Author: Trey Jackson

The Real Estate Roundtable Elects New Board and Committee Leadership for FY2017

Posted on by Trey Jackson

(WASHINGTON, D.C.) — At The Real Estate Roundtable’s Annual Meeting on June 14-15, members approved the organization’s leadership for their fiscal year beginning July 1, 2016. 

William C. Rudin (Rudin Management Company, Inc.) was elected to his second year as the organization’s chairman. Joining him on the Board of Directors, as of July 1, are: 

  • Brian Harnetiaux, Senior Vice President of Asset Management, McCarthy Cook & Co.
    Chair and Chief Elected Officer, Building Owners & Managers Association (BOMA) International
  • Elizabeth I. Holland, CEO/General Counsel, Abbell Associates
    Chairman, International Council of Shopping Centers
  • Jodie W. McLean, CEO, EDENS
  • Stephen P. Weisz, President and CEO, Marriot Vacations Worldwide Corporation
    Chairman of the Board, American Resort Development Association.

Stepping down from the Roundtable board are:  

  • Stephen D. Lebovitz, President and CEO, CBL & Associates Properties, Inc.
    Immediate Past Chairman, International Council of Shopping Centers
  • George M. Marcus, Chairman, Marcus & Millichap Company.

The full board list and committee leadership for FY 2017 can be found online at www.rer.org. 

For FY 2017, The Roundtable has added a Membership Committee to continue its efforts to maintain a balanced and diverse membership, co-chaired by Jeffrey B. Citrin (Managing Principal, Square Mile Capital Management LLC), and Anthony J. LoPinto (Global Sector Leader, Real Estate, Korn Ferry).

The Sustainability Policy Advisory Committee (SPAC) will continue to be led by Anthony E. Malkin (Chairman & CEO, Empire State Realty Trust), and Joyce S. Mihalik (Vice President, Design Services, Forest City Realty Trust) will serve as the new vice chair. 

The Real Estate Capital Policy Advisory Committee (RECPAC) will be co-chaired by Dennis Lopez (Global Chief  Investment Officer, AXA Real Estate Investment Managers), Mark Myers (Executive Vice President, Wells Fargo), and Diana Reid (Executive Vice President, PNC Bank) will serve as vice chair. 

The Research Committee will be chaired by Michael Bilerman (Managing Director, Citi Investment Research).

As for the Tax Policy Advisory Committee (TPAC), Frank G. Creamer, Jr. (Senior Advisor, Trimont Real Estate Advisors) will remain chair, and Jeffrey S. Clark (Senior Vice President, Global Tax and JV Accounting, Host Hotels & Resorts Inc.) will serve as vice chair. 

The Homeland Security Task Force (HSTF) leadership remains the same, with co-chairs Joseph Billy Jr. (Vice President/Global Security, Prudential), and J. Christopher Woiwode (Vice President, Security, Macerich). 

Roundtable Chairman William C. Rudin acknowledged the contributions of outgoing board members and our policy advisory committee leaders. “Thanks to the dedication, knowledge, and the leadership of our outgoing board and committee leaders, The Roundtable this past year made tremendous strides in all areas of our policy issues; the 6–year extension of the Terrorism Risk Insurance Act (TRIA), congressional authorization for the voluntary “Tenant Star” program, significant reforms of the Foreign Investment in Real Property Tax Act (FIRPTA), critical improvements to legislation affecting how large and small partnerships are audited for tax purposes, and efforts to reinvigorated the debate over how to authorize the collection of taxes owed for online purchases and goods.”

“We look forward to the new leadership’s valuable insights, along with years of industry experience, as we continue to work with our 17 national trade association partners to jointly address key national policy issues relating to real estate and the overall economy.” added Rudin. 

“The Roundtable had a terrific year, raising the industry profile in positive and substantive ways, and adding value to policy issue discussion throughout Washington. The industry leaders on our board of directors took our well-informed, fact-based organization to a new level of thoughtful analysis of policy proposals. Throughout the year we quickly responded to policy challenges and we proactively advanced our perspective on important issues,” said Roundtable President and CEO, Jeffrey D. DeBoer.

 

Real Estate Roundtable Commits Cooperation on Productive Policy Agenda with President-Elect Trump and New Congress

Posted on by Trey Jackson
(WASHINGTON, D.C.) — Real Estate Roundtable CEO and President Jeffrey D. DeBoer today committed to
working on a positive policy agenda with President-Elect Trump and the 115th Congress on compelling issues

affecting the nation’s economy, job creation and the health of commercial real estate markets.

“We look forward to working with President-Elect Trump and the 115th Congress to positively boost job creation, expand the economy, and address the many important national policy issues relating to real estate and the national economy.

Strong real estate markets provide millions of American jobs, improve the well being of our local communities, support the interests of national security and defense, and help sustain the nation’s critical infrastructure in our towns, cities, and states. 

The strength of real estate, and the benefits the industry provides to all Americans, depends on fair, consistent, and forward-looking policy at all levels of government. Real estate public policies are non partisan. They should be based on objective economic principles, responsive to changing economic cycles and sensitive to societal demands. 

Tax and financial regulatory reform; infrastructure investment; immigration issues; energy policy; and, physical and cyber security each will present opportunities to advance the economy job creation and the stability of U.S. real estate markets. 

We are excited to offer our support, expertise and assistance to President-Elect Trump and to the new Congress. We are honored to contribute meaningfully to the strength and prosperity of our nation,” said DeBoer.

About The Real Estate Roundtable

The Real Estate Roundtable brings together leaders of the nation’s publicly-held and privately owned real
estate ownership, development, lending and management firms with the leaders of national real estate trade associations to jointly address key national policy issues relating to real estate and the overall economy. Collectively, Roundtable members’ portfolios contain over 12 billion square feet of office, retail and industrial properties valued at more than $1 trillion; over 1.5 million apartment units; and in excess of 2.5 million hotel rooms. Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.

The Real Estate Roundtable Calls On Congress to Reform and Reauthorize EB-5 Investment Program by Sept. 30

Posted on by Trey Jackson
(Washington, D.C.) – Real Estate Roundtable President and CEO Jeffrey DeBoer today said congressional reauthorization of EB-5 “regional centers” needs to pass before the investment program expires on Sept. 30, and that the reauthorization should include measures to improve the program’s transparency and accountability along the lines of reforms outlined in an August 12 report by the U.S. Government Accountability Office:
 
“The Real Estate Roundtable strongly supports the EB-5 program. It provides unique gap financing for large and small projects across the nation and creates American jobs at no cost to taxpayers.  Congress should extend EB-5 regional centers before they expire on September 30, 2015, and at the same time make needed reforms to improve the integrity, administration and transparency of the program.  
 
“The August 12 Government Accountability Office report provides a blueprint to rally Congress into action after Labor Day.  The report outlines reforms to improve the decades-old EB-5 program that will continue to meet the overriding objectives of job creation and economic growth. This GAO report responds to bipartisan congressional requests to review and comment on the program. The report focuses on measures to safeguard national security, deter evolving risks of investor fraud, and clarify accepted government methodologies to show job creation.  Its findings are commendable and pending bipartisan bills presently address these identified concerns. This report can now be the catalyst that points the way toward reform and multi-year reauthorization by Congress.
  
“An estimated 136,000 American jobs – and nearly $7 billion in foreign investment dollars – could be forfeited if Congress fails to act.  Since the early 1990s, these regional centers have directed capital to help finance development projects and have always been reauthorized by wide bipartisan margins.  From 2005-2013, EB-5 brought in a minimum of $5.2 billion in private investment to the U.S. – with a minimum of $1.6 billion in 2013 alone.  
    
“Smart government policies are critical to enable America to compete in the global marketplace to attract foreign investment dollars – and put Americans to work – in rebuilding infrastructure, modernizing buildings, and developing resilient 21st century communities where we live, work, and play.  Businesses, local economic development agencies, and other key stakeholders should not wait.  They should now urge their Senators and Representatives to act swiftly
 
 

Industry Coalition Promotes GSE Reform Principles; Senate Banking Committee Advances New FHFA Director

Posted on by Trey Jackson

The Real Estate Roundtable and 27 other industry organizations today submitted principles for reforming the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, which underpin the multi-trillion-dollar financial market for single-family and multifamily mortgages. (GSE Reform Coalition letter, March 1)

The Real Estate Roundtable and 27 other industry organizations today submitted principles for reforming the Government-Sponsored Enterprises (GSEs). 
  • “We believe that comprehensive legislative reform, including an end of conservatorship, is ultimately necessary in order to codify structural changes that ensure safety and soundness and provide the certainty needed for private capital to establish a more reliable presence in housing finance,” according to the comments.
  • The letter emphasized that compelling evidence must show the private market is capable of an expanded role before efforts are made to reduce the GSEs’ current housing finance footprint. “Ultimately, we believe any reform, be it administrative or legislative, must seek to further two key objectives: 1) preserving what works in the current system, while 2) maintaining stability by avoiding unintended adverse consequences for borrowers, lenders, investors, or taxpayers.”    
  • Fannie and Freddie recently announced they will pay a combined $4.7 billion in dividends to the U.S. Treasury Department.  The government took control of the two GSEs in September 2008 during the financial crisis.  (Reuters, Feb. 14)
  • The GSE coalition reform principles were sent to Acting Federal Housing Finance Agency (FHFA) Director Joseph Otting and Washington policymakers days after the Senate Banking Committee advanced the nomination of Mark Calabria as FHFA Director.  Calabria, currently chief economist to Vice President Mike Pence, would lead the agency that oversees the GSEs.  A vote to approve Calabria now moves to the full Senate, where it is expected to pass. (Housing Wire, Feb. 26 and Senate Banking Committee nomination hearing, Feb. 14) 
  • The coalition states in today’s letter that FHFA should establish policies that ensure a continuation or expansion of: 

    The  coalition states that FHFA should establish certain policies to support the continuation or expansion of a robust housing market.

     

    • A liquid national market with broad and fairly-priced access to affordable credit and improved infrastructure for the single-family secondary market;
    • Support for strong and sustained liquidity in the multifamily rental market;
    • Equal secondary market access and pricing for all lenders, regardless of size or volume; and
    • The sustainable transfer of appropriate credit risk to the private sector. 
  • The letter also advocates that principles governing any potential administrative reforms to the GSEs should be guided by the potential impact on borrowers, taxpayers, and market structure dynamics.  Any reform that would meaningfully alter the GSEs’ market presence-single-family, multifamily, or both-should also seek to maintain and enhance the stability and liquidity of the housing finance system.  (GSE Reform Coalition letter, March 1) 
  • Roundtable President and CEO Jeffrey DeBoer added, “Housing finance reform should support the GSE’s overall mission-ensure Americans across a broad range of income levels have access to a diverse supply of housing.” 

Senate Banking Committee Chairman Mike Crapo (R-ID) on Feb. 1 released an outline for reforming the nation’s housing finance system, including the GSEs. (Crapo Statement and Housing Reform Outline, Feb. 1 / Roundtable Weekly, Feb. 8)

Roundtable Asks Treasury to Clarify Real Estate Exception to New Limit on Business Interest Deductibility

Posted on by Trey Jackson

The Real Estate Roundtable on Tuesday wrote to the Treasury Department and IRS about the new limitation on business interest deductibility enacted in the Tax Cuts and Jobs Act of 2017 (TCJA).  The provision allows qualifying businesses to continue fully deducting interest related to commercial real estate debt.  (Roundtable comment letter, Feb. 26)

The Roundtable’s Feb. 26 letter on business interest deductibility.

  • Roundtable President & CEO Jeffrey DeBoer sent the  detailed comments as Treasury officials work to finalize proposed regulations implementing TCJA’s new section 163(j), which limits the deductibility of business interest to no more than 30% of modified, adjusted taxable income.  Section 163(j) includes a critical exception for real estate.
  • On December 28, 2018 Treasury published proposed regulations clarifying that partner-level debt may qualify for the real estate exception-if the debt is allocable to a partnership engaged in a real property trade or business (RPTOB). 
  • DeBoer notes in The Roundtable’s Feb. 26 letter, “In light of the clear legislative intent to enact a broad real estate exception and its importance to the health and stability of real estate markets, the final Treasury regulations should build on the proposed rules and not limit unnecessarily the ability of a real property trade or business (RPTOB) to elect out of the provisions of section 163(j).”
  • DeBoer adds, “No issue in tax reform is more important to the health and stability of U.S. commercial real estate than the new rules related to the taxation of business-related borrowing.  U.S. commercial real estate is leveraged conservatively with roughly $14 trillion of total property value and $4 trillion of debt.”

The letter includes detailed comments on several 163(j) implementation issues and makes the following recommendations:

The need to preserve the deduction for income-producing real estate was at the center of Jeffrey DeBoer’s testimony and exchanges with Senate Finance Committee members before final passage of the 2017 tax overhaul law. (Roundtable Statement for the Record, Sept. 19, 2017 and video clips). 

 

  • The real estate exception should extend through all “tiered” investment structures. 
  • The real estate exception should apply fully to non-rental activities. 
  • Treasury regulations should not “whipsaw” corporations/REITs through conflicting definitions of a “trade or business” that can effectively block their ability to use the real estate exception. 
  • Treasury regulations should modify the anti-abuse rule for related-party leases. 
  • The small business exception should not prevent otherwise eligible partners from qualifying for the real estate exception. 
  • Debt allocation rules should not undercount real estate assets for purposes of the real estate exception.
  • Treasury regulations should confirm that senior housing constitutes a real property trade or business.

The economic consequences of changes to the deductibility of business interest expense, and particularly the potential impact on real estate, was a central focus of lawmakers during consideration of the historic tax overhaul in 2017.  The need to preserve the deduction for income-producing real estate was at the center of DeBoer’s testimony and exchanges with Senate Finance Committee Chairman Orrin Hatch – and other members of the committee – during the last congressional hearing on business tax reform prior to votes on the TCJA.  (Roundtable Statement for the Record, Sept. 19, 2017 and video clips).  

Vice President Pence Promotes Opportunity Zones Program; Wall Street Investors Focus on Opportunity Funds

Posted on by Trey Jackson

Vice President Mike Pence and Sen. Tim Scott (R-SC) promoted the new Opportunity Zones (OZ) program in South Carolina yesterday as an example of how economically distressed areas can be redeveloped to benefit lower-income communities.  (WCBD video, Feb. 21)

Vice President Mike Pence and Sen. Tim Scott (R-SC), above, promoted the new Opportunity Zones (OZ) program in South Carolina yesterday as an example of how economically distressed areas can be redeveloped to benefit lower-income communities.  (WCBD video, Feb. 21). 
  • “The truth is, Opportunity Zones help address unique needs by forming partnerships between the federal government with regard to tax benefits, state and local leaders, and local investors to create that incentive that makes it even more possible for people to invest at the point of the need,” Pence said.  (Pence Remarks, Feb. 21)
  • Vice President Pence added, “As President Trump said just a few months ago, when he established what came to be known as the White House Opportunity and Revitalization Council – which is going to be coordinating efforts and identifying Opportunity Zones all across the country – as the President said, and I quote, ‘No citizen will be forgotten, no community will be ignored…no American will be left on the sidelines.’ “
  • Sen. Scott – who led the effort in Congress for enactment of the Opportunity Zones program – discussed OZ goals and incentives on Jan. 29 in a discussion with Roundtable member Geordy Johnson (CEO, Johnson Development Associates, Inc.) during The Roundtable’s State of the Industry Meeting (Roundtable Weekly, Feb. 15)
  • Wall Street’s interest in OZs was profiled this week in the New York Times, which reported more than 80 opportunity funds have been established since January 2018 – and that the program “has unleashed a flurry of investment activity by wealthy families, some of Wall Street’s biggest investors and other investors.”  (New York Times, Feb. 20)
  • The article also notes that “The National Council of State Housing Agencies, which is tracking opportunity-zone funds, found that money managers and nonprofits had so far sought to raise over $18 billion.” 

A recent IRS hearing focused on how OZ regulatory guidance may affect long-term investments in certain low-income communities. The Treasury Department is expected to release its second set of OZ regulations in the coming weeks.  Another public hearing will follow before rules for the program are finalized.  (Roundtable Weekly, Feb. 15)

Commercial Real Estate Executives Report Positive Q1 Market Conditions; Future Clouded By Uncertainty of Economy’s Historic 10-Year Expansion Cycle

Posted on by Trey Jackson

The Real Estate Roundtable’s 2019 Q1 Sentiment Index released today reveals confidence from commercial real estate industry executives that today’s fundamentally sound CRE markets will prove resilient when the decade-long expansion of the U.S. economy inevitably slows down. 

The Real Estate Roundtable’s 2019 Q1 Sentiment Index released today reveals confidence from commercial real estate industry executives that today’s fundamentally sound CRE markets will prove resilient when the decade-long expansion of the U.S. economy inevitably slows down.

  • The historically long economic expansion, stable interest rates and demand driven supply have sustained the current healthy real estate market conditions.  Unpredictability about the future longevity of the economic expansion tempers the forward looking industry outlook.  
  • “The unsettling year-end capital market turbulence caused a degree of early 2019 industry concern.  However, as the first quarter moved forward, the equity markets strengthened and positive job creation continued to fuel steady economic growth.  These conditions bolstered the already well-balanced commercial real estate markets in Q1,” said Roundtable CEO and President Jeffrey D. DeBoer.  “Looking ahead, our CRE executive survey reveals the timing of a natural economic cycle slowdown is concerning, but that is moderated by fundamentally sound commercial real estate markets,” DeBoer added.
  • The Roundtable’s Q1 2019 Sentiment Index registered at 45 – a five point drop from the previous quarter.  [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.]  This quarter’s Current-Conditions Index of 47 decreased six points from the previous quarter, while this quarter’s Future-Conditions Index of 42 came in at five points lower compared to Q4 2018.

DeBoer noted, “Over the last decade, the commercial real estate industry has not overbuilt or over-leveraged, resulting in disciplined markets that could act as a resilient buffer to any potential slowdown in the U.S. economy.  Our Q1 survey shows industry executives have concerns over unpredictable influences on the economy, such as the recent government shutdown and uncertain outcome of ongoing international trade talks.  Policymakers need to focus on bipartisan pro-growth policies designed to encourage further investment, spur job creation and propel the economy forward for all.” 

Economic Slowdown Forecasts  

St. Louis Fed President James Bullard told CNBC yesterday he expects the economy to slow to a 2.25% annual rate this year from 3% in 2018.  Bullard is a voting member of the Federal Reserve’s Federal Open Market Committee, which meets regularly to set the direction of U.S. monetary policy and interest rates. 

St. Louis Fed President James Bullard told CNBC yesterday he expects the economy to slow to a 2.25% annual rate this year from 3% in 2018.

  • “It does seem the economy is slowing down some – not terribly – but some. That’s not a terrible outcome. I don’t really think we’re in any trouble,” Bullard said.  (CNBC full interview, Feb. 21)
  • Additionally, Fannie Mae yesterday released its February Economic Outlook, which forecasts s GDP growth of 2.2% this year, down from 3.1% in 2018.  (Fannie Mae’s Economic & Strategic Research Group, Feb. 21)   
  • “We reduced first quarter growth expectation slightly, but our forecast for full-year 2019 growth remains unchanged” said Fannie Mae Chief Economist Doug Duncan. “The labor market is strong, unemployment is at a very low level historically, and wages are rising modestly, enticing workers to come off the sidelines. Uncertainty regarding terms of trade remains a downside risk, as does slowing global economic growth.”

Dr. Ken Rosen (Chairman, Rosen Consulting Group) led a discussion during The Roundtable’s Jan. 29 State of the Industry Meeting about recent Fed actions, stock market volatility and how signs of weakness in the Chinese economy may affect future U.S. growth.  (Roundtable Weekly, Feb. 1)

 

Commercial Real Estate Executives Report Positive Q1 Market Conditions

Posted on by Trey Jackson

Sentiment Future Clouded By Uncertainty of Economy’s Historic 10-Year
Expansion Cycle 

(WASHINGTON, D.C.) — The Real Estate Roundtable’s 2019 Q1 Sentiment Index released today reveals confidence from commercial real estate industry executives that today’s fundamentally sound CRE markets will prove resilient when the decade-long expansion of the U.S. economy inevitably slows down.  The historically long economic expansion, stable interest rates and demand driven supply have sustained the current healthy real estate market conditions.  Unpredictability about the future longevity of the economic expansion tempers the forward looking industry outlook.     

“The unsettling year-end capital market turbulence caused a degree of early 2019 industry concern.  However, as the first quarter moved forward, the equity markets strengthened and positive job creation continued to fuel steady economic growth.  These conditions bolstered the already well-balanced commercial real estate markets in Q1,” said Roundtable CEO and President Jeffrey D. DeBoer.  “Looking ahead, our CRE executive survey reveals the timing of a natural economic cycle slowdown is concerning, but that is moderated by fundamentally sound commercial real estate markets,” DeBoer added.

The Roundtable’s Q1 2019 Sentiment Index registered at 45 – a five point drop from the previous quarter.  [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.]  This quarter’s Current-Conditions Index of 47 decreased six points from the previous quarter, while this quarter’s Future-Conditions Index of 42 came in at five points lower compared to Q4 2018.

The report’s Topline Findings include:

  • CRE executives recognize that a historic decade of U.S. economic expansion has benefited today’s healthy commercial real estate markets.  Q1 survey respondents feel a cyclical slowdown for the U.S. economy could be on the horizon.  Respondents also note that a possible decrease in economic growth may not significantly adversely affect well-balanced, fundamentally-sound CRE markets. The Roundtable’s Q1 Economic Sentiment Index registered 45, a five-point drop from the previous quarter.  
  • Survey participants were quick to identify the economy’s current, strong fundamentals as a significant influence on healthy Q1 real estate market conditions.  Many respondents also suggest they have diversified their investment focus and are placing capital into less traditional real estate property types.
  • Respondents pointed to examples of increasing asset prices in certain markets and many suggested they view the pricing environment to be reaching, or in some cases, at peak. Multiple survey participants suggested some markets have plateaued.
  • Debt and equity remain plentiful for the best assets in the best markets, but is becoming challenging for secondary or tertiary market investments. Respondents also reported increased competition among lenders for business.

While 46% of survey participants reported Q1 asset values today are “about the same” compared to this time last year, 40% of respondents believe that one year from now, values will be “about the same.”  Many respondents noted asset values in some markets may have reached a plateau.

DeBoer noted, “Over the last decade, the commercial real estate industry has not overbuilt or over-leveraged, resulting in disciplined markets that could act as a resilient buffer to any potential slowdown in the U.S. economy.  Our Q1 survey shows industry executives have concerns over unpredictable influences on the economy, such as the recent government shutdown and uncertain outcome of ongoing international trade talks.  Policymakers need to focus on bipartisan pro-growth policies designed to encourage further investment, spur job creation and propel the economy forward for all.” 

Data for the Q1 survey was gathered in January by Chicago-based FPL Associates on The Roundtable’s behalf.  Full survey report.

 

 

 

IRS Holds Hearing on Opportunity Zones; Roundtable Working Group Meets With Treasury Officials on OZ Regulations

Posted on by Trey Jackson

An IRS hearing this week focused on how Opportunity Zone regulatory guidance may affect long-term investments in certain low-income communities.  The hearing, originally scheduled for Jan. 10, was rescheduled due to the government shutdown in December. 

An IRS hearing this week focused on how Opportunity Zone regulatory guidance may affect long-term investments in certain low-income communities.

  • Earlier in the week, a delegation from The Real Estate Roundtable’s Opportunity Zone Working Group met with Treasury officials to discuss proposed and forthcoming tax regulations.  The meeting addressed key areas where additional guidance could help ensure the Opportunity Zone tax incentives succeed in stimulating productive, job-creating real estate investment in the designated low-income communities. Among the issues discussed:
    • Determining what constitutes the original use of property for Opportunity Zone purposes, and in particular, whether a Qualified Opportunity Fund can purchase a newly constructed building before it is placed in service;
    • Clarifying how land is treated for purposes of the Opportunity Zone asset test, and how to account for leased property;
    • Facilitating contributions of real property to Opportunity Funds by current property owners
    • Ensuring that capital gain in multi-asset Opportunity Funds can qualify for the tax incentives;
    • Clarifying the tax consequences of refinancing and debt distribution transactions, particularly those that involve appreciated Opportunity Zone assets;
    • Encouraging capital formation and growth in Opportunity Zones through favorable gain reinvestment, roll-over, and holding period rules at the investor, fund and business level; and
    • Enhancing the 31-month working capital safe harbor through additional safeguards and relief for fund investors making a good faith effort to deploy their capital. 

Sen. Tim Scott (R-SC) led the effort in Congress for enactment of the Opportunity Zones program.

Similar issues were raised by 23 witnesses at the five-hour IRS hearing on Thursday.  (Bisnow, Feb. 14). 

  • A letter on Feb. 5 from Senators Chris Coons (D-DE) and Michael Bennet (D-CO) to Treasury Secretary Steven Mnuchin raised additional issues and expressed concerns regarding the potential for waste and abuse, including in the context of real estate investment. (Delaware Business Now, Feb. 6).
  • The Opportunity Zone program’s goals and incentives were the focus of a Jan. 29 discussion during The Roundtable’s State of the Industry Meeting, which  featured Sen. Tim Scott (R-SC) – who led the effort in Congress for enactment of the program – and Roundtable member Geordy Johnson (CEO, Johnson Development Associates, Inc.).
  • The Real Estate Roundtable provided formal comments on Dec. 19, 2018 that encouraged Treasury and the IRS to clarify certain tax issues for potential Opportunity Zone (OZ) investors and Qualified Opportunity Zone managers.  The letter was the second round of Roundtable comments following Treasury’s initial set of proposed OZ regulations issued last October. (Roundtable Weekly, Oct. 21, 2018 and  Dec. 19, 2018)

The highly-anticipated, second set of Treasury OZ regulations are expected in the coming weeks.  Another public hearing will follow before rules for the program are finalized.

 

Lawmakers Focus on Preventing Second Partial Government Shutdown; House Committees Prep for Action on Tax and Infrastructure Issues

Posted on by Trey Jackson

The federal government this week resumed full-time operations after a 35-day partial shutdown. A three-week bill signed by President Trump last Saturday now funds approximately 25% of the government – including the Department of Homeland Security (DHS), Treasury and the Internal Revenue Service (IRS) – until Feb. 15. If a new funding measure is not passed, the government will face another partial shutdown.

President Trump is scheduled to deliver the State of the Union to Congress on Tuesday, Feb. 5. 
(C-Span) 

  • The nonpartisan Congressional Budget Office released a report on Monday showing the partial shutdown reduced gross domestic product by $3 billion.  (Wall Street Journal, Jan. 28)
  • A House-Senate conference committee began negotiations Wednesday on a border security funding measure to resolve the same issue that caused the shutdown in December – a wall on the Mexican border.
  • President Trump yesterday said, “On Feb. 15th, the committee will come back and if they don’t have a wall, I don’t even want to waste my time reading what they have because it’s a waste of time.”  (Bloomberg, Jan. 31)
  • House Speaker Nancy Pelosi (D-CA) yesterday stated, “There’s not going to be any wall money in the legislation.  However, if they have some suggestions about certain localities where technology, some infrastructure [is appropriate] … that’s part of the negotiation.” 

      If a new funding measure is not passed by Feb. 15, the government will face another partial shutdown. 
  • The House Speaker added that House rules require the congressional conference committee to complete an agreement by Feb. 8 to pass it by Feb. 15.  “In order to have a bill signed by the president, we have to have a signed conference report by next Friday.  So we only have this week plus one day, with the State of the Union in between, to get this done,” Pelosi said.  (The Hill, Jan. 31)
  • President Trump is scheduled to deliver the State of the Union to Congress on Tuesday, Feb. 5, when he is expected to address his proposed increase in border security funding, including $5.7 billion for wall construction.  (Daily Caller, Jan. 30) 

House Committee Hearings on Tax, Infrastructure  

House Ways and Means Committee Chairman Richard Neal (D-MA) recently addressed his legislative priorities.

  • House and Senate tax-writing committees are preparing for action on their policy agendas in the 116th Congress.
  • House Ways and Means Committee Chairman Richard Neal (D-MA) addressed his priorities during a Jan. 24 organizational meeting.  Neal stated that in addition to retirement security and health care costs, “Another issue requiring our attention is America’s infrastructure. We must ensure our infrastructure systems are both safe and efficient  it’s essential for our global competitiveness.  We’ll also closely examine the Republicans’ tax law and its various problems.  So we’ll be conducting thorough oversight of this law – oversight that frankly is well overdue.  (Ways and Means, Neal Statement, Jan. 24.)
  • Rep. Mike Thompson (D-CA), chairman of the Ways and Means’ Subcommittee on Select Revenue Measures (formerly the tax policy subcommittee), said his panel’s first hearing will focus on infrastructure, although he has not set a date for the hearing.  Thompson added that the subcommittee will also review the 2017 tax code overhaul and how tax policies, such as a carbon tax or renewable energy tax breaks, impact climate change.  (CQ, Jan. 31)

Senate Finance Committee Chairman Charles Grassley this week said that retroactive renewal of more than 20 tax deductions that expired at the end of 2017 should be tied to a spending measure to keep the government fully funded beyond Feb. 15.  “The only vehicle that I see in the next few weeks is what comes out of this closing-down conference,” Grassley said,. “And if we don’t have something ready to go when that’s done, have a compromise on extenders … then it’s going to be a long time before we get another opportunity.”  (CQ, Jan. 31)