Category: Roundtable Weekly

Senate Finance Committee Ranking Member Introduces Bill to Tax Carried Interest at Ordinary Income Rates

Posted on by Trey Jackson

Senate Finance Committee Ranking Member Ron Wyden (D-OR) yesterday introduced legislation to fundamentally alter the longstanding tax treatment of a profits interest in a real estate partnership. 

Senate Finance Committee Ranking Member Ron Wyden (D-OR) has introduced legislation to fundamentally alter the longstanding tax treatment of a profits interest in a real estate partnership.

  • The Wyden proposal (detailed summary of the legislation and one-pager) would depart dramatically from prior carried interest legislation by taxing partners before any capital gain or even rental income is generated by the partnership.  For example, it would give rise to large amounts of taxable (but phantom) income for a general partner with a profits interest during the pre-construction and development phase of a real estate project.
  • The legislation would treat a profits interest in a real estate partnership as an interest-free loan from the other partners. The bill would effectively tax the partner with a profits interest annually, at ordinary income rates, on his or her deemed share of the invested capital by multiplying the deemed share by a specified interest rate (9% plus the variable yield on a corporate bond index that is currently 2.93%).  The product would be considered taxable, ordinary income.
  • In addition to taxing partners currently on non-existent, illusory income, in many cases the legislation would not allow partners to recover the taxes down the road if the project ultimately fails to produce a capital gain.  That’s because the losses would be treated as capital losses that generally are nondeductible against ordinary income. 
  • General partners are currently taxed at ordinary income rates on their management fees and other income that is compensatory in nature.  Partners owe tax on any guaranteed payments for services provided.  Under the Wyden bill, however, a real estate entrepreneur would be taxed today on a partnership’s invested capital-capital at risk-irrespective of whether the project will ever generate income.  

  • The  Real Estate Roundtable opposes both Senate and House carried interest proposals. General partners earning a carried interest in a real estate partnership bear significant risks beyond direct capital contributions. These risks can include funding predevelopment costs, guaranteeing construction budgets and financing, and exposure to potential litigation over countless possibilities. 

  • Senator Wyden’s bill came just days after a televised interview in which President Trump indicated he still intends to address the carried interest issue.  (FOXBusiness, May 20).  “If President Trump wants to address carried interest and make the tax code more fair, he’ll be happy to support my new proposal,” said Sen. Wyden. (Wyden news release, May 23) 
  • Other legislative proposals to reform the taxation of carried interest were introduced in March by Sen. Tammy Baldwin (D-WI) and House Ways and Means Committee member Bill Pascrell, Jr. (D-NJ).  (News releases: Baldwin and Pascrell)
  • The Roundtable and 13 other national real estate organizations sent a letter to members of the House Ways and Means Committee on March 26 about the adverse impact that the Baldwin-Pascrell legislation (H.R. 1735) would have on U.S. real estate and entrepreneurial risk taking.  (Roundtable Weekly, March 29)  
  • The letter notes how the bill would result in a huge tax increase on Americans who use partnerships in businesses of all types and sizes – and would be particularly harmful to the nearly 8 million partners in U.S. real estate partnerships.  
  • The March 26 letter states, “The false narrative surrounding the carried interest issue is that it targets only a handful of hedge fund billionaires and Wall Street executives.  The carried interest legislation is far broader and would apply to real estate partnerships of all sizes-from two friends owning and leasing a townhome to a large private real estate fund with institutional investors.” 

The Real Estate Roundtable opposes both Senate and House carried interest proposals.  General partners earning a carried interest in a real estate partnership bear significant risks beyond direct capital contributions. These risks can include funding predevelopment costs, guaranteeing construction budgets and financing, and exposure to potential litigation over countless possibilities.

New York’s High Court Upholds Sanctity of Partnership Contracts, Confirms “Goodwill” Value for Real Estate Assets

Posted on by Trey Jackson

New York’s highest court issued a significant decision on March 27 regarding the governance, operation and dissolution of businesses structured as general partnerships; the value of “goodwill” that can inure to real estate assets; and the discounts that apply when valuing the stake of an investor with only a minority position in an enterprise.

As the vast majority of U.S. general partnerships are real estate enterprises, The Roundtable filed an amicus brief last year supporting the continuing partners.

Congel v. Malfitano concerns a general partnership formed to build, own and operate a 1.2 million square foot retail mall in upstate New York.  A 58-page agreement executed when the partners formed their business covers all aspects of its operations.  For example, the agreement prescribes two, sole means to dissolve the concern, either by (1) a majority vote of the partners, or (2) by the occurrence of an event that makes it unlawful for the business to carry on.

After negotiations to buy-out the defendant’s 3.08 percent minority stake failed, he sent a notice letter to unilaterally dissolve the partnership.  Concerned that the letter could force liquidation and preclude refinancing the asset, the remaining partners continued the business and filed suit.  They alleged that the minority partner committed a “wrongful dissolution” that breached their written agreement. 

The Court of Appeals agreed with the ongoing partners on the dissolution issue.  It re-affirmed prior holdings that, while “partners are statutorily empowered [under New York law] to dissolve the partnership at any time, wrongfully dissolving partners may be liable to the expelled partner for breach of the partnership agreement.”  Moreover, the minority partner could not obtain recourse to “default” statutory standards for dissolving “at will” partnerships – which can be unwound unilaterally by any single partner – because the written agreement at issue left “no room for other means of dissolution” and the parties “clearly specified under what terms [their partnership] could be dissolved.”  Accordingly, the court deemed the minority partner’s dissolution letter as wrongful.  

Congel further addressed key principles to ascertain the value of the minority stake owed to the defendant by the partners who continued operations, including:

  • Goodwill Value:  New York law provides that a wrongfully dissolving partner should not benefit from the enterprise’s “goodwill,” an intangible asset attributable to the “patronage and support of regular customers” and the “positive advantage … acquired by a proprietor in carrying on a business.”  The appeals court thus affirmed the trial court’s factual finding “that the shopping mall and the mall’s tenants attract regular loyal, shoppers” – such that the value of partnership’s goodwill component (aside from its real property and cash holdings) should be deducted from the defendant’s minority interest.

  • Minority Discount: The Congel decision acknowledged that “a minority discount is a standard tool in valuation of a financial interest, designed to reflect the fact that the price an investor is willing to pay for a minority ownership interest in a business, whether a corporation or a partnership, is less because the owner of a minority interest lacks control of the business.”  It held that a minority discount applied here, to reflect a “determination of the fair market value of the wrongfully dissolving partner’s interest as if that interest were being sold piecemeal and the rest of the business continu[ed] as a going concern.”

As the vast majority of U.S. general partnerships are real estate enterprises, The Roundtable filed an amicus brief last year supporting the continuing partners.  The Building Owners and Managers Association (BOMA) International, CRE Finance Council, International Council of Shopping Centers, Nareit®, National Association of Home Builders, National Multifamily Housing Council, New York State Association of REALTORS®, and the Real Estate Board of New York also joined the amicus brief.

GOP Leaders Considering Legislation to Make Recent Tax Cuts Permanent; House Speaker Paul Ryan Announces Retirement, Endorses Majority Leader Kevin McCarthy

Posted on by Trey Jackson

House and Senate GOP leaders signaled this week they intend to pursue legislation that would make permanent the individual tax provisions enacted as part of the Tax Cuts and Jobs Act (P.L. 115-97) enacted last December (Roundtable Weekly, Dec. 22, 2017)

House Majority Leader Kevin McCarthy (R-CA), left, and House Ways and Means Committee Chairman Kevin Brady (R-TX) discussed the impact of  recent tax reform; a possible phase 2 effort; the recent resignation of House Speaker Ryan; and the endorsement of McCarthy as his successor on  CNBC’sSquawk on the Hill  .

Under current law, many of the individual provisions – including the lower effective tax rate on pass-through business income – will sunset after 2025.  Although the nonpartisan Congressional Budget Office (CBO) projected last week that the tax bill would add 1.9 trillion dollars to the national debt over a decade, making permanent the cuts that lapse after 2025 could add an additional 1.5 trillion over the next decade, according to a Tax Foundation analysis.  (Roundtable Weekly, April 13 and Reuters, April 17)
 
House Speaker Paul Ryan (R-WI) on Tuesday said, “We fully intend to make these things permanent, and that’s something we’ll be acting on this year.” (Reuters, April 17).  Senate Majority Leader Mitch McConnell (R-KY) added, “If they are interested in making the individual rates permanent that’s something we ought to take a look at. I don’t know why we wouldn’t want to do that” (Politico, April 17)
 
In addition to making the individual provisions permanent, House Ways and Means Committee Chairman Kevin Brady (R-TX) has also floated making immediate business expensing permanent, among other changes. (Bloomberg, March 28 and Miller & Chevalier, DC TaxFlash, April 17)
 
Although prospects for passing what President Trump calls a “phase-two” tax cut bill in the House are possible, a Senate bill would require 60 votes for passage, which Democrats could prevent in the closely divided chamber.  (CNBC, April 5)
 
Brady and House Majority Leader Kevin McCarthy (R-CA) on Tuesday discussed the impact of  recent tax reform; a possible phase 2 effort; the recent resignation of House Speaker Ryan; and the endorsement of McCarthy as his successor on CNBC’s Squawk on the Hill .
 
After recently announcing his retirement from Congress when the current legislative session ends in early 2019, Ryan declared his support for McCarthy as the next GOP House Speaker. (Deloitte, April 13 and ABC News, April 13) 
 
The next GOP House Speaker candidate must get 218 votes in a floor vote, which gives the 30-member conservative House Freedom Caucus leverage to propose one of their members for a leadership position.  Such negotiations will be irrelevant if Republicans lose the House in the 2018 midterm elections. (USA Today, April 18)

House Passes FAA Reauthorization, Including Roundtable-Backed “One Engine Inoperative” Language Regarding Allowable Building Height

Posted on by Trey Jackson

Legislative language that could affect the allowable heights of buildings near airports passed the House today (393-13) as part of a bill ( H.R. 4 ) extending authorization of the Federal Aviation Administration (FAA) for five years. 

The so-called One Engine Inoperative (OEI) language included in the House-passed FAA bill addresses an Obama-era proposal that could affect land development and property values near U.S. airports.  The  proposed 2014 policy change would alter decades-old standards by compelling the FAA to consider whether a building or other structure poses a hazard to navigable airspace if a plane engine fails on takeoff.   

The FAA’s current funding and revenues are set to expire this September 30.  With the House’s passage of FAA reauthorization today, the Senate is expected to follow suit and aims to have long-term reauthorization in place by August. ( Roll Call , April 16 and CNN , April 27) 

The so-called One Engine Inoperative (OEI) language included in the House-passed FAA bill addresses an Obama-era proposal that could affect land development and property values near U.S. airports.  The proposed 2014 policy change would alter decades-old standards by compelling the FAA to consider whether a building or other structure poses a hazard to navigable airspace if a plane engine fails on takeoff.    

According to a study of the issue, approximately 4,000 buildings near 380 airports throughout the U.S. could become “non-conforming” if such OEI policies were ever to take effect.  The proposed standards would modify take-off and landing flight paths in a manner that restricts allowable building heights and development potential in growth centers and transportation hubs surrounding the nation’s airports.   

When the FAA proposed the policy change, it explained it was not due to any public safety concerns but rather to allow airlines to carry more passenger and freight cargo.  [See technical comment letter submitted July 2014 by The Roundtable and coalition partners]. 

The language passed by the House would require that any changes to current OEI policies must first go through a full public rulemaking process.  Additionally, the White House Office of Management and Budget would be compelled to conduct a full cost-benefit analysis of any such FAA action.  

The Roundtable, the National Association of Real Estate Investment Trusts (NAREIT), and other real estate trade groups have long urged Congress to include the OEI rulemaking and cost-benefit language in any FAA reauthorization bill. (Roundtable Weekly, Feb. 12, 2016).  

The Roundtable will continue to monitor the Senate’s actions on FAA reauthorization and urge inclusion of similar provisions as the legislation now moves to the other side of Capitol Hill.

Commercial Real Estate Industry Leaders See Balanced Market Fundamentals for Q2

Posted on by Trey Jackson

The Roundtable’s Q2 2018 Economic Sentiment Index released yesterday shows that as plentiful financing and equity continue to drive commercial real estate investment activity, industry leaders continue to see balanced market fundamentals, despite rising costs of construction and an uncertain outlook for markets in 2019.

The Roundtable’s  Q2 2018 Economic Sentiment Index   shows  plentiful financing and equity continue to drive commercial real estate investment activity.   

The report’s Topline Findings include: 

  • The Q2 index came in at 51, a three point drop from Q1. Awareness of the length of current cycle and trepidation about economic conditions in 2019 has led to a general feeling of cautiousness. That said, availability of affordable financing and plentiful equity for the best quality investments are driving continued investment activity. 
  • Despite rising costs of construction, development continues somewhat unabated. Some responders pointed to the expectations of the millennial generation as the driver for reimagined building uses and new developments. 
  • Asset values are perceived as peaking for the most property types and markets. Industrial and multifamily assets are viewed as classes with room to continue pricing growth, whereas many felt retail assets are overpriced and possibly overbought.

    Roundtable President and CEO Jeffrey DeBoer, “As our Q2 Index show, with debt and equity readily available for quality investments and new development opportunities, industry leaders are being forced to reevaluate, innovate, and reimagine their buildings – driven by an influx of the millennial generation and their new set of expectations for office and multifamily markets.”

  • Responders noted the absence of previously ubiquitous Asian capital this quarter. Despite this absence, all responders felt debt and equity was readily available for quality investments.  

“Real estate fundamentals continue to remain strong into 2018, where balance between supply and demand in almost every sector is healthy, while debt and equity for real estate as an asset class remains abundant,” said Roundtable President and CEO Jeffrey DeBoer. “There are fears about political uncertainty, trade wars and interest rate increases, which are having some impact and creating a manageable amount of uncertainty for the markets for the remainder of 2018 and looking ahead to 2019.” 

DeBoer added, “As our Q2 Index shows, with debt and equity readily available for quality investments and new development opportunities, industry leaders are being forced to reevaluate, innovate, and reimagine their buildings – driven by an influx of the millennial generation and their new set of expectations for office and multifamily markets. It is vital for our industry to continue developing new technology solutions for the ever evolving demands of the market.” 

Data for the Q2 survey was gathered in April by Chicago-based FPL Associates on The Roundtable’s behalf.  The next Sentiment Survey covering Q3 2018 will be released in August.

“VisitU.S.” Coalition, Roundtable Advance Policy Recommendations to Boost Economic Growth

Posted on by Trey Jackson

Robust international travel helps power economic growth and commercial real estate through tourism dollars directly spent at U.S. hotels, resorts, stores, home purchases, attraction, and investment properties. That is the message to policymakers from the multi-industry VisitU.S. Coalition, which aims to safely and securely welcome more overseas travelers to the U.S. – who stay an average of 18 nights and spend approximately $4,360 at hotels, stores, restaurants and attraction properties on business and leisure trips. (VisitU.S. Policy Agenda) 

The multi-industry  VisitU.S. Coalition  aims to safely and securely welcome more overseas travelers to the U.S. – who stay an average of 18 nights and spend approximately $4,360 at hotels, stores, restaurants and attraction properties on business and leisure trips. (  VisitU.S.Policy Agenda  )

  • The coalition advocates for policies from the Trump Administration and Congress to regain the nation’s lost share of the global travel market by 2020, which will result in 88 million international visitors who directly support 1.3 million U.S. jobs and $294 billion in travel exports – crucial to achieving the Administration’s economic goals. (Roundtable Weekly Jan. 19 Feb. 9)
  • To address policies that may encourage or discourage in-bound travel – as well as the impact of  the travel and tourism market on CRE – The Roundtable will host a panel discussion during its June 14 Annual Meeting entitled “ Enhancing International Travel and Tourism.
  • “We should be encouraging international tourism and promoting policies that not only make the visa system more secure and accessible, but also streamline the process,” said Jeffrey D. DeBoer, President and CEO of The Real Estate Roundtable. “Increasing inbound international travel to the U.S. helps power the commercial real estate industry here at home through spending at hospitality, retail, attraction, health, and investment properties – all of which generate revenues to boost overall economic growth and create American jobs,” DeBoer added.
  • Jonathan Tisch, chairman and CEO of Loews Hotels & Co. spoke about the coalition’s concerns and goals during a Monday interview with CNBC’s “Squawkbox” and at an international hospitality industry investment conference.  ( Squawkbox Interview, June 4 and GlobeSt, June 6)
  • In a June 4 Travel Weekly editorial, Tisch also addressed the Trump Administration’s proposal to eliminate Brand USA, a public-private partnership created by Congress to promote America as the best destination for international visitors.  Tisch writes, “The program returns an estimated $28 in visitor spending for every $1 invested –  without a single dollar from U.S. taxpayers. Although the fees that fund it were extended, after 2020, those monies will be diverted to the U.S. Treasury instead of Brand USA. Unless this is fixed, the program will be in limbo.”

Led by the U.S. Travel Association and the American Hotel and Lodging Association, the VisitU.S. coalition also includes The Real Estate Roundtable, U.S. Chamber of Commerce and the American Resort Development Association. 

House Congressional Committees Move Forward on Policy Agendas, Add New Members

Posted on by Trey Jackson

With Democrats now in control of the House of Representatives, key congressional committee chairs this week announced their policy agendas and appointed additional members.  (Roundtable Weekly, Jan. 11)

House Financial Service Committee:

  • Rep. Maxine Waters (D-CA), the new chair of the powerful House Financial Services Committee, on Wednesday  outlined a broad range of priorities that include policy issues affecting commercial real estate.  In her first speech as committee chairwoman, Waters said, “Some of the big issues we are going to try to work on a bipartisan basis include long-term reauthorization and reform of the National Flood Insurance Program (NFIP), Terrorism Risk Insurance (TRIA), and the reauthorization of the job-creating Export-Import Bank.”  (House Financial Committee Services, Jan. 16)

    Rep. Maxine Waters (D-CA), the new chair of the powerful  House Financial Services Committee ,  outlined a broad range of priorities  that include policy issues affecting commercial real estate.

     
    [The Terrorism Risk Insurance Act, enacted following 9/11 and extended three times since 2002, is currently scheduled to sunset at the end of 2020.  A long-term extension of TRIA is a major policy focus of The Real Estate Roundtable. Terrorism risk insurance coverage is essential for many businesses – including commercial real estate. Without TRIA, private markets cannot provide the American economy with the coverage it needs. The Roundtable also supports a long-term reauthorization of NFIP and improvements to the program that would expand private markets.]

  • Chairwoman Waters addressed a broad range of other financial policy priorities, including regulatory oversight of Wall Street; the future of the government sponsored enterprises Fannie Mae and Freddie Mac; diversity in the workplace; and housing affordability.

[A Federal Reserve report released this week addresses how student debt hinders homebuying for young adults and the role it plays on their decisions to live in rural or urban areas (Wall Street Journal and CNBC, Jan. 16).  “Over 20 percent of the overall decline in homeownership among the young can be attributed to the rise in student loan debt.  This represents over 400,000 young individuals who would have owned a home in 2014 had it not been for the rise in debt,” according to the report. “As policymakers evaluate ways to aid student borrowers, they may wish to consider policies that reduce the cost of tuition …”  (Federal Reserve, Consumer & Community Context, Jan. 2019) ]

  • Waters added in her Wednesday speech, “As Chairwoman I will continue to find areas where we can all work together. Ranking Member McHenry and I have a relationship, and just last Congress we worked together on several bills … So I am very hopeful that we will be able to get some good bipartisan work done in Committee.”  (House Financial Services Committee, Jan. 16) Rep. Patrick McHenry (R-NC), the House GOP’s former chief deputy whip, is now the committee’s ranking member.
  • House Financial Services member Rep. J. French Hill (R-AR) will address a joint Real Estate Capital Policy Advisory Committee and Research Committee (RECPAC) meeting on the morning of Jan. 29, before the start of the Roundtable’s State of the Industry business meeting.

House Ways and Means Committee:

  • New House Ways and Means Committee Chairman Richard Neal (D-MA) announced this week the committee’s membership and new chairs for its subcommittees for the 116th Congress.  (Ways and Means, Jan. 16)

    New House Ways and Means Committee Chairman Richard Neal (D-MA) announced the committee’s  membership and new chairs  for its subcommittees for the 116th Congress.  (Ways and Means, Jan. 16)
  • Treasury deputy assistant secretary Jennifer Bang responded to Neal’s invitation by offering other officials to testify. “If the purpose of the upcoming hearing is to inform Congress and the public, we are confident that goal will be best served by testimony from the senior Department officials with the deepest and broadest expertise on the subject of the hearing,” (The Hill, Jan. 17)  
  • Yesterday, Neal urged Mnuchin to reconsider the request, noting that Mnuchin’s trip to Davos, Switzerland for the annual World Economic Forum next week has been cancelled.  “With more than 70,000 Treasury employees furloughed and missing paychecks, I strongly believe Secretary Mnuchin himself should appear before our committee and answer members’ questions. Nearly a month into the shutdown and with tax filing season rapidly approaching, the Treasury Department has announced plans to call more than 35,000 employees back to work, but has not provided details about this action to our committee,” Neal stated.  (House Ways and Means News Release, Jan. 17)

Chairman Neal – the long-standing co-chair of the House Real Estate Caucus – will discuss prospects for tax policy legislation with Roundtable Board Member John Fish (Chairman and CEO, SUFFOLK) during The Roundtable’s State of The Industry Meeting on Jan. 29 in Washington, DC.  

Congress Ushers In New Leadership on Key Committees

Posted on by Trey Jackson

 

The 116th Congress convened last week with Democrats in control of the House for the first time in eight years as Nancy Pelosi (D-CA) was reelected House Speaker. Among the new leadership is a fresh slate of committee chairs who will address issues of importance to real estate in the areas of tax; capital and credit; energy; infrastructure; homeland security and other policy areas.  The lawmakers who will set agendas for key committees in a divided Congress include:

Rep. Richard Neal of Massachusetts – the long-standing co-chair of the House Real Estate Caucus – is the new Democratic chairman of the tax-writing  House Ways and Means Committee  .

Tax:

  • Rep. Richard Neal of Massachusetts – the long-standing co-chair of the House Real Estate Caucus – is the new Democratic chairman of the tax-writing House Ways and Means Committee.  He will be joined by 10 new Democratic committee members. Former Chairman Kevin Brady (R-TX) – a principal author of the 2017 tax overhaul law – now serves as ranking member.  Neal has indicated he may hold several rounds of hearings on the legislation’s economic impact and alternative proposals.  Ways and Means may also consider a technical corrections bill – including a correction related to the depreciation schedule for nonresidential, interior real estate improvements  (Roundtable Weekly, Dec. 7 and Jan. 4)
  • Sen. Chuck Grassley (R-UT) is now the chairman of the tax-writing Senate Finance Committee, following the retirement of Sen. Orrin Hatch (R-UT).  This will be Senator Grassley’s third tenure at the helm of Finance.  Sen. Ron Wyden (D-OR) retains his ranking minority member seat.  The committee may consider proposals affecting the retroactive renewal and extension of temporary tax breaks.  Grassleyreleased his tax priorities for the committee yesterday and stated this week that Congress will not grant President Trump any expansion of his executive authority over tariff and trade issues. (Reuters, Jan. 9)

Capital and Credit:

Rep. Maxine Waters (D-CA) is the first woman and African-American to lead the  House Financial Services Committee  . 

  • Rep. Maxine Waters (D-CA) is the first woman and African-American to lead the House Financial Services Committee.  Among the wide-ranging issues addressed by the committee that would require Republican support for enactment is a long-term approach to Terrorism Risk Insurance.  The Terrorism Risk Insurance Act (TRIA) has been extended three times since 2002 and is currently scheduled to expire at the end of 2020.  Waters has historically been a strong supporter of TRIA and will play a pivotal role in the reauthorization process. The committee is also expected to address the reauthorization of  National Flood Insurance Program, which is scheduled to sunset on May 31, 2019.  Waters has also expressed interest in working with the Senate on reforming government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. (Insurance Journal, Jan. 7)  Rep. Patrick McHenry (R-N.C), the House GOP’s former chief deputy whip, is now the committee’s ranking member.
  • In the Senate, the Banking, Housing and Urban Affairs Committee is led by Chairman Mike Crapo (R-ID), with Sen. Sherrod Brown (D-OH) serving as the ranking member.  Along with terrorism risk insurance, flood insurance and reform of the GSEs, several capital formation proposals considered during last year’s lame duck session may be addressed by the committee in 2019. Last year, the committee passed important banking legislation to reduce regulatory burden and clarify the High Volatility Commercial Real Estate (HVCRE) rules.

Energy and Commerce

  • The House Energy and Commerce Committee will be chaired by Frank Pallone, Jr. (D-NJ), who yesterday announced the Committee’s six subcommittees for the 116th Congress – including one on Environment and Climate Change.  Rep. Greg Walden (R-OR) is the ranking member.  Climate change will be a focus of the full committee’s first round of hearings.  Policy issues affecting energy efficiency in buildings will likely be considered by the committee. 

The Senate Committee on Energy and Natural Resources is now chaired by Sen. Lisa Murkowski (R-AK), who is expected to propose a broad energy bill that she first introduced in 2015.

  • House E&C also has jurisdiction over the public-private partnership “Brand USA” program to boost U.S. job creation, grow our economy, and reduce the foreign trade imbalance to attract more international travelers to visit our country.  The Roundtable is a member of the Visit U.S. coalition, which advocates for Congress to reauthorize BrandUSA (which expires in 2020 without legislative action). 
  • Building codes that could promote increased energy efficiency may also be addressed by the Senate Committee on Energy and Natural Resources, now chaired by Sen. Lisa Murkowski (R-AK), with Sen. Joe Manchin (D-WV) serving as the ranking member.  Murkowski is expected to propose a broad energy policy bill that she first introduced in 2015.  (Roundtable Weekly, April 25, 2016)

Climate:

  • In addition to the climate subcommittee mentioned above, a House Select Committee on the Climate Crisis was announced by Speaker Pelosi in her opening remarks for the 116th Congress  (Politico, Jan. 3).  Chaired by Rep. Kathy Castor (D-FL), the committee was formerly a select committee on global warming and energy independence.  (National Public Radio, Dec. 30)

Infrastructure:

  • The House Transportation & Infrastructure Committee will be led by Rep. Pete DeFazio (D-OR) with Rep. Sam Graves (R-MO) as ranking member.  DeFazio recently stated,  “As Chairman, I will be a tireless advocate for the kind of infrastructure investment that results in job creation, increased economic growth, and decreased emissions.” (Committee News Release, Jan. 4)
  • Roundtable President and CEO Jeffrey D. DeBoer addressed the nation’s evolving infrastructure needs in an interview on CNBC Squawkbox in June 2017.  (Roundtable Weekly, Oct. 16, 2018).
  • Sen. John Barrasso (R-WY) will continue to chair the Senate Environment & Public Works Committee while Sen. Tom Carper (D-DE) will remain the ranking Democrat.  Legislation to reauthorize surface transportation programs – including the Highway Trust Fund that finances most federal spending for roads and mass transit – will likely be a priority for both committees.

Homeland Security:

  • The Roundtable’s Homeland Security Task Force (HSTF) and Real Estate Information Sharing and Analysis Center remain focused on information sharing and working with law enforcement and intelligence agencies to encourage measures that businesses can take to more effectively mitigate and manage risk from a variety of physical and cyber threats.

   Sen. Lindsey Graham (R-SC) will Chair the  Senate Judiciary Committee .

Immigration and Visa Policy:

  • The House and Senate Judiciary committees have oversight over immigration-related issues such as the EB-5 investment program, visas to attract workers at all skill levels, and tourist visa reforms advocated by the Visit U.S. coalition to boost international travel to our country. 
  • The House Judiciary Committee will be chaired by Rep. Jerrold Nadler (D-NY) with Rep. Doug Collins (R-GA) as ranking member.  Sen. Lindsey Graham (R-SC) takes the gavel of the Senate Judiciary Committee from Sen. Chuck Grassley (R-IA), with Dianne Feinstein (D-CA) returning as Ranking Member.  

Many national policy issues affecting CRE that fall within the jurisdiction of these committees in the 116th Congress will be discussed at The Roundtable’s next State of The Industry business meeting and policy advisory committee meetings on Jan. 29-30 in Washington, DC. 

 

Roundtable, Industry Coalition Voice Concerns That “Enhanced Vetting” Proposal Could Dampen Economy by Deterring International Visitors to U.S.

Posted on by Trey Jackson

A multi-industry travel and tourism coalition that includes The Real Estate Roundtable submitted formal comments on May 29 urging the State Department to withdraw an “enhanced vetting” proposal for visitors traveling to the U.S. – a dramatic expansion of information collection that could further reduce the downward trend of in-bound tourism and its significant economic benefits.  The Roundtable is also part of the  VisitUS Coalition , which expressed concerns about the proposal in April.  [Roundtable Weekly, April 13, 2018.] 

A multi-industry travel and tourism coalition that includes The Real Estate Roundtable submitted  formal comments  on May 29 urging the State Department to withdraw an  “enhanced vetting” proposal  for visitors traveling to the U.S . 

The business coalition concerns submitted this week addressed: 

  • The “highly competitive” global market to capture foreign travelers “is sensitive to new and evolving security protocols.”  The comments also address the department’s proposal to require all visitors seeking a U.S. visa – about 15 million applicants each year – to provide extensive information on social media use, history of international travel, and other matters.  Currently, only a much smaller subset of visa applicants identified as presenting a “threat profile” to national security must answer these questions. 
  • “New requirements that make it more challenging to obtain U.S. visas can affect the willingness and interest of international travelers to visit the United States rather than other countries,” the coalition wrote.  “Safeguarding national security and growing the U.S. economy by encouraging international visitors are compatible, significant objectives. America can be both the most secure and the most visited country in the world.”     
  • Noting that the U.S. has attracted 7.4 million fewer overseas travelers in 2016-2017 – with corollary declines in visitor spending at American hotels, resorts, stores and attraction properties – the coalition urged the State Department to re-think its “enhanced vetting” proposal.  
  • The comments also explained that the dip in the U.S. share of the global travel market hinders the Trump Administration’s foreign trade goals.  “Money spent here by foreign travelers counts as an export for the United States; indeed, international travel is our country’s largest export of services accounting for $245 billion in total travel exports, and the second largest of any economic sector,” the coalition wrote.  

Roundtable Panel on Enhancing International Travel and Tourism

  • The Trump Administration also announced this week that it will begin limiting the length of validity for some visas issued to Chinese citizens, starting June 11.  (Bloomberg, May 29) 
  • To address policies that may encourage or discourage in-bound travel to the U.S.– as well as the impact of  the travel and tourism market on CRE – The Roundtable will host a panel discussion during its June 14 Annual Meeting. 

The American Hotel & Lodging Association and the U.S. Travel Association lead the multi-industry VisitUS coalition, which also includes the U.S. Chamber of Commerce and the American Resort Development Association.  (VisitU.S. Policy Agenda, Roundtable Weekly, March 2)

Industry Execs Engage Lawmakers on National Policy Issues; Ventas CEO Debra Cafaro Elected Roundtable Chair

Posted on by Trey Jackson

Congressional lawmakers and industry leaders discussed national policies affecting commercial real estate this week during The Real Estate Roundtable’s 2018 Annual Meeting, where Debra A. Cafaro (Chairman & CEO, Ventas, Inc.) was elected to a three-year term as Roundtable Chair. 

Debra A. Cafaro  (Chairman & CEO, Ventas, Inc.), right, was elected to a three-year term as Roundtable Chair, following  William C. Rudin ‘s (Vice Chairman & CEO, Rudin Management, Inc.), left, term.

  • Roundtable Chair William C. Rudin  (Vice Chairman & CEO, Rudin Management, Inc.) kicked off yesterday’s business meeting with a summary of the organization’s successful efforts to diversify the membership and announced its newly-released FY2018 Annual Report, “Building Success.”  
  • Following Cafaro’s approval as Chair starting July 1, Real Estate Roundtable and President Jeffrey DeBoer said, “Bill Rudin and Deb Cafaro follow a long line of distinguished business leaders who have pursued a fact-based, pro-growth agenda in Washington on behalf of the industry.  We are confident that our new Chair will continue that tradition and we look forward to her leadership.” 
  • Cafaro noted The Roundtable’s public policy agenda remains full of key issues that require further engagement with policymakers: “Above all, we must uphold our independent & respected position on Capitol Hill, emphasizing our optimism about the economy and the positive contributions the real estate industry provides as a job creator and as a cornerstone for retirement savings.”   
  • Cafaro’s election as the first female chair for The Roundtable culminates years of service.  She joined its board of directors in 2011, became board secretary in 2015 and chair-elect and secretary in 2017. 

National policymakers and featured speakers at yesterday’s meeting included: 

The economic importance of foreign travel and tourism to the United States’ economy and commercial real estate industry was the focus of a panel discussion during The Roundtable’s 2018 Annual Meeting. (enlarge photo)

  • House Majority Leader Kevin McCarthy (R-CA) and Senate Minority Leader Chuck Schumer (D-NY) discussed policy issue priorities for their party. 
  • House Ways and Means Committee Chairman Kevin Brady (R-TX) was presented with The Roundtable’s Champion of the Economy Legislative Leadership Award.  He also engaged meeting attendees on the results of recently enacted tax legislation. 
  • Rep. John Larson (D-CT) and Rep. Gregory Meeks (D-NY) focused on the House Democratic legislative agenda. 
  • The economic importance of foreign travel and tourism to the United States was the focus of a discussion that included Sen. Amy Klobuchar (D-MN); American Hotel & Lodging Association President & CEO Katherine Lugar; U.S. Travel Association President & CEO Roger Dow; and Empire State Realty Trust Chairman and CEO Tony Malkin. The Roundtable is a member of the VisitU.S. Coalition, which is encouraging policy solutions to address a recent drop in travel to the U.S. and the resulting loss to the economy and jobs. (Roundtable Weekly, Feb. 9) 
  • Cook Political Report National Editor Amy Walter and former Governor of Virginia Terry McAuliffe offered separate insights and remarks on the upcoming mid-term elections. 
  • An evening dialogue with former White House Press Secretary to President Barack Obama Josh Earnest and former Deputy White House Chief of Staff to President George W. Bush Karl Rove focused on how their experience with past Administrations offers perspective about current and future legislative efforts. 

The Roundtable’s Policy Advisory Committees also met this week in conjunction with the Annual Meeting for in-depth discussions in the policy areas of tax; capital and credit; energy and environment; and homeland security.  Next on The Roundtable’s calendar is the Fall Meeting on September 26 in Washington, DC (Roundtable-level members only).