Policy Landscape – Page 6 – The Real Estate Roundtable

Senators Joe Manchin and Lisa Murkowski Aim for Bipartisan Compromise on Energy Policy as Alternative to Stalled Build Back Better Act

Posted on May 6, 2022October 27, 2023 by Trey Jackson

Senators Joe Manchin (D-WV), left, and Lisa Murkowski (R-AK), right, have led bipartisan meetings with lawmakers over the last two weeks to explore potential areas of agreement for a scaled-back energy and climate legislative package before the midterm elections. (Politico Morning Energy and E&E News, May 5 | The Hill, April 25)

BBB Energy Measures

$300 billion in clean energy tax credits were part of last year’s failed, multi-trillion Build Back Better (BBB) Act, which Democrats advanced through the House under fast-track, filibuster-proof budget reconciliation rules. The Roundtable sent a letter in November to congressional tax writers with specific recommendations to improve the BBB bill’s energy tax provisions affecting real estate. (Roundtable Weekly, Nov. 19)
The BBB legislation stalled in the Senate after failing to attract key Democratic votes from Sens. Manchin and Kyrsten Sinema (AZ). Manchin’s concern about rising inflation led to his opposition of the bill. (Wall Street Journal, April 28)
Last week, Sen. Sinema discussed the post-BBB policy landscape during The Roundtable’s Spring Meeting in Washington. Other featured speakers included Sens. Bill Cassidy (R-LA) and John Hickenlooper (D-CO), who are among the members of the bipartisan group. (Roundtable Weekly, April 29 and E&E News, May 5)

Search for Agreement

This week, the BBB Act’s energy-related tax credits were a focus of the small bipartisan group, which also included Senate Environment and Public Works Chair Tom Carper (D-DE), above.
Carper on May 5 said, “I think some progress was made in better understanding what the Finance Committee voted on in the energy tax package that was debated and voted on months ago.” He added, “Republicans will not be anxious to support any kind of reconciliation bill. But let’s see how much we can get done in a bipartisan approach.” (Politico Morning Energy, May 5)
Another meeting participant, Sen. Kevin Cramer (R-ND), said general discussions need to eventually produce an agreement on specific measures “long before” the July 4th recess. Cramer also told E&E News that any Republican support for a bipartisan package “depends on how long Santa’s list is.”
Support for a bipartisan clean energy package would need to clear a 60-vote threshold in the Senate to pass the evenly-divided chamber before November’s midterm elections.

Sen. Chris Van Hollen (D-MD) recently stated, “I think it’s a make-or-break moment for the elements of Build Back Better that are still on the table. The clock is ticking. This is a perishable moment.” (Wall Street Journal, April 28)

# # #

Inflation Threatens Biden Agenda as Fed Chair Powell Addresses Raising Interest Rates

Posted on April 22, 2022October 27, 2023 by Trey Jackson

President Joe Biden traveled throughout the country this week to promote the benefits of infrastructure projects as rising inflation threatens his administration’s revamped “Building a Better America” domestic agenda. Meanwhile, Federal Reserve Chair Jerome Powell affirmed expectations that interest rates will begin increasing next month with consumer inflation running at an annual pace of 8.5 percent. (NBC News, April 19 and Associated Press, April 20)

Revising “Build Back Better”

Democrats are expected to resuscitate parts of the moribund Build Back Better (BBB) Act when Congress returns on April 25 by focusing on a scaled-back package to attract enough party line support in the 50-50 Senate for passage. (Roundtable Weekly, April 15)
A key consideration for Senate Democrats and the White House will be agreement on policy priorities with Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ), who rejected the administration’s BBB social and climate policy package late last year. (Roundtable Weekly, Jan. 21)
Sen. Manchin cited inflation as one of his top concerns about passing more spending bills. “Getting inflation under control will require more aggressive action by a Federal Reserve that waited too long to act,” Manchin recently said. (The Hill, April 12)
Sen. Sinema will discuss the current policy landscape in Congress with Real Estate Roundtable members next week in Washington DC during The Roundtable’s April 25 Spring Meeting.
Rising consumer prices and inflation have been a focus of Republicans as the mid-term elections are only about six months away. (BGov and Fortune, April 20)
House Ways and Means Committee Ranking Member Kevin Brady (R-TX) on April 12 discussed inflation’s threat to small businesses and the administration’s agenda on CNBC’s Squawkbox.

Fed & Interest Rates

The Consumer Price Index’s rise to 8.5 percent last month – the fastest annual increase in 40 years – sparked expectations that the Fed will move aggressively to raise interest rates. (Bureau of Labor Statistics, April 12 and CBS News, April 21)
The Federal Reserve’s Open Market Committee will meet next on May 3-4 to consider monetary policy, the discount rate and consider a reduction in the nearly $9 trillion in bonds on its balance sheet.
Powell, above, commented yesterday on the Fed’s target for annual price increases. “We really are committed to using our tools to get 2 percent inflation back,” he said, adding, “It’s absolutely essential to restore price stability.”
Powell also noted a half point interest rate increase next month may be the start of future interest rate increases. “I would say 50 basis points will be on the table for the May meeting,” he stated. (CNBC, April 21)
He also said the Fed will act to get demand and supply back in balance, “so that inflation moves down and does so without a slowdown that amounts to a recession.” (CNBC, April 21)
The Fed also released this week its latest “Beige Book” containing anecdotal information on current economic conditions. The report stated “supply chain backlogs, labor market tightness, and elevated input costs continued to pose challenges” and that “outlooks for future growth were clouded by the uncertainty created by recent geopolitical developments and rising prices.” (Fed’s Beige book, April 20)

The Roundtable’s Spring Meeting next week will include a discussion with former Fed Board Member Kevin Warsh on inflation, interest rate expectations, potential asset bubbles and other economic challenges.

# # #

Democrats Considering Spring Revisions to Build Back Better Act

Posted on April 15, 2022October 27, 2023 by Trey Jackson

Democrats are planning to work with Senators Joe Manchin (D-WV), left, and Kyrsten Sinema (D-AZ), right, this spring to resuscitate parts of the moribund Build Back Better (BBB) Act, in hopes that a scaled-back domestic policy package can pass the 50-50 Senate under the budget reconciliation process. (Business Insider, April 13)

The Manchin View

Manchin and Sinema remain key votes in the Senate after their reluctance to approve the Biden Administration’s BBB social and climate policy package last year. (Roundtable Weekly, Jan. 21)
Manchin, chair of the Senate Energy and Natural Resources Committee, has signaled his support for a much smaller package that would include climate programs, prescription drug reform, and reversal of Trump-era tax cuts that would generate savings for deficit reduction. (Politico, April 4)
Manchin also issued a statement on April 12 about consumer inflation rising to 8.5%, the largest 12 month increase in four decades. “Getting inflation under control will require more aggressive action by a Federal Reserve that waited too long to act. It demands the Administration and Congress, Democrats and Republicans alike, support an all-the-above energy policy because that is the only way to bring down the high price of gas and energy while attacking climate change,” Manchin said.
Additionally, he commented this week about the possibility of revised BBB negotiations, “We’ll just see if there’s a pathway forward. We don’t know if there’s a pathway forward yet.” (Business Insider, April 13)

Sinema & Taxes

Sinema offered her views this week, commenting, “What I can’t tell you is if negotiations will start again or what they’ll look like. But what I can promise you is that I’ll be the same person in negotiations if they start again that I was in negotiations last year.” (Arizona Republic, April 13)
She added, “I am unwilling to support any tax policies that would put a break on economic growth or stall personal or economic growth for America’s industries.” (Arizona Republic, April 13)
Sinema noted last week that she wants to ensure any spending package is “responsibly offset and that new revenue provisions protect qualified small business income where possible.” (NFIB Tax Summit, April 7)
Senate Minority Leader Mitch McConnell (R-KY) this week stated, “Sinema is unenthusiastic about tax hikes. Hopefully that will be enough to keep [BBB-related legislation] underwater permanently.” (Business Insider, April 12)
Sen. Tim Kaine (D-VA) noted Congress is on a tight deadline to pass a reconciliation package after they return from recess on April 25. “You either do it before Memorial Day or you’re not going to do it,” Kaine said. (Politico, April 4)

Sen. Sinema will be a guest at The Roundtable’s April 25-26 Spring Meeting in Washington, DC. (Roundtable-level members only)

# # #

Biden Administration Submits FY2023 Budget to Congress, Proposes Tax and Other Measures Impacting Real Estate

Posted on April 1, 2022October 27, 2023 by Trey Jackson

The Biden administration on Monday released its $5.8 trillion FY2023 Budget, a package of spending, tax, and policy proposals that will face extensive congressional scrutiny and revisions over the coming months. The March 28 budget was accompanied by the Treasury Department’s “Greenbook,” which details the Administration’s $2.5 trillion in tax increases on corporations, high-earning households, and certain business activities, including real estate investment. (New York Times and BGov, March 29)

Billionaire Minimum Income Tax

The new budget proposes to tax the wealthiest households on their unrealized capital gains, including real estate. The so-called “Billionaire minimum income tax” would impose a minimum levy of 20 percent on a comprehensive tax base that includes both realized income and the unrealized annual appreciation of a taxpayer’s assets.
The new tax would apply to future appreciation of assets and all unrealized, built-in gains at the time of enactment. The tax on pre-enactment, built-in gains would be collected over a 9-year transition period.
Although marketed as a tax on “billionaires,” the proposal would apply to any taxpayer with $100 million or more in wealth. This initial high threshold arguably represents a first step towards a wealth tax regime with much broader application. The original income tax applied to the top 1/3 of one percent of the U.S. population and now applies to over 150 million American households.
In certain cases, holders of illiquid assets like real estate could elect to defer the minimum tax until the property is sold, provided they pay an additional charge.
The budget leaves many of the most difficult questions unanswered, including:
- How would the tax survive a constitutional challenge on the grounds that direct taxes must be apportioned among the states by population?
- Why would taxpayers continue to make patient, long-term investments, knowing that they could be taxed before the investment generates cash income?
- Will much of the tax burden fall on noneconomic inflationary increases in asset values?
- How will the IRS administer the tax without building a highly intrusive compliance system that is based on subjective valuation measures?

Another new revenue proposal in the budget relates is to tax depreciation recapture at ordinary income rates. The provision generally would treat gain on real estate held for more than one year as ordinary income to the extent of cumulative depreciation deductions taken in tax years beginning after 2022. Depreciation recapture is currently taxed at a rate of 25 percent.

The White House budget also includes tax proposals recycled from last year that failed to pass congressional budget negotiations, including:
- repealing the deferral of gain from real estate like-kind exchanges;
- taxing long-term capital gains at ordinary income rates;
- taxing carried interest in real estate partnerships as ordinary income; and
- treating transfers of property at death as realization events subject to capital gains tax.

Immediate Congressional Pushback

The spending and revenue proposals faced immediate pushback on Capitol Hill by Republicans and Democrats, including Sen. Joe Manchin (D-WV), a key centrist who stated he opposes President Biden’s 20% minimum tax on unrealized capital gains for households worth at least $100 million. (CQ News, March 29)
Manchin told The Hill, “You can’t tax something that’s not earned. Earned income is what we’re based on. Everybody has to pay their fair share, that’s for sure. But unrealized gains is not the way to do it, as far as I’m concerned.”
Manchin also recently stated he is open to negotiating some limited remnants of the defunct Build Back Better (BBB) Act, with a focus on energy-related incentives, prescription drug costs ,and deficit reduction. (Business Insider, March 24)

Other Measures Directly Affecting Real Estate

Biden budget proposals impacting other aspects of The Roundtable’s 2022 Policy Agenda include:
- Energy and Climate – the president’s budget request outlines $44.9 billion for increased spending on several climate-related initiatives, yet does not address specific clean energy provisions that were part of last year’s BBB bill. Instead, a “deficit neutral reserve fund” is noted in the FY23 budget to accommodate a potential future deal on clean energy legislation with Democratic Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-AZ). (E&E News, March 28 and Axios Generate, March 29)
- Affordable Housing – the FY23 budget seeks to ease the nation’s affordable housing shortage with $50 billion in federal funding for housing construction and supply, including $35 billion for state and local housing finance agencies. (PoliticoPro, March 28)
- SEC Reporting Requirements – The Securities and Exchange Commission would receive $2.15 billion in the FY2023 budget proposal, an 11.4% increase from FY2021 (BGOV, March 28). The SEC has ramped up its activity recently with proposed rules on reporting requirements for investment advisers, climate risks and cybersecurity incidents that may have significant impacts for the real estate industry.

The release of President Biden’s second budget launches the annual congressional appropriations process, which aims to fully fund the FY23 government budget starting Oct. 1. The prospects for certain tax increase proposals before the Nov. 8 mid-term elections are highly uncertain. (Politico, March 28 – “Here’s what’s in Biden’s $5.8 trillion budget proposal – and what’s next”)

Issues outlined in The Roundtable’s recently released 2022 Policy Agenda in the areas of tax, climate, capital and credit and cybersecurity will be discussed during the April 25-26 Spring Meeting (Roundtable-level members only) in Washington DC.

# # #

Roundtable Schedules Town Hall Next Week on Ukraine Conflict; Zelensky Addresses Joint Session of Congress

Posted on March 19, 2022October 27, 2023 by Trey Jackson

Vindman testifying

The Real Estate Roundtable will hold a virtual “town hall” on Friday, March 25 with Lieutenant Colonel (USA, Ret.) Alexander Vindman, former National Security Council Director for Eastern Europe during the Trump Administration, to discuss Russia’s war against Ukraine.

Ukraine Support

The Roundtable’s town hall with Vindman will address Ukrainian President Volodymyr Zelensky’s speech to Congress on Wednesday and the U.S. response thus far to the brutal Russian invasion. Zelensky’s appeal galvanized the Biden administration to release additional aid to Ukraine. (President Biden video, transcript and Axios, March 16)
Roundtable President and CEO Jeffrey DeBoer stated, “The Roundtable fully supports the billions in federal aid to Ukraine as its citizens continue to bravely stand up against Russian aggression. As we bear witness to the tragic violence of the invasion, The Roundtable encourages its members and all industry stakeholders to contribute to charities involved in Ukrainian humanitarian relief,” DeBoer added. (VetVoice Foundation)

Map of Ukraine

The Ukrainian war has compelled hundreds of American companies with business in Russia to either withdraw completely, suspend or scale back operations, or delay investments, according to the Yale’s Chief Executive Leadership Institute.
Hilton President and Chief Executive Officer Christopher Nassetta (Roundtable Chairman 2006-2009) announced on March 9 the company’s actions in response to the crisis in Ukraine, including:
- Closure of Hilton’s corporate office in Moscow;
- Suspension all new development activity in Russia;
- Donation of any Hilton profits from business operations in Russia to the humanitarian relief efforts for Ukraine, and;
- Donation of up to 1 million room nights to support Ukrainian refugees and humanitarian relief efforts across Europe, in partnership with American Express, #HospitalityHelps.
Marriott International also recently announced the closure of their corporate office in Moscow, along with a suspension in opening upcoming hotels and all future hotel development and investment in Russia. (Marriott statement, March 10)

Reviving Climate Negotiations

Capitol Hill night mirror image

Separately, House Democrats this week urged the White House to revive negotiations on climate measures that were part of the moribund Build Back Better (BBB) Act. (Business Insider, March 8)
A group of 89 House Democrats on March 14 wrote to President Biden stating, “The more than $555 billion in climate investments in the House-passed Build Back Better Act can serve as the building block to restart negotiations.” (House Democrats’ letter)
The Roundtable sent a letter to Congressional tax writers last fall detailing recommendations to improve the BBB Act’s green energy tax provisions. (Roundtable letter, Nov. 16)

The BBB bill passed the House in November, but stalled in the Senate amid disagreements with key Democratic Senators Joe Manchin (WV) and Kyrsten Sinema (AZ). (Roundtable Weekly, Nov. 19, 2021 and Jan. 21, 2022). It remains uncertain if any revised deal will garner their support. (CNBC, March15)

# # #

White House Requests Billions for Ukraine and Pandemic Response as Congress Rushes to Pass Omnibus Funding

Posted on March 5, 2022October 27, 2023 by Trey Jackson

Congressional appropriators received an emergency request yesterday from the White House for an additional $10 billion for Ukraine assistance and $22.5 billion for pandemic response funding. The request may complicate lawmakers’ efforts to pass an “omnibus” spending package by March 11, when current government funding expires. (Punchbowl News, March 3)

Omni Funding

Congressional appropriators may release the text of an omni bill within days, as House Democrats hope to pass a potential $1.5 trillion spending package early next week for the Senate to consider before the March 11 funding deadline. (Politico, March 3)
A deal on an omni package would fund the government though Sept. 30, consolidate 12 separate spending bills and release additional funds for infrastructure. (Tax Notes, Feb. 18 and Roundtable Weekly, Feb. 11)
Reauthorization and reform of the EB-5 visa investment program is one of the many issues being negotiated for possible inclusion in the omni funding bill.
If efforts to pass an omnibus deal fail, Congress could pass yet another Continuing Resolution to fund the government at current levels – while considering separate bills to fund aid for Ukraine or the U.S. response to COVID-19.

SOTU & Climate Measures

Yesterday’s White House emergency request comes after President Joe Biden’s March 1 State of the Union address, where he sought to rebrand the multitrillion Build Back Better (BBB) spending package into a pared-down proposal called “Building a Better America.” (BGov, March 2)
The moribund BBB legislation stalled at $1.7 trillion, which included $555 billion in climate-related incentives. (Roundtable Weekly, Jan. 21)
President Biden’s address on Tuesday also touched on climate measures such as tax credits for electric vehicles, energy efficiency improvements, and clean energy production. (White House Fact Sheets on Clean Energy and Infrastructure, Feb. 28)
“Let’s provide investment tax credits to weatherize your home and your business to be energy efficient and get a tax credit for it; double America’s clean energy production in solar, wind, and so much more,” Biden stated.
The Real Estate Roundtable on Nov. 16, 2021 supported the BBB Act’s climate measures in a letter to congressional tax writers. The letter also detailed five Roundtable recommendations aimed at improving certain green energy tax provisions affecting real estate. (Roundtable letter, Nov. 16)

Key Senate Votes

Key Sen. Joe Manchin (D-WV), right, chair of the Senate Energy and Natural Resources Committee, has signaled his support for climate measures in a revised BBB package. (Roundtable Weekly, Feb. 18)
Manchin on Wednesday responded to the State of the Union, saying he could support a smaller spending package that would split revenue between deficit reduction and new spending. Manchin said, “If you do that, the revenue producing [measures] would be taxes and [prescription] drugs. The spending is going to be climate.” (Politico, March 2 and E&E News, March 3)
However, another key vote in the 50-50 upper chamber – Sen. Kyrsten Sinema (D-AZ), left – has voiced opposition to raising taxes. (BGov, March 2)

As Congress continues to work on the current fiscal year budget, President Biden will release a non-binding budget for the 2023 fiscal year that will outline his administration’s major economic, tax and climate policy priorities. The Treasury Department will also release its “Greenbook,” which will detail proposed tax cuts and revenue raisers that could fund the White House’s budget initiatives.

# # #

House Passes Government Funding Extension Until March 11 as Appropriators Signal Progress on FY2022 Omnibus

Posted on February 12, 2022October 27, 2023 by Trey Jackson

The House of Representatives on Tuesday passed a continuing resolution (CR) that would prevent a government shutdown on Feb. 18 by extending current government funding levels for three weeks, through March 11. The CR, which also applies to the National Flood Insurance Program, moves to the Senate for consideration next week. (CR legislative text and summary)

CR & Omnibus

If passed by the Senate, the CR would give lawmakers additional time to finalize a separate “omnibus” spending bill for fiscal year 2022, which runs from Oct. 1, 2021 through Sept. 30, 2022. (BGov, Feb. 9)
House and Senate Appropriations Committee leaders announced on Wednesday a “framework” deal for top-line spending levels for defense and domestic funding. Such an agreement would clear the way for congressional committees to complete a sweeping 12-bill spending bundle, which could amount to a $1.5 trillion omnibus package funding government operations into the fall. (PoliticoPro, Feb. 10)
A full-year omnibus package would also release an additional $197 billion over 10 years for energy, transportation, and other programs that were part of last year’s bipartisan infrastructure bill. (BGov, Feb. 9 and CQ, Feb. 10)

Omni & BBB

The “omni” funding bill is now a focus of Congress since President Biden’s multi-trillion Build Back Better (BBB) Act has been sidelined on Capitol Hill. (Politico, Feb. 10)
Sen. Joe Manchin (D-WV), above, – a key vote in the 50-50 Senate – said on Sunday that he sees a government funding package as a higher priority than the stalled BBB bill. ‘We have to get a budget bill first,’ Manchin said. (CNN, Feb 6)
Manchin this week also expressed his reluctance to endorse additional federal spending, after news that consumer inflation rose to 7.5%, the largest 12-month increase in four decades. (BGov, Feb. 10)
Manchin’s statement included, “It’s beyond time for the Federal Reserve to tackle [inflation] head on, and Congress and the Administration must proceed with caution before adding more fuel to an economy already on fire. As inflation and our $30 trillion in national debt continue a historic climb, only in Washington, DC do people seem to think that spending trillions more of taxpayers’ money will cure our problems, let alone inflation,” Manchin said. (Newsweek, Feb. 10)

The start of the 2023 fiscal year cycle is approaching as Congress aims to pass an omnibus for the current year by March. President Biden is expected to release his FY2023 budget request shortly after his State of the Union address on March 1.

# # #

White House Looks to Reset and Downsize Build Back Better Act; Roundtable Meeting to Address National Issues With Leading Policymakers

Posted on January 22, 2022October 27, 2023 by Trey Jackson

President Joe Biden acknowledged in a Jan. 19 news conference that his nearly $2 trillion social and climate package, the Build Back Better (BBB) Act, needs to be pared down in the face of stalled negotiations in the 50-50 Senate. “I think we can break the package up, get as much as we can now, come back and fight for the rest later,” Biden said, noting there are some areas of agreement with key Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. (CQ and BGov, Jan. 20)

Revamping BBB

Biden and congressional Democratic leaders may pursue one revamped legislative package – instead of several separate bills – as the November mid-term elections grow closer. Democrats have pushed the BBB Act under restrictive budget reconciliation rules, which allows consideration of one bill that could pass with a simple majority in the evenly divided Senate. (Wall Street Journal and CNBC, Jan. 19)
Climate measures are emerging as a top priority for inclusion in a smaller bill. Manchin, chair of the Senate Energy and Natural Resources Committee, has signaled his support for that aspect of the BBB package. (CNN, Jan. 5 and New York Times, Jan. 20)
White House National Economic Council Director Brian Deese yesterday said that certain BBB proposals, including clean energy measures are “doable” and could pass Congress. “The clean energy provisions in this bill will not only make it easier and cheaper to deploy clean energy and address the climate crisis, it will reduce energy costs,” Deese said. (BGov and Bloomberg, Jan. 20)
If the Senate ultimately passes some revised version of the BBB Act that changes the House-approved version (H.R. 5376), the bill would need to go back to the House for another vote before it reaches President Biden’s desk. (Roundtable Weekly, Nov. 19, 2021)

Roundtable Support for Clean Energy Measures

The Roundtable has supported the BBB Act’s climate measures, which include a suite of clean energy tax credits and incentives amounting to $300 billion. (Roundtable Weekly, Jan. 7)
The Roundtable sent a letter to Congressional tax writers on Nov. 16, 2021 detailing five recommendations aimed at improving the green energy tax provisions affecting real estate. (Roundtable letter, Nov. 16)

BBB, ESG and More

Next week, key policymakers will discuss what’s next for the BBB plan with Roundtable members during the organization’s Jan. 25-26 Virtual State of the Industry Meeting (SOI). The featured speakers will include:
- Sen. John Thune (R-SD), who holds the second highest position in Senate Republican leadership;
- Sen. Amy Klobuchar (D-MN), member, Joint Economic Committee and Senate Commerce Committee;
- Sen. Catherine Cortez Mastro (D-NV), member, Senate committees – Finance, Banking, and Energy;
- John Kerry, President Biden’s Special Envoy for Climate and former Secretary of State; and
- Larry Summers, former Secretary of the Treasury and former Director of the White House National Economic Council.

Mr. Summers’ discussion will include the growing importance of environmental, social and corporate governance (ESG) issues for private sector businesses.
One policy example of the growing influence of ESG factors is a proposed rule expected soon from the Securities and Exchange Commission (SEC) on new reporting disclosures quantifying financial risks related to climate. (Roundtable Weekly, Oct. 1, 2021 and Wall Street Journal, Jan. 19, 2022)

BlackRock CEO Larry Fink, above, this week explained the need for businesses to make ESG an essential part of their decision-making process in his annual letter to CEOs. His letter states, “As stewards of our clients’ capital, we ask businesses to demonstrate how they’re going to deliver on their responsibility to shareholders, including through sound environmental, social, and governance practices and policies.” (New York Times and Washington Post, Jan. 18)

The Roundtable’s SOI Meeting will also address market conditions and feature detailed policy advisory committee presentations in the areas of sustainability, tax, homeland security and capital and credit.

# # #

Build Back Better Act Negotiations in “Cooling Off” Period as Congress Prioritizes Pressing Issues

Posted on January 8, 2022October 27, 2023 by Trey Jackson

Democrats this week signaled that negotiations over the Build Back Better (BBB) Act are in a “cooling off” period as Congress turns its immediate focus to pressing policy issues such as voting rights legislation and filibuster rules reform. (The Hill, Jan. 5)

BBB’s Climate Provisions

Congress will face several other deadlines in the New Year, including a possible push later this month by Senate Democrats for a vote on the Build Back Better (BBB) Act, the need to extend funding for federal government operations beyond February 18, and the looming November mid-term elections. (Bloomberg and Roll Call, Jan. 3)
Discussion on how to revive the multitrillion BBB Act followed Sen. Joe Manchin’s (D-WV) Dec. 19 statement on Fox News that he opposed the package. Manchin is a key vote in the 50-50 Senate to pass the BBB Act under reconciliation rules, which require a majority vote for passage.
Manchin, who chairs the Senate Energy Committee, last month offered the White House a $1.75 trillion proposal that included funding for climate initiatives supported by The Roundtable. (Wall Street Journal, Jan. 4)
Sen. Manchin affirmed on Tuesday that he shares the views of the Democratic caucus on the climate portions of the BBB package. “The climate thing is one that we probably could come to an agreement much easier than anything else,” Manchin said. (E&E News, Jan. 4)
Sen. Manchin wants to restructure other aspects of the BBB bill, possibly paring down the cost of its healthcare, childcare and housing initiatives. (Wall Street Journal, Jan. 5)
If the Senate ultimately passes the BBB Act in a manner that changes the House-approved version (H.R. 5376), the bill would need to go back to the House for another vote before it reaches President Biden’s desk. (Roundtable Weekly, Nov. 19)

Roundtable Support for Clean Energy Tax Provisions

The BBB Act includes $550 billion for measures to fight climate change, which include a suite of Roundtable-supported clean energy tax credits and incentives amounting to $300 billion.

The Roundtable sent a letter to Congressional tax writers on Nov. 16, 2021 detailing five recommendations that aim to improve green energy tax provisions affecting real estate. The Roundtable letter urged further changes to the BBB Act that would advance objectives aimed at slashing GHG emissions and making rapid progress toward a “net zero” economy by mid-century. (Roundtable letter, Nov. 16)
The letter’s recommendations would increase and scale deployment of low- and zero-carbon technology in the nation’s commercial and multifamily building infrastructure.
The need to address funding to keep the government is also pressing upon Congress. Current funding is authorized under a “Continuing Resolution” through Feb. 18, 2022. Congress has not yet reached agreement on full-year funding for fiscal 2022, which began Oct. 1, 2021.

The Roundtable will discuss its policy agenda for the new year during its Jan. 25-26 State of the Industry meeting (virtual), along with potential changes to the BBB Act, and how the mid-term elections in November may impact the congressional agenda.

# # #

Build Back Better Act Stalls as Congress Raises Debt Ceiling; Fed Signals Interest Rate Hikes Next Year

Posted on December 17, 2021October 27, 2023 by Trey Jackson

Senate action on the House-passed multitrillion dollar Build Back Better (BBB) Act (H.R. 5376) stalled this week as Democrats continued negotiations on the scope and scale of the legislation. (The Guardian, Dec. 16 and BGov, Dec. 15).

BBB Issues

A significant hurdle to progress on the BBB bill are ongoing negotiations between President Biden and congressional leadership with Senate Energy Committee Chairman Joe Manchin (D-WV) – one of the key Democratic centrist swing votes needed to pass the bill under budget reconciliation rules. (CNBC, Dec. 15)
“The talks between [Biden] and Manchin have been going very poorly. They are far apart,” according to a Dec. 15 Politico report. The article also quotes Sen. Tim Kaine (D-VA), who stated, “[Biden and Manchin] may have very different views about timing. It’s less about whether, than about when and how much.”
Democrats also remain split over how BBB legislation would resolve policy issues such immigration and SALT – the limit on the federal deduction for state and local taxes. (Bloomberg, Dec. 13)
Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) predicted this month that Congress would pass the BBB Act before Christmas. (Wall Street Journal, Dec. 15 and AP, Dec. 16)
President Biden acknowledged in a statement yesterday that his BBB agenda is unlikely to pass this year and that Democrats will work to finish it “over the days and weeks ahead.” (The White House, Dec. 16)

BBB and CRE

Senate Finance Chairman Ron Wyden (D-OR) on Dec. 11 released statutory language for BBB Act measures that fall under the Finance Committee’s jurisdiction, including tax provisions.
The committee’s language does not include a complex tax proposal that would impose mark-to-market taxation on annual, unrealized gains. Chairman Wyden’s specific legislative proposals to impose an income limit on the sec. 199A pass-through deduction (July 2021), tax carried interest as ordinary income (Aug. 2021) and reform partnership taxation (Sept. 2021) are also excluded. These proposals, as introduced, could have a negative impact on real estate investment, entrepreneurial risk-taking, jobs, and local communities.
Additionally, the current BBB Act would not limit like-kind exchanges, increase the 20% capital gains tax, or repeal the step-up in basis of assets at death. The key tax issues in the bill are addressed in a Roundtable comparison of the tax-related provisions in the BBB package. (Roundtable Weekly, Oct. 29)
Clean energy tax credits make up the most significant portion of the BBB Act’s climate policies. The Roundtable supports several improvements to the green tax provisions aimed at extending them to certain technologies (e.g., thermal energy storage), ensuring that EV charging incentives cover stations employed in widely available but non-public locations (e.g., apartment building parking lots), and incentivizing building electrification through the use of heat pumps.
The Roundtable on Nov. 16 sent a letter to congressional tax writers detailing five recommendations that would improve green energy tax provisions in the BBB Act affecting real estate. (Roundtable Weekly, Nov. 19)

Debt Ceiling and Fed Action

President Biden yesterday signed legislation to raise the debt ceiling by $2.5 trillion, averting default on the nation’s debt and pushing the issue beyond the November 2022 mid-term elections. (Investopedia, Dec. 16)
The debt ceiling bill cleared the Senate Dec. 15 on a party-line vote of 50-49, and the House passed it the following morning on a mostly partisan 221-209 tally. (The Hill and CNBC, Dec. 16)
Federal Reserve Chairman Jerome Powell on Wednesday announced the Fed will wind down its bond-buying program by March instead of June – paving the way for potential interest rate hikes starting in the spring. Powell said the Fed could raise interest rates three times next year as it responds to elevated inflation. (Commercial Property Executive, Dec. 17 | GlobeSt, Dec. 16 | Wall Street Journal, Dec. 15)

Monetary and fiscal policy will be a focus of discussion at The Real Estate Roundtable’s all-member State of the Industry Meeting on Jan. 25-26 in Washington, DC.

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