Category: Coronavirus Response

A massive $2.2 trillion emergency coronavirus relief bill was signed into law today by President Trump shortly after passage by the House of Representatives, following unanimous approval on March 25 by the Senate.  The historic legislative package—the Coronavirus Aid, Relief, and Economic Security (CARES) Act—comes as the United States registered the largest amount of coronavirus cases in the world and a record 3.3 million jobless claims in one week. (White House video of signing and Axios March 27, Wall Street Journal  March 27 and New York Times  March 26)

• The CARES Act—the largest rescue package in U.S. history—includes $100 billion for hospitals and the medical workforce to obtain products, medicine, and equipment needed to meet the capacity surge in patients throughout the country. (Bill text here, summary from Senate Appropriations Committee Republicans here, and summary from Senate Appropriations Democrats here.)

• The 883-page bill includes direct financial assistance to a wide swath of Americans and significantly expands unemployment assistance. The legislation also provides loans, grants and other financial assistance to state and local governments, as well as to and all types and sizes of U.S. businesses.

• For the business community, The CARES ACT establishes a number of assistance programs, largely based on how many workers are employed by a given business concern. The Roundtable’s CARES Act webpage provides an analysis of the bill.  Separate Roundtable documents below summarize the provisions that target:

• Independent contractors, sole proprietors, and businesses with 500 employees or less
• Mid-sized businesses with 501 to 10,000 employees  

• Businesses with any number of employees over 500
• Tax Considerations 

• The CARES Act authorizes $500 billion for direct loans and guarantees, including $454 billion for the Federal Reserve to support its lending facilities and $29 billion for direct lending to passenger and cargo air carriers.

• An additional $367 billion is available to assist small businesses through the Small Business Administration (SBA). The Act also contains a number of provisions aimed at granting temporary regulatory relief.  Despite the enormity of the assistance provided by the CARES Act, additional financial assistance legislation is expected if the duration of the national emergency continues for a greater period of time.  (Senate Republican Conference Summary, March 27)

CARES Act Support for Financial Institutions

The CARES Act also includes a number of other provisions designed to support financial institutions during the COVID-19 pandemic.

• It authorizes the Federal Deposit Insurance Corporation to further guarantee obligations of solvent insured depository institutions and depository institution holding companies – provided that any such guarantee must terminate no later than December 31, 2020. The legislation does not set the maximum amount to be guaranteed. The Act also temporarily authorizes the Office of the Comptroller of the Currency to exempt any transaction from its lending limits, if the exemption is in the public interest.
• The legislation also allows a financial institution to suspend, during a covered period, requirements under U.S. Generally Accepted Accounting Principles for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a troubled debt restructuring – and the federal banking agencies must defer to the financial institution’s determination. The covered period begins on March 1, 2020, and ends the earlier of December 31, 2020 – or 60 days after the date on which the national emergency declaration related to coronavirus terminates.
• The legislation also permits an insured depository institution, bank holding company or any affiliate thereof to temporarily delay measuring credit losses on financial instruments using the new Current Expected Credit Losses (CECL) accounting standard until the earlier of December 31, 2020, or the date on which the coronavirus-related national emergency declaration terminates.
• Finally, in addition to providing financial support for the Federal Reserve’s lending programs, as discussed above, the legislation would temporarily suspend the statutory limitation on the use of the Treasury Department’s Exchange Stabilization Fund for guarantee programs for the U.S. money market mutual fund industry. Any such guarantee must terminate not later than December 31, 2020.

Industry Briefings and What’s Next

The ongoing legislative and regulatory efforts to combat the COVID-19 outbreak were the subject of a March 23 Real Estate Roundtable “Townhall” conference call moderated by Roundtable President and CEO Jeffrey DeBoer.  Approximately 230 Roundtable members participated in the conference call, which is available here.

• The Roundtable’s Homeland Security Task Force held a conference call on March 26, featuring Dr. Jay Butler, Deputy Director for Infectious Diseases (DDID) with the Centers for Disease Control and Prevention (CDC), who addressed the U.S. public health agencies’ efforts to confront the crisis.

• Future Roundtable Townhalls may be offered as policy responses evolve with the fluid developments of the Coronavirus pandemic.

• Next week, a Marcus & Millichap Webcast on “Getting Through the Global Health Crisis Together” will cover an updated economic assessment; government initiatives and potential impact; state of real estate financing and transaction markets; and challenges by property type. Register here for the webcast, which will be held on Thursday, April 2 at 4:00pm Eastern /1:00pm Pacific.
• Congressional leaders have already mentioned the possibility of a fourth coronavirus relief measure.  House Speaker Nancy Pelosi (D-CA) on Bloomberg TV yesterday said that subsequent relief bills may “lean toward recovery” and include funds for frontline health-care workers, along with support for COVID-19 health-care services that go beyond testing.  She added that a future legislative package would focus on job creation measures and U.S. infrastructure building. 

• Vice President Mike Pence yesterday said the administration was open to a fourth bill during a White House press conference. “I think the secretary of the Treasury’s already indicated and congressional leadership has already indicated a willingness to remain open to that. Already we’re hearing from some governors about the need for additional resources, and we will evaluate those very carefully,” Pence said.  (BGov, March 27)

In the Senate, another Coronavirus relief bill likely will have to wait until Senators return from recess on April 20.

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Policymakers raced this week to complete a massive economic response to stem the spiraling public health and economic toll of the Coronavirus pandemic. As infection and death rates continued to grow, jobless claims soared, hotels and malls temporarily closed world-wide, and President Trump invoked rarely used emergency powers to fight what he called a “medical war.”  (NYTimes and BBC, March 19)

• Roundtable President and CEO Jeffrey DeBoer said today, “While the world’s experts work around the clock to solve the health related issues related to the COVID-19 pandemic, Washington must take dramatically more bold policy actions then it has to date to prevent this health emergency from igniting an immediate liquidity crisis or much longer-term economic repercussions. We are actively helping develop a variety of policy responses.”

• DeBoer added, “We are focused on helping employers maintain their payrolls, helping businesses access new or restructured debt , encouraging banking and other regulators to exercise discretion in loan examinations, seeking new credit facilities (like the Term Asset-Backed Securities Loan Facility (TALF) used during the 2008 crisis) to assist the CMBS market, and working with federal tax authorities to ease transaction deadlines, lower tax penalties in debt modification, broaden the ability to use operating losses and many other areas.  Our policy committees are hard at work and our team is coordinating with all the industry and many outside our industry.”

• Three phases of public policy responses have been assembled to date as the medical community rushes to develop treatments for the virus. 

Phase 1, enacted on March 6, is a $8.3 billion packaged focused on public health measures to bolster vaccine development and research, increased equipment stockpiles, and support for state and local health responses to the virus.  (Roundtable Weekly, March 6).

Phase 2, signed into law by President Trump on March 18, is the $104 billion Families First Coronavirus Response Act (H.R. 6201), which includes paid leave provisions for employees, free COVID-19 testing, expansion of unemployment insurance, food assistance, and other provisions aimed at immediate relief for affected individuals. (Joint Committee on Taxation, March 16)

Phase 3, a $1 trillion-plus bill introduced yesterday by Senate Majority Leader Mitch McConnell (R-KY), will focus on (1) general economic stimulus, (2) small business and individual relief, (3) airline and travel industry concerns; and (4) health care matters.  

• McConnell outlined the evolving package – the ‘‘Coronavirus Aid, Relief, and Economic

• Security Act’’ (CARES Act) – which includes cash payments to individuals, an expanded SBA loan program and other small business lending facilities, tax relief, substantial aid to airlines, direct and substantial supplemental appropriations to address the pandemic. (CBS News, March 19)

• Small Business Administration (SBA) loan provisions supported by a broad coalition of business groups, including The Roundtable, are included in the Keeping Workers Paid and Employed Act, which is “Division A” of the Senate GOP’s CARES Act.  (Coalition letter support letter, March 19) 

• Sens. Marco Rubio (R-FL), Susan Collins (R-ME) and Lamar Alexander (R-TN) developed the $300 billion SBA relief plan to provide loans for businesses and non-profit organizations with up to 500 employees. A portion of the loans, to cover payroll and payments on pre-existing debt, would be forgiven until June 30.  (Section-by-section summary of  the legislation can be found here and a one-pager can be found here.)

• The Senate Finance Committee yesterday also released a summary of the tax provisions in the CARES Act.   (See related Tax story in this issue of Roundtable Weekly).

• After GOP Leaders released the legislative text of the Phase 3 bill, McConnell acknowledged the legislation was likely to change as the White House, Senate Democrats and House leaders weigh in.  “The legislation I’ve just laid out will not be the last word,” McConnell said, adding that he will keep the Senate in session until a Phase 3 coronavirus package passes the chamber.

• McConnell, Senate Minority Leader Chuck Schumer (D-NY) and Treasury Secretary Mnuchin will lead negotiations starting today in an attempt to hash out a compromise plan by Monday – as applications for unemployment benefits intensify and may top 2 million, according to Goldman-Sachs.  (CBS News, March 20)

• In the House, Financial Services Committee Chairwoman Maxine Waters (D-CA) on March 18 proposed a six-page legislative framework coronavirus response. (House Financial Services Committee news release, March 18)

• In a memorandum to House Democrats, Chairwoman Waters outlined her wide-ranging proposals, which would go farther than measures floated in the Senate. Her approach would include larger monthly payments to all Americans via the Federal Reserve, suspension of consumer debt and a new federal insurance backstop.

• Her proposed plan also includes suspension of private-sector commercial rental payments, evictions and foreclosures – along with suspension of negative credit ratings during the pandemic.

• [On March 18, the Federal Housing Finance Agency announced suspension of evictions and foreclosures for mortgages backed by Fannie Mae and Freddie Mac. The Housing and Urban Development Department also on March 18 implemented an immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages for the next 60 days.]

• At the White House, President Trump today invoked rarely used emergency powers under the 1950 Defense Production Act (DPA) to marshal private-sector production for medical supplies.  “I invoked the Defense Production Act, and last night we put it into gear,” Mr. Trump said today. “We are invoking it to use the power of the federal government to help the states get things they need like masks and ventilators.” (AP, March 18 and Wall Street Journal, March 20)

• The DPA empowers the federal government to order private businesses and U.S. manufacturers to prioritize government contracts to produce “critical materials and goods” in return for purchase loans or guarantees.  (The Hill, March 20)

The Roundtable Urges Focused Policy Actions

The Real Estate Roundtable, along with 113 other organizations, wrote to the Administration and congressional leadership on March 18 to urge swift and unprecedented action to confront the fallout from COVID-19.

• The coalition letter states that Washington’s response needs to minimize the number of businesses that could close and workers who may lose their jobs by ensuring all businesses have the resources necessary to ride out the pandemic. The coalition notes that a focused, massive response should:
  • Immediately provide readily accessible, unsecured credit to businesses of all sizes to ensure they have the cash to pay their workers, rent, and other costs during this crisis.
  • Suspend the filing of business returns and the payment of all business taxes to the federal government for the duration of the pandemic. These suspended taxes should include taxes owed for the 2019 Tax Year, estimated payments for 2020, and all payroll tax obligations.
  • Amend the Tax Code to, among other items, restore the ability of businesses to carryback any net operating losses against previous year tax payments; suspend the application of the Section 163(j) limitation on interest expense deductions for tax year 2020 to avoid penalizing businesses for borrowing during this crisis; and suspend the Section 461(l) loss limitation on pass-through businesses to allow the owners of pass-through businesses to fully deduct any losses they incur this year.
• The Roundtable during the past few weeks of the crisis has also worked closely with its board of directors and 18 national real estate organization partners to develop specific policy recommendations that would help contain the repercussions of the pandemic, stabilize the economy and reinforce the industry.

• The Roundtable’s policy advisory committees – tax, credit and capital, and homeland security – continue to hold frequent conference calls with industry specialists to analyze market developments and discuss government policy responses (e.g., H.R. 6201, House Financial Services Committee proposal)

• Additionally, Real Estate Roundtable President and CEO Jeffrey DeBoer on March 9 notified all Roundtable members that the organization’s March 31 Spring Business Meeting was canceled “in light of health and safety issues surrounding COVID-19.” 

As policymakers intense efforts to mitigate the effects of the pandemic, The Roundtable will continue to communicate unified industry policy recommendations in the short-term crisis or addressing longer-term stimulus of the U.S. economy, infrastructure investment, workforce development and efforts to stabilize capital markets.

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