomberg, Oct. 1)

  • The “Continuing Resolution,” which passed the House last week, includes short-term funding extensions (with no policy changes) for surface transportation funding, the National Flood Insurance Program, and the EB-5 Regional Center Program.  (Rountable Weekly, Sept. 25, Text of H.R. 8337 and Section-by-section summary of the legislation)
  • As the government operations funding bill advanced this week, House Speaker Nancy Pelosi (D-CA) met face-to-face with Treasury Secretary Steven Mnuchin about an additional COVID-19 relief package for the first time since August.
  • Disagreements between Democrats and Republicans continued over the cost of a relief package, leading House Democrats Thursday night to pass a largely symbolic $2.2 trillion COVID-19 relief bill by a narrow 214-207 vote.  Eighteen Democrats voted against the measure, which is a scaled-down version of the $3 trillion HEROES Act passed by the House in May. The Senate is unlikely to consider the package.  (Forbes and NBC News, Oct. 1)

President Donald Trump comments in WH driveway

  • President Trump’s positive test for the coronavirus today adds great uncertainty to the political landscape and “changes the dynamic” of the pandemic relief talks, according to Pelosi.  “We always have to find a path, that is our responsibility to do so, and I believe that we will,” she said.  (Washington Post, Oct 2)
  • The White House has seemed willing to engage House Democrats in hopes of a deal, yet attracting enough support from Senate Republicans to pass another relief package over $1 trillion is a significant challenge. 
  • Senate Finance Committee Chairman Chuck Grassley (R-IA) yesterday said, “There’s a real revulsion among Republicans to going above $1 trillion and even $1trillion is real difficult.”  (CNN, Sept. 30)
  • Another issue in the negotiations remains Senate Majority Leader Mitch McConnell’s (R-KY) insistence on a liability shield for businesses that are concerned about unlimited COVID-related lawsuits after reopening.  McConnell said yesterday, “I’d like to see another rescue package. We’ve been trying for months to get there. I wish them well.”  (AP, Oct. 1)

House lawmakers will depart Washington today until after the election – unless they are summoned back to vote on a COVID-19 legislative package deal.  The Senate is scheduled to remain in session next week as confirmation hearings begin Oct. 12 for Judge Amy Coney Barrett, the President’s nominee for the US Supreme Court.

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Roundtable Interview with US-EPA Administrator Covers ENERGY STAR, Coronavirus Guidance, and Brownfields Redevelopment in Opportunity Zones

Posted on by Trey Jackson

Jeffrey DeBoer and Andrew Wheeler, EPA Administrator

U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, above right, met yesterday with Real Estate Roundtable President and CEO, Jeffrey D. DeBoer, above left, to discuss a wide range of energy and environmental policy matters that impact the U.S. real estate sector.  (Video on Roundtable’s YouTube page)

DeBoer interviewed Wheeler at The Roundtable’s offices in Washington, D.C., as part of a series of “listening sessions” between EPA and stakeholders.  Their discussion covered:

  • EPA’s development of a standardized process to systematically calculate the economic costs and environmental benefits of its regulatory programs (video at 3:29);
  • A “science transparency” regulation that makes the scientific studies relied upon by EPA available to the public (video at 4:56);
  • Wheeler’s implementation of a “lean management” system to streamline the agency’s procedures for project permitting and environmental reviews (video at 8:15);

Energy Star Tenant Space logo

  • ENERGY STAR building ratings, and EPA’s corollary Tenant Space program that will launch on October 13.  Wheeler stated he is a “strong” ENERGY STAR proponent, expanding the program to cover tenant spaces was “the right thing to do” – and that these platforms must remain voluntary to spur technological innovations deployed in buildings and manufacturing. ( video at 12:40);
  • EPA’s development of COVID-related guidance to help the economy re-open, such as updated Portfolio Manager benchmarking instructions to account for recent changes in building occupancy and hours of operations, EPA’s approvals of cleaning and disinfecting products to combat COVID-19, and information on flushing pipes and plumbing systems to maintain indoor water quality (see, e.g., Roundtable Weekly, July 31, 2020 and May 22, 2020) (video at 15:45)
  • Public-private partnerships to re-develop Brownfield sites in economically-distressed “opportunity zones” created under the 2017 Tax Cuts and Jobs Act.  Wheeler remarked that every dollar EPA invests in a Brownfields clean-up leverages up to an estimated $20 dollars in private sector investment capital for surrounding low-income neighborhoods. ( video at 18:40)
  • Also yesterday, EPA career staff spoke to The Roundtable’s Sustainability Policy Advisory Committee (SPAC) regarding the imminent launch of the ENERGY STAR Tenant Space program on October 13.  Opportunities to certify high performance design and construction of leased office spaces will become a permanent EPA offering, and stem from the so-called “Tenant Star” law Congress passed in 2015 with the Roundtable’s strong backing.  (Commercial Property Executive, May 4, 2015)

The Roundtable participates in EPA’s Smart Sectors Program, the agency’s platform to collaborate with industry sectors to protect the environment and public health though sensible, cost-effective regulatory and incentive programs.  (EPA news release, Oct. 3, 2017)

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Roundtable Board of Directors Approves RER Leadership; Establishes Equity, Diversity and Inclusion Committee

Posted on by Trey Jackson

RER Board Approves Suffolk Chairman and CEO John F. Fish as Chair-Elect for FY 2021, Edens CEO Jodie W. McLean as Secretary, and Related Companies CEO Jeff T. Blau as Chair of Newly Established Equity, Diversity and Inclusion Committee

(WASHINGTON, D.C.) — The Real Estate Roundtable’s 24-member Board of Directors has approved John F. Fish (CEO & Chairman, Suffolk) as the organization’s Chair-Elect, to begin his term as Chairman of the Roundtable in mid-2021.  The Board also approved, effective immediately, Jodie W. McLean (CEO, Edens) as its Secretary and Jeff T. Blau (CEO, Related Companies) as the Chair of the organization’s newly established Equity, Diversity and Inclusion (ED&I) Committee.

Chair-Elect Fish will succeed current Roundtable Chair Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc.) whose term expires July 1, 2021.  “The Board of Directors of The Real Estate Roundtable is excited to announce John Fish as our Chair-Elect and Jodie McLean as our Secretary,” said Cafaro.  “John has been an active Board member and has played a key role in developing our policy agenda.  He is active on a bipartisan basis with policymakers, and his experiences and accomplishments across business, government and philanthropy give John a broad perspective that will benefit the Roundtable and our members.  John’s emphasis on labor force issues, infrastructure, and the need to level the educational and economic opportunities for all Americans are particularly relevant as The Roundtable develops and advocates fact-based policies that create jobs and inclusive economic growth,” Cafaro added.

Mr. Fish stated, “I am honored to have the opportunity to serve as Roundtable Chair-Elect, work with the talented team and follow Debra Cafaro’s impressive record of policy accomplishments in Washington.  I have seen the effectiveness of the organization in advocating shared industry concerns to lawmakers and regulators, and strongly believe it is essential for The Real Estate Roundtable to continue its engagement at all levels of policy-making as the nation comes together to address new economic, societal and health challenges.” 

About Fish and McLean

Mr. Fish is the Chairman and CEO of Suffolk, which is a national real estate and construction enterprise that invests, innovates and builds, providing value throughout the entire building lifecycle. Suffolk is one of the largest builders and privately held companies in the country, with main offices in the Northeast, New York, Florida, Texas and California. The company services clients in the aviation/transportation, science and technology, mission critical, commercial, education, healthcare, gaming and government sectors.  Mr. Fish is a former Chair of the Federal Reserve Board of Boston, current Chair of Brigham and Women’s Hospital and member of the Mass General Brigham’s Executive Committee, and is serving his second term as Chairman of the Board of Trustees at Boston College. 

Jodie W. McLean is Chief Executive Officer of EDENS, one of the nation’s leading private owners, operators and developers of retail real estate.  She is responsible for EDENS’ strategy to move the portfolio to major urban centers, creating a portfolio of assets that are the center of community life.  Ms. McLean currently serves on the Board of Directors of the Federal Reserve Bank of Richmond.  She also serves on the boards of Cushman & Wakefield and Extended Stay America, as well as boards of several other institutions and charities. 

Equity, Diversity and Inclusion Commitment of RER

On his appointment as the Chair of the Real Estate Roundtable’s newly created Equity, Diversity and Inclusion Committee, Mr. Blau said, “As leaders, it is our obligation to enact fundamental change. I am honored to chair the ED&I committee and am eager to listen and be guided by diverse voices and perspectives as we work together to promote an industry that is reflective of the society we live in.” 

Roundtable Present and CEO, Jeffrey D. DeBoer commented, “I am delighted with these Board leadership decisions and, in particular, I look forward to implementing recommendations from our ED&I Committee that will help advance equal economic opportunities for all.” 

The Real Estate Roundtable brings together leaders of the nation’s top publicly-held and privately-owned real estate ownership, development, lending and management firms with the leaders of major national real estate trade associations to jointly address key national policy issues relating to real estate and and its important role in the global economy.  The Roundtable’s policy agenda, annual report and policy digest are available on The Roundtable website.

The Roundtable’s membership represents nearly 3 million people working in real estate; approximately 12 billion square feet of office, retail and industrial space; more than 2 million apartments and nearly 3 million hotel rooms.  The collective value of assets held by Roundtable members is estimated at $3 trillion.  

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Roundtable Board of Directors Approves RER Leadership; Establishes Equity, Diversity and Inclusion Committee

Posted on by Trey Jackson

Deb Cafaro and John Fish remote RER meeting

The Real Estate Roundtable’s 24-member Board of Directors has approved John F. Fish (CEO & Chairman, Suffolk), above right, as the organization’s Chair-Elect, to begin his term as Chairman of the Roundtable in mid-2021.  The Board also approved, effective immediately, Jodie W. McLean (CEO, Edens) as its Secretary and Jeff T. Blau (CEO, Related Companies) as the Chair of the organization’s newly established Equity, Diversity and Inclusion (ED&I) Committee.

  • Chair-Elect Fish will succeed current Roundtable Chair Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc.), above left, whose term expires July 1, 2021.  “The Board of Directors of The Real Estate Roundtable is excited to announce John Fish as our Chair-Elect and Jodie McLean as our Secretary,” said Cafaro.  “John has been an active Board member and has played a key role in developing our policy agenda.  He is active on a bipartisan basis with policymakers, and his experiences and accomplishments across business, government and philanthropy give John a broad perspective that will benefit the Roundtable and our members.  John’s emphasis on labor force issues, infrastructure, and the need to level the educational and economic opportunities for all Americans are particularly relevant as The Roundtable develops and advocates fact-based policies that create jobs and inclusive economic growth,” Cafaro added.
  • Mr. Fish stated, “I am honored to have the opportunity to serve as Roundtable Chair-Elect, work with the talented team and follow Debra Cafaro’s impressive record of policy accomplishments in Washington.  I have seen the effectiveness of the organization in advocating shared industry concerns to lawmakers and regulators, and strongly believe it is essential for The Real Estate Roundtable to continue its engagement at all levels of policy-making as the nation comes together to address new economic, societal and health challenges.”  (Roundtable news release, Sept. 30 and Roundtable video)About Fish and McLean

    EDENS CEO Jodie McLean

  • Mr. Fish is the Chairman and CEO of Suffolk, which is a national real estate and construction enterprise that invests, innovates and builds, providing value throughout the entire building lifecycle. Suffolk is one of the largest builders and privately held companies in the country, with main offices in the Northeast, New York, Florida, Texas and California. The company services clients in the aviation/transportation, science and technology, mission critical, commercial, education, healthcare, gaming and government sectors.  Mr. Fish is a former Chair of the Federal Reserve Board of Boston, current Chair of Brigham and Women’s Hospital and member of the Mass General Brigham’s Executive Committee, and is serving his second term as Chairman of the Board of Trustees at Boston College. 
  • Jodie W. McLean, above, is Chief Executive Officer of EDENS, one of the nation’s leading private owners, operators and developers of retail real estate.  She is responsible for EDENS’ strategy to move the portfolio to major urban centers, creating a portfolio of assets that are the center of community life.  Ms. McLean currently serves on the Board of Directors of the Federal Reserve Bank of Richmond.  She also serves on the boards of Cushman & Wakefield and Extended Stay America, as well as boards of several other institutions and charities. Equity, Diversity and Inclusion Commitment of RER

    Debra Cafaro, Ventas and Jeff Blau, Related

  • On his appointment as the Chair of the Real Estate Roundtable’s newly created Equity, Diversity and Inclusion Committee, Mr. Blau, above right,  said, “As leaders, it is our obligation to enact fundamental change. I am honored to chair the ED&I committee and am eager to listen and be guided by diverse voices and perspectives as we work together to promote an industry that is reflective of the society we live in.” 

Roundtable Present and CEO, Jeffrey D. DeBoer commented, “I am delighted with these Board leadership decisions and, in particular, I look forward to implementing recommendations from our ED&I Committee that will help advance equal economic opportunities for all.”  (Roundtable news release, Sept. 30) 

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Powell and Mnuchin Urge More Congressional Pandemic Fiscal Relief; Fed Releases FAQs on Main Street Lending Program; Democrats Considering New COVID-19 Package

Posted on by Trey Jackson

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jay Powell

Federal Reserve Chairman Jay Powell (right) and Treasury Secretary Steven Mnuchin (left) testified before House and Senate committees this week to discuss the government’s pandemic response.  Powell offered no option for administrative changes to the Main Street Lending Program (MSLP) credit lending facility while Mnuchin strongly urged Congress to repurpose unused COVID-19 relief funds in another legislative pandemic aid package.  (BGov, Sept. 23 and Reuters, Sept. 24)

  • Recommendations to improve access to the MSLP were a focus of recent testimony by Roundtable President and CEO’s Jeffrey DeBoer on behalf of the industry before the Senate Banking Committee.  (Roundtable Weekly, Sept. 11)
  • Powell responded about the MSLP that the Fed has done “… basically all of the things we can think of that are clear gains (but) we are looking to do more.”  He added, “… but I would say the things that we have done have been really to widen the appeal of that program and its effectiveness … there is nothing major that we see now that would be consistent with opening it up…”  (BGov and CQ Committee transcript, Sept. 23)

Fed Updates MSLP FAQs

Federal Reserve Building DC

The Fed on Sept. 18 issued new guidance to banks for the MSLP in an attempt to encourage increased lending.  The central bank’s revised “Frequently Asked Questions” for the MSLP emphasize that lender underwriting should look back to the borrower’s pre-pandemic condition and forward to their post-pandemic prospects. The FAQs also seek to clarify the Board and Department of Treasury’s expectations regarding lender underwriting.  (Fed news release)

  • In a news conference announcing the FAQs, Powell said, “I would say it may be that further support for commercial real estate will require further action for Congress – from Congress.”

     

  • During his three committee appearances this week, Powell consistently emphasized that more fiscal relief is needed from Congress to sustain an economic recovery from the pandemic.  Mnuchin struck a similar theme in his two committee appearances while urging Congress to pass a new package that would reuse unused funds from previous COVID-19 relief authorizations for urgent needs.

     

  • Mnuchin told the Senate Banking Committee this week that up to $380 billion could be repurposed.  “It would not cost an extra penny,” Mnuchin said.  (Reuters, Sept 24)

     

  • During the Sept. 24 hearing, Senate Banking Committee Chairman Mike Crapo (R-ID) in his opening statement referred to the committee’s earlier hearing on Sept. 9 on “The Status of the Federal Reserve Emergency Lending Facilities.”

    Real Estate Roundtable President and CEO Jeffrey DeBoer

  • Chairman Crapo said, “Jeff DeBoer (above) President  and CEO of the Real Estate Roundtable painted a bleak picture of the condition of the commercial real estate market. He said, ‘It is impacting their ability to meet their debt service obligations which increases pressure on financial institutions, pension fund investors and others.’  And he said, ‘It is pushing property values down to the detriment of local governments. It is causing much stress to pools for commercial mortgage backed securities and it is threatening to result in countless commercial property foreclosures. The situation must be addressed.’”  (Crapo’s Opening Statement, Sept. 24 and DeBoer’s testimony and Q&A, Sept. 9)
  • Crapo added, “Negotiating toward a realistic package that can actually get passed and signed into law would best serve the American people during this difficult time.”

     

  • Mnuchin told the Senate Committee that he and House Speaker Nancy Pelosi (D-CA) have “agreed to continue to have discussions.” (Wall Street Journal, Sept. 24)

Democrats Considering New Aid Proposal

House Speaker Nancy Pelosi (D-CA)

Pelosi has directed her committee chairs this week to assemble a scaled back coronavirus relief package of approximately $2.4 trillion that could be used for as a basis for potential discussions with the White House and Senate Republicans. (Politico, BGov, and The Hill, Sept 24)

  • Negotiations over a COVID-19 relief bill between Democrats and Republicans broke down in August over a nearly $1 trillion gulf between their proposals. 
  • The House passed a $3.4 trillion package in May (H.R. 6800), which is more than the $1.5 trillion President Trump indicated he would support and much larger than a $650 billion package supported by Senate Republicans.
  • House Democrats could vote on a new plan next week, which would appease lawmakers from battleground election states anxious to pass a pandemic aid package before adjourning to campaign – despite chances that a Democrat-only plan is unlikely to attract Republican support.

Speaker Pelosi said last week that the House would remain in session until an agreement is reached, and House Majority Leader Steny Hoyer (D-MD) clarified that Representatives would be on call to return to the Capitol on short notice in the event a deal is reached. (BGov, Sept. 15)

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Representative Steve Stivers Anticipates a Pandemic Risk Insurance Bill by Early 2021

Posted on by Trey Jackson

Rep. Steve Stivers (R-OH) interview - image

Rep. Steve Stivers (R-OH) discussed prospects for developing and enacting a federal pandemic risk-business continuity insurance program in an interview with Roundtable President and CEO Jeffrey DeBoer during the organization’s Fall Meeting this week.  (Video of the interview)

  • Rep. Stivers is the Ranking Member on the House Committee on Financial Services’ Subcommittee on Housing, Community Development and Insurance and played a key role in last year’s seven-year extension of the Terrorism Risk Insurance Act (TRIA).
  • DeBoer noted that the COVID-19 crisis has highlighted the lack of insurance availability for business continuity coverage for catastrophic pandemic events. Most business interruption insurance policies are denying pandemic risk-related claims, raising urgent concerns among policyholders – including owners of real estate, the event industry and professional sporting leagues.
  • Rep. Stivers emphasized the problem is growing worse and stated, “We’ve seen business interruption insurance not being willing to cover any pandemics.  I think you’re going to start to see lenders … requiring some type of pandemic coverage in their loan covenants in the coming years.”
  • While a number of legislative proposals have been introduced – including the Pandemic Risk Insurance Act of 2020 (H.R. 6983) – many are based on TRIA, which presents stark differences compared to pandemic risk.  Rep. Stivers notes in the interview how the scale and size of a terrorism attack and a pandemic are fundamentally different.  He also notes how a mandatory make-available clause that is part of the TRIA legislation is not currently part of a pandemic risk insurance bill.

Rep Steve Stivers remote interview with RER

  • Rep. Stivers (above) also said he expects a modified legislative approach to H.R. 6983 may be successful: “I believe in the first six months of next year we should have something (legislation) out of the House and pending in the Senate with the Senate starting to take action.”
  • Both DeBoer and Stivers agreed that a federal business continuity insurance program should be put into place before there is a recurrence of pandemic or government-ordered shutdown in response to a different natural catastrophe.
  • The Roundtable is working with industry partners such as Nareit and other stakeholders through the newly formed Business Continuity Coalition (BCC) to develop with policymakers an effective federal insurance program that provides the economy with the coverage it needs to provide business continuity coverage in the face of pandemic risk.  .  (Video of DeBoer’s discussion with Rep. Stivers)
  • DeBoer also asked the Congressman, as a member of the House Financial Services Committee, about the prospects for a pandemic relief bill.  Rep. Stivers responded, “I believe there will be a pandemic relief bill in the lame-duck session. The most important things to me are number one, liability protection for businesses that open.  Number 2 – some help for our state and local governments that have seen a hit in their revenues.  I’d like to see us add money for infrastructure … and for people who continue to struggle.”
  • He continued, “Instead of (increasing) unemployment insurance … I would rather see us do a temporary rental assistance program and I think it should apply to commercial as well as residential.  There’s already an eviction moratorium, but if you can’t evict somebody but you don’t get help for your rent, then you’re picking tenants over landlords and I’d like to see us fix that problem and do a temporary rental assistance program.”

Pressure for policymakers to act on another round of pandemic aid is growing since negotiations between Democrats and Republicans stalled in August.  (See story below on Coronavirus Response)

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House Approves Government Funding Until Dec. 11 and Passes Comprehensive Energy Package

Posted on by Trey Jackson

Capitol Building Dusk

The House of Representatives on Tuesday night passed a bipartisan Continuing Resolution (CR) by a vote of 359-57 to extend federal government funding through December 11 and avoid a government shutdown at the end of the month.  (Text of H.R. 8337 and Section-by-section summary of the legislation)

  • The CR includes short-term funding extensions (with no policy changes) for surface transportation funding, the National Flood Insurance Program, and the EB-5 Regional Center Program.
  • The Senate is expected to pass the CR next week and send it to President Trump for his signature before FY’2021 starts on October 1, 2020. 

Energy Package Passes

skyline-chicago-night-x475w

  • The House yesterday also passed a comprehensive energy package (H.R.4447) that includes sections on building energy codes, federal energy data regarding commercial buildings, and grant programs for underserved communities and green infrastructure.  The measure passed with mostly Democratic support by a 220-185 vote.  (CQ, Sept. 24)
  • One of the major goals of the legislative package is to reduce carbon dioxide emissions by 80% by 2050. (BGov, Sept. 16)
  • The Clean Economy and Jobs Innovation Act includes a section – strongly supported by The Roundtable – that would require the U.S. Environmental Protection Agency (EPA) and the U.S. Energy Information Administration (EIA) to report to Congress through a “coordination agreement” regarding each agency’s separate collection of data regarding commercial building energy consumption.
  • The House bill also includes Roundtable-backed provisions that would bring greater transparency to how the U.S. Department of Energy provides federal recommendations to develop building energy codes, which state and local governments may ultimately adopt through a long-established process. (Roundtable Weekly, June 19, 2019)

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  • The White House on Sept. 21 stated its opposition to H.R. 4447.  Among the reasons for its veto threat, the Administration believes that the bill sets “rigid targets” on Federal buildings to reduce water and energy consumption, and is concerned that State and local governments might establish building codes “not grounded in available technologies.”
  • In the Senate, Energy Committee Chair Lisa Murkowski (R-AL) hopes to reintroduce bipartisan energy legislation (S. 2657) next week.  Sen. Joe Manchin (D-WV), the Senate Energy Committee’s ranking member and co-sponsor of S. 2657, said they are working through issues to overcome an impasse on the building energy codes section. (BGov, Sept. 24)

If the Senate passes its bill, a “conference” would be convened – perhaps during the Lame Duck Congressional session after Election Day – for House and Senate committee leaders to reconcile any differences between their respective packages.

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