Author: Trey Jackson

Congressional Tax Writers Focus on Policies to Increase Supply of Affordable Housing

Posted on by Trey Jackson

NMHC President testifying on Affordable HousingLegislation aimed at increasing the nation’s supply of affordable housing was introduced by Senate and House tax writers this week while the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) offered joint testimony before a March 7 Senate Finance Committee hearing on “Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families.” (NMHC President Sharon Wilson Géno, above and MarketWatch, March 9)

Solutions to Meet the Need 

  • A new report from real estate brokerage Redfin shows that the number of affordable home listings fell 53% from last year—the largest annual drop in Redfin’s records, which date back to 2013. (The Hill and Redfin news release, March 3)
  • The National Low Income Housing Coalition estimates there is a shortage of 7 million affordable and available rental homes in the United States, while a Rosen Consulting Group study reports the underbuilding gap is 5.5 million units.
  • This week’s Senate hearing displayed bipartisan policymaker consensus on the need to increase the supply of affordable housing by expanding the Low-Income Housing Tax Credit (LIHTC) and other tax incentives. (TaxNotes, March 8 and Congressional Research Service, “An Introduction to the Low-Income Housing Tax Credit”)
  • During the hearing, NMHC President Sharon Wilson Géno offered joint testimony that included recommendations to address the affordable housing crisis, including tax policy, regulatory reform, rental assistance, and development incentives. (NHMC News | Video of Géno’s remarks and Written testimony, March 7) 

Senate Bills Senate Finance Committee Chairman Ron Wyden (D-OR)

  • Senate Finance Committee Chairman Ron Wyden (D-OR), above, noted his support for the Affordable Housing Credit Improvement Act (AHCI), the Neighborhood Homes Investment Act, and the reintroduction of the Decent, Affordable, Safe Housing for All (DASH) Act in his opening comments. 
  • Wyden’s DASH Act would strengthen the LIHTC and offer a new Middle-Income Housing Tax Credit (MIHTC) that would provide a tax credit to developers who house tenants between 60 and 100% of the area’s median income. (DASH Act Text | Bill Summary | Section-by-section)
  • The AHCI would expand the pool of tax credits allocated to states for new affordable housing, make it easier to combine LIHTC with other sources of capital like private activity bonds, and facilitate LIHTC rehab projects.
  • Wyden added in his opening comments, “Members of Congress also need to keep pushing state and local authorities to cut back on the thicket of zoning rules that get in the way of building the housing Americans need.”
  • The Roundtable has supported these Senate bills since they were introduced last year. Real Estate Roundtable President and CEO Jeffrey DeBoer previously stated, “Overly restrictive land-use and zoning policies, construction cost increases, and labor shortages are deepening our housing challenges, which now extend across the entire country. Government at all levels needs to be part of the solution, not part of the problem.” (Roundtable Weekly, July 22, 2022) 

House Action Capitol bright sky

  • Reintroduction of similar LIHTC legislation in the House is expected by Reps. Suzan DelBene (D-WA) and Brian Higgins (D-NY). (BGov, March 2)
  • Additionally, House Ways and Means Tax Subcommittee Chair Mike Kelly (R-PA) and committee member Jimmy Panetta (D-CA) on March 1 reintroduced the More Homes on the Market Act, which would double the capital gains exclusion for home sellers to $500,000 for single individuals and $1 million for married couples. (TaxNotes, March 8) 

Despite widespread congressional support for certain affordable housing legislation, prospects for the bills are uncertain until the national debt ceiling issue is addressed—and a tax legislative package is identified that could include such measures. 

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SEC Chair Indicates Possible Scale-Back of “Scope 3” Emissions Reporting

Posted on by Trey Jackson

SEC Chair Gary GenslerU.S. Securities and Exchange Commission (SEC) Chair Gary Gensler commented on March 6 that the agency’s forthcoming rule on climate reporting may be scaled-back, including its proposal for sweeping disclosures on Scope 3 GHG emissions, according to CNBC.

Scope 3 Proposal 

  • Scope 3 refers to indirect emissions that are part of an organization’s value chain but not owned or controlled by the reporting company. The 2022 SEC proposal would require corporate issuers of securities to estimate and report Scope 3 emissions “if material” in 10-Ks and other filings. (SEC News Release, March 22, 2022)

  • Roundtable comments submitted last June called the SEC’s proposed treatment of Scope 3 disclosures a “back-door mandate” and urged the agency to drop it. (Roundtable Weekly, June 10, 2022)

  • The SEC’s final rulemaking process is ongoing. Gensler acknowledged that the agency received a record 15,000 public comments and “adjustments” to the proposed rule were likely. (Bloomberg Law, March 6; CNBC, Feb 10)

  • Some stakeholders have signaled potential litigation by questioning whether the SEC has “clear” legal authority to regulate climate matters in light of recent Supreme Court precedent. (SCOTUSblog, June 30, 2022 | Pensions & Investments, March 7, 2023)

  • Gensler told POLITICO this week that any final climate rule must be “durable” and “sustainable.” “It doesn’t protect investors … if we have a rule overturned in court,” he said.

Congress Weighs In 

U.S. Capitol
  • The SEC’s climate rule is the focus of dueling letters by members of Congress. Democrats wrote in a March 5 letter that the agency should not “soften” or “scale back” proposed climate discloures. Reports that the SEC might “curtail” Scope 3 reporting, among other matters, are “deeply concerning,” the Democrats wrote.

  • Republicans wrote to Gensler on Feb 22, stating the proposed rule exceeds the Commission’s authority. The GOP letter states, “Congress created the SEC to carry out the mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation—not to advance progressive climate policies.”

A final rule is anticipated from the SEC this spring. The Roundtable’s Sustainability Policy Advisory Committee (SPAC) will continue to track any developments on the agency’s proposed rule and other climate-related regulatory proposals affecting CRE.

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President Biden’s FY2024 Budget Aims to Raise Taxes on Real Estate, Capital Formation, and Investment

Posted on by Trey Jackson

FY2023 Budget Cover

The Biden administration yesterday proposed a $6.9 trillion FY2024 budget that includes $3 trillion in deficit reduction and $2.2 trillion in tax increases over the next decade on corporations, high-earning households, and certain business activities, including real estate investment. (White House budget materials and Treasury Department news release)

Blueprint for Negotiations

  • Real Estate Roundtable President and CEO Jeffrey DeBoer said, “Congress has rejected several of these same tax proposals in the past. In particular, Congress has said no to proposals to double the capital gains rate, tax gains reinvested in property of a like-kind, or taxing unrealized gains. We will strongly urge that these counter-productive proposals again be rejected. They have weak policy support, are poorly timed and quite risky given the current uncertain economy.”
  •  Of note for real estate:
    • Capital Gains Rate
      The top, combined tax rate on long-term capital gains would nearly double from 23.8% (20% + 3.8% net investment income tax) to 44.6%. This results from increasing the maximum capital gains rate from 20% to 39.6% and a new proposal to increase the net investment income tax from 3.8% to 5%.
    • Mark-to-Market Tax on Unrealized Capital Gains
      The FY 2024 budget carries over President Biden’s proposal from last year, imposing a retroactive, annual minimum tax of 25% on the income and unrealized gains of taxpayers with wealth (assets minus liabilities) exceeding $100M.
    • Real Estate Professionals
      The budget also carries over a proposal to extend the 3.8% net investment income tax to real estate professionals and other pass-through business owners who are currently exempt from the tax because they are active in their business.

Tax ProposalsChicago cityscape sky view

  • Other real estate-related tax proposals include:
    • Taxing carried interest as ordinary income
    • Limiting the deferral of gain from like-kind exchanges
    • Increasing the top tax rate on ordinary income to $39.6%
    • Ending step-up in basis and taxing unrealized capital gains at death
    • Expanding the limitation on excess business losses for non-corporate taxpayers by converting the limitation from a 1-year deferral to a permanent compartmentalization of active pass-through losses
    • Modifying tax rules for grantor retained annuity trusts (GRATs) and grantor trusts
    • Recapturing and taxing real estate depreciation deductions at ordinary income tax rates
  • The budget also devotes $59 billion to provisions aimed at increasing the supply and availability of affordable housing, as well as $10 billion “to incentivize State, local, and regional jurisdictions to make progress in removing barriers to affordable housing developments, such as restrictive zoning.” Tax incentives in the budget include an expansion of the low-income housing tax credit (LIHTC) and a new tax credit for the development of affordable, owner-occupied housing.

These tax issues and other policies affecting CRE will be discussed during The Roundtable’s Spring Meeting on April 24-25 in Washington.

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Impact of Remote Work Increases Pressure on Office Sector, Cities

Posted on by Trey Jackson

Kastle Workplace Occupancy series

The number of office assets facing loan defaults or entering special servicing is growing in major markets as remote work and rising interest rates continue to exert pressures on metropolitan areas and city budgets, according to reports this week in Commercial Observer and Bloomberg.

Workplace Occupancy

  • Workplace occupancy rates are measured in a weekly “Back to Work Barometer” series, above, by building security provider Kastle Systems, whose March 6 report showed a 10-city average occupancy rate of 50.1%. (Bloomberg, March 9)
  • Kastle also reported that the Washington, DC metro area’s workplace occupancy rate registered 46.6%. Remote work’s influence on the DC tax base, reduced office transactions, and dropping asset values are projected to decrease the city’s tax revenue by nearly a half-billion dollars from 2024-2026. (Roundtable Weekly, March 4)

Congressional Hearings

Senate Banking Committee hearing with Fed Chairman Jay Powell

  • During a March 7 Senate Banking Committee hearing, Fed Chairman Jay Powell addressed a question from Sen. Mark Warner (D-VA) about low office occupancy rates in many major cities. Powell said the issue is “an area that requires a lot of monitoring,” noting that some smaller banks may have more significant exposure to CRE than large banks. “I’d say we’re on the case,” he added. (CQ News, March 7 and CQ hearing transcript)
  • The issue of converting commercial buildings into affordable housing and mixed-use properties was also addressed during a Senate Finance Committee hearing this week by Sen. Debbie Stabenow (D-MI), who co-sponsored the Revitalizing Downtowns Act to encourage conversions. Hearing witness Sharon Wilson Géno—president of the National Multifamily Housing Council (NMHC)—noted a recent joint NMHC and Urban Land Institute study on adapting CRE to residential use.

The Real Estate Roundtable wrote to President Joe Biden last December about the need for federal employees to return to their workplaces—and encouraged the administration to support legislation that could incentivize conversion of underutilized buildings to more productive use such as housing. These two requests are included in the House-approved Stopping Home Office Work’s Unproductive Problems (SHOW UP) Act (H.R. 139). (Roundtable Weekly, Feb. 3 | GlobeSt and CoStar, Dec. 15, 2022)

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Roundtable Comments on EPA’s Proposed Voluntary Label for Low-Carbon Buildings

Posted on by Trey Jackson

EPA NextGen logo

The Real Estate Roundtable submitted comments to the U.S. Environmental Protection Agency (EPA) yesterday on the agency’s proposed voluntary label for low-carbon buildings. (Roundtable letter, March 2)

Voluntary Building Label

  • EPA’s NextGen building label would expand upon the agency’s successful ENERGY STAR program for assets that attain high levels of energy efficiency.
  • The NextGen label would allow companies to highlight buildings that go beyond top efficiency performance—and further rely on renewable energy use and reduce their greenhouse gas (GHG) emissions. (EPA’s proposal and Roundtable Weekly, Jan. 27)
  • NextGen recognition has great potential for widespread market acceptance, The Roundtable stated in its comments.
  • EPA’s proposed program could create a uniform, voluntary federal guideline to simplify the confusing patchwork of city and state climate-related building mandates that exists across the country. (EPA Policy Brief, Jan. 19; Roundtable Weekly, Jan. 20)
  • EPA staff discussed its NextGen proposal with The Roundtable’s Sustainability Policy Advisory Committee (SPAC) at the “State of the Industry” meeting in January. (SPAC slide presentation)

Roundtable Recommendations

SPAC Chair Tony Malkin and Vice Chair Ben Myers

  • The Roundtable’s SPAC, chaired by Tony Malkin, above left, (Empire State Realty Trust Chairman President and CEO) and vice-chaired by Ben Myers, right, (BXP Senior Vice President, Sustainability), convened a working group to develop the comments submitted to EPA.
  • The Roundtable stated that NextGen recognition criteria “must be grounded in financial performance that offer building owners reasonable returns on their investments.”
  • The Roundtable’s comments suggested refinements to improve EPA’s proposed components, including:
      

    • Efficiency:
      Significant and demonstrated reductions in a building’s energy use should be eligible for the NextGen label (as an alternate, additional criterion to EPA’s proposal that only ENERGY STAR certified buildings could qualify).
    • Renewable Energy:
      The NextGen proposal would require that 30% of a building’s energy use must derive from renewables. The Roundtable recommends that the level should start at 20% and adjust over time to reflect the changing status of the electric grid as it decarbonizes through increased reliance on solar, wind, and other clean power sources.
    • GHG Reductions: 
      The Roundtable supports EPA’s proposal for a GHG “intensity target” that reflects a building’s unique weather conditions by a factor known as heating degree days (HDD). The Roundtable worked closely with EPA in the pre-pandemic era to consider HDD as a key variable in the underlying ENERGY STAR building score process. (Roundtable Weekly, July 19, 2019)
    • Renewable Energy Certificates (RECs):
      The Roundtable explained that voluntary NextGen recognition can provide much-needed guidance on corporate accounting for REC purchases and enhance credible claims on the environmental benefits from offsite clean power procurement.  

The Roundtable further advised EPA that it should conduct a pilot of the low-carbon label with private and public building owners before broad release to U.S. real estate markets. EPA intends to make the NextGen label available in 2024.

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Roundtable, Trade Organizations Urge Treasury to Withdraw FIRPTA Regulatory Proposal

Posted on by Trey Jackson

The Real Estate Roundtable and 16 other trade organizations weighed in this week against a proposed IRS rule that would expand the reach of the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980.

Retroactive Rewrite

  • On December 29, Treasury and the IRS released proposed regulations that would redefine what constitutes a domestically controlled REIT and impose capital gains taxes, through FIRPTA, on investment structures that taxpayers have used for decades when planning real estate and infrastructure investments in the United States.
  • For purposes of FIRPTA and the exemption for domestically controlled REITs, the proposed look-through rule would no longer treat a taxpaying U.S. C corporation (that is a shareholder of a REIT) as a U.S. person if more than 25% of the owners of the C corporation are foreign. The result would be that many REITs previously exempt from FIRPTA would be thrust, retroactively, into the discriminatory tax regime.

Industry Response

  • On Monday, The Roundtable, Nareit, American Investment Council, Managed Funds Association, and ICSC submitted detailed comments to Treasury urging withdraw of the proposed look-through rule. The organizations wrote that the rule would “reverse decades of well-settled tax law, severely misconstrue the statute, and contradict Congressional intent,” as well as potentially “impair real estate’s access to foreign capital at a critical economic juncture and undermine foreign investors’ confidence in the stability and predictability of U.S. tax rules.” (Letter to Treasury, Feb. 27)
  • On Wednesday, The Roundtable and 14 other real estate trade organizations wrote to the congressional tax-writing committees asking Members of Congress to encourage the Treasury Department and IRS to withdraw the rule, which could put property value, jobs, and communities at risk unnecessarily. (Letter to congressional tax committees, March 1)
  • Treasury’s regulatory package also included favorable final rules regarding the FIRPTA foreign pension fund exemption and a helpful proposal related to real estate investments and the tax exemption for foreign governments.

The principal drafters of the Treasury comment letter were Roundtable Tax Policy Advisory Committee (TPAC) members David Levy (Weil Gotshal) and David Polster (Skadden), as well as Nickolas Gianou (Skadden). TPAC members also met virtually with Treasury officials on February 15 to discuss the proposed regulation. TPAC will remain active and engaged with the administration on this issue as the process unfolds.

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Remote Work’s Negative Impact on Office Market Cited for Plunge in DC Tax Revenue Forecast

Posted on by Trey Jackson

The expansion of remote work in Washington, DC has dramatically reduced tax revenue from office buildings, which poses “a serious long-term risk to the District’s economy and its tax base,” according to a Feb. 28 revenue estimate from the city’s CFO Glen Lee. (Washington Post, March 1)

$464M Revenue Drop

  • DC’s tax revenue is projected to plunge nearly a half-billion dollars from 2024-2026 due to remote work’s influence, reduced office transactions, and dropping asset values. (BisNow and DCist, March 1)
  • The quarterly report notes that tax revenue from District commercial properties —particularly large office buildings valued over $50 million—significantly declined in the past fiscal year and was the main reason for a reduction in overall real property tax revenue in FY 2022.
  • The city’s forecast, according to Lee’s letter to District Mayor Muriel Bowser and Council Chairman Phil Mendelson, has also been “revised downward by $81 million in FY 2024, $183 million in FY 2025, and by approximately $200 million in FY 2026.”
  • The report states that although real property revenue from hotels, restaurants and retail properties is expected to continue on a path of recovery, “this growth is expected to be more than offset by a deeper loss in tax revenue from office properties.”

The Roundtable View

Roundtable Chair John F. Fish (Chairman and Chief Executive Officer, SUFFOLK), left, and Jeffrey DeBoer, Roundtable President and CEO
  • The letter from Real Estate Roundtable Chair John Fish, above right, (SUFFOLK Chairman & CEO) and President & CEO Jeff DeBoer, left, also urged Biden “to direct federal agencies to enhance their consideration of the impact of agency employee remote working on communities, surrounding small employers, transit systems, local tax bases and other important considerations.” (Roundtable letter, Dec. 12, 2022)
  • City officials in New York, Washington, Chicago, Houston, San Francisco, and Boston have also recently encouraged city workers to return to their downtown offices. (Wall Street Journal, Jan. 24)

Economic Consequences

  • The DC revenue forecast also warned, “The population decline observed during the pandemic, coupled with the increasing prevalence of remote work, may lead to demographic shifts and economic repercussions. With fewer commuters, there may be less demand for public transportation and office space, leading to a potential reduction in real estate prices. Policymakers will need to carefully monitor and respond to these changes.”
  • Separately, The Wall Street Journal reported on Feb. 28 that return-to-office rates in Paris and Tokyo have climbed to over 75%, while U.S. office occupancy stands at about half of prepandemic levels, depending on the city. (WSJ, “As Americans Work From Home, Europeans and Asians Head Back to the Office”)

The consequences of remote work on CRE—and potential policy solutions—will continue to be a focus of The Roundtable.

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Senate Bill Introduced to Require Federal Guidance on Cybersecurity Insurance

Posted on by Trey Jackson

Cybersecurity graphic - image

Federal guidance on cyber insurance policies is the focus of a new bipartisan Senate bill introduced on Feb. 21 that aims to protect businesses and consumers against cyberattacks. (PoliticoPro, Feb. 21)

Cyber Issues

  • The Insure Cybersecurity Act will direct the National Telecommunications and Information Administration (NTIA) to mitigate digital risk by developing recommendations for issuers, agents, brokers, and customers to improve communication over cybersecurity insurance coverage levels.
  • Co-sponsored by Sens. John Hickenlooper (D-CO) and Shelley Moore Capito (R-WV), the bill also directs a NTIA task force to develop policy recommendations relating to ransomware or ransom payments, and the “terminology used in policies to include or exclude losses” due to cyber terrorism or acts of war.
  • Hickenlooper is the new chair of the Commerce Committee’s Subcommittee on Consumer Protection, Product Safety, and Data Security.
  • A 2021 Government Accountability Office report found that ambiguity in policy language can result in misunderstandings and litigation between issuers and policyholders—and underestimations of coverage needed to protect against cyber risks.

The Roundtable’s Homeland Security Task Force continues working with the Real Estate Information Sharing and Analysis Center (RE-ISAC), federal officials, and real estate companies about threats to the business cyber environment with the aim of mitigating cyber intrusions.

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House Republicans Reintroduce Bill to Make TCJA Deductions and SALT Cap Permanent

Posted on by Trey Jackson

House Ways and Means Committee Vice Chairman Vern Buchanan (R-FL)Tax provisions affecting individuals and small businesses originally enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017—along with the state and local tax (SALT) deduction cap—would be made permanent under legislation reintroduced this month by House Ways and Means Committee Vice Chairman Vern Buchanan (R-FL), above. (The Bond Buyer, Feb. 13 and Legislative Text)

The TCJA Permanency Act

  • Buchanan’s bill (H.R.976) includes a Roundtable-supported provision to make permanent the 20 percent deduction for qualified pass-through business income (Section 199A). The legislation would also permanently lower tax rates for individuals and families and maintain the higher standard deduction.
  • There are currently 83 co-sponsors of The TCJA Permanency Act. Buchanan has led five of the six Ways and Means Subcommittees and currently sits on the Joint Committee on Taxation, a small group of the most senior tax policy writers in Congress. (Buchanan news release, Feb. 13)
  • Without Congressional action, 23 different provisions of the 2017 Republican tax law are set to expire after 2025, including the SALT deduction cap. Buchanan originally filed legislation to make the TCJA cuts permanent last September during the Democratic-controlled 117th Congress.
  • Buchanan stated that funding for the Federal Aviation Administration could be a legislative vehicle to attach the TCJA bill, since no major standalone tax bills are expected this year. (BGov, Feb. 23)

SALT Caucus Relaunched

SALT Caucus 2023

  • ​More than 20 members of the House relaunched the SALT Caucus this month as part of their push to repeal the $10,000 cap limit on the federal deduction for state and local taxes. (News conference video, Feb. 8 and Tax Notes, Feb. 9)
  • The cap is scheduled to sunset after 2025, but SALT caucus members want relief sooner while pledging to fight attempts to extend the cap. (Rep. Gottheimer news release, Feb. 9)
  • “I like the odds of having a bunch of new Republicans from states that need to restore SALT,” said SALT Caucus Co-Chair Josh Gottheimer (D-NJ). “So if you want to talk, this is the caucus to talk to to get this done, to restore SALT and make life more affordable.” (Roll Call, Feb. 8)

More than 30 states and local jurisdictions have enacted a SALT workaround for pass-through businesses, S-corporations, and some LLCs. (CNBC video Feb. 13)

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New Study Forecasts Remote Work Will Restructure Office Sector

Posted on by Trey Jackson

Cushman & Wakefield demand chart

The profound impact of remote work on the office sector—and the resulting negative consequences for municipal tax revenues—were the focus of reports this week on current marketplace pressures and long-term office forecasts.

Office Vacancy

  • A weak return-to-office rate for employees working under hybrid arrangements, combined with rising interest rates and asset value pressures, have led to increased office vacancy rates and loan defaults in many cities, according to a Feb. 21 Wall Street Journal report.
  • Roundtable Board Member Scott Rechler (Chairman & CEO, RXR) is quoted by the Journal on how the office sector may eventually emerge from the current cycle. “There’s a transition period that takes time. You have to cross the chasm into the new regime,” Rechler said. (WSJ, “Office Landlord Defaults Are Escalating as Lenders Brace for More Distress”)
  • A Feb. 22 Cushman & Wakefield report forecasts that the overall level of office vacancy by 2030 will be 55% higher than prior to the pandemic (Q4 2019)—a trend that could be countered by repositioning and repurposing current space usage in coordination with public-private efforts at the local, state, and federal levels. (C&W’s “Obsolesence Equals Opportunity” and Fortune, Feb. 22)
  • The report also states that as much as 25% of all U.S. office space is “growing increasingly undesirable and will need to be reimagined and made relevant for the future,”—and that approximately 60% of all current office stock is “facing competitive obsolescence.” (BisNow, Feb. 23)
  • The Cushman & Wakefield report concludes, “Eventually, the remote working dynamic will flow completely through the marketplace as pre-pandemic leases expire and as firms shed the space to meet new-era, hybrid work requirements.”

The Roundtable View

Real Estate Roundtable President and CEO Jeffrey DeBoer

  • The Real Estate Roundtable’s Q1 Economic Sentiment Index released last week shows that Class B office properties are struggling, asset values have fallen year-over-year, and availability of debt and equity capital have declined.
  • Roundtable President and CEO Jeffrey DeBoer, above, said, “Fundamentally, our Q1 index illustrates that the trends accelerated by the pandemic have led to mixed performances across asset classes. In the office sector, remote work policies, concerns over crime and transportation are driving record-high vacancy rates throughout the country, hurting city budgets and small businesses.” (Roundtable news release, Feb. 17)
  • DeBoer added, “Policymakers should emphasize the need to return to the workplace while considering other innovative solutions such as legislation to convert underutilized offices to housing.” (Roundtable Weekly, Feb. 17)
  • DeBoer and Roundtable Chairman John Fish (Chairman & CEO, SUFFOLK) submitted comments last Dec. to President Biden encouraging support for legislation that could help facilitate “the increased conversion of underutilized office and other commercial real estate to much-needed housing.” (Roundtable Weekly, Dec. 16, 2022)
  • The Roundtable’s letter to Biden emphasized that work-from-home policies are damaging the economy, cities, and communities. “We are concerned that certain Administration policy guidance is encouraging federal agencies to adopt permanent work-from-home policies for federal employees and thereby actually magnifying negative economic and social consequences for cities,” the letter stated. 

Tax Incentives & Remote Work

Chicago cityscape sky view

  • Private companies may be motivated to enforce stronger employee return-to-office policies if they wish to qualify for city and state tax incentive agreements.
  • Provisions built into some existing municipality agreements were designed to ensure that private sector jobs would boost local revenue from income, sales and property taxes, and bolster downtown economies. (Bloomberg, Feb. 21) 

The Bloomberg report offers several examples of how state and city officials are reevaluating current incentive agreements and designing new ones that detail the scope of employee location requirements for companies to qualify for tax breaks.

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