Democrats Advance Human Infrastructure Package While Facing Tight Deadlines on Physical Infrastructure Bill, Budget Funding and Debt Ceiling

Capitol Building in Washington, DC side view
House Democrats this week advanced 13 committee bills – including positive measures affecting commercial real estate – that will be assembled into a massive $3.5 trillion “human” infrastructure package for policymakers to consider as soon as this month. (See Roundtable Weekly stories below for details on tax, energy and transportation legislation). 

Human and Physical Infrastructure 

  • Democrats aim to pass President Joe Biden’s massive social spending and tax package in the House and Senate without Republican support using the budget reconciliation process – despite signals of resistance from some caucus members in a narrowly divided Congress. (BGov, Sept. 15)  
  • Additionally, House Speaker Nancy Pelosi (D-CA) has set a Sept. 27 deadline for the House to vote on a separate, bipartisan “physical” infrastructure bill passed by the Senate on Aug. 10. (Roundtable Weekly, Sept. 10 and Aug. 20
  • Congress also needs to act on FY22 government funding by October 1 to avoid a partial shutdown – and reach agreement on raising the federal debt ceiling in October to avoid a national credit downgrade or default. (Politico, Sept. 12) 

Roundtable Response

Real Estate Roundtable Town Hall on Reconciliation bill

[Photo, right to left: Roundtable Chair John Fish (Chairman and CEO, Suffolk); Roundtable President and CEO Jeffrey DeBoer and Senior Vice President & Counsel Ryan McCormick during today’s Town Hall discussion on the House reconciliation package.]

  • The physical infrastructure bill’s impact on CRE was the focus of a discussion published Sept. 15 in The Real Deal, featuring Roundtable Chair John Fish (Chairman and CEO, Suffolk) and Roundtable President and CEO Jeffrey DeBoer. 
  • Fish stated in the article, “At the end of the day, these are investments that the government is going to be sponsoring, that creates economic activity, job creation, and a sense of equality across our communities of America.”
  • DeBoer commented, “We think it’s very important and very much needed, long overdue. I think everyone agrees that what is needed immediately is to work on our infrastructure, repairing roads, bridges, inter-city rail, broadband, water systems, and all of these things are definitely needed.” (The Real Deal, Sept. 15)
  • The Real Estate Roundtable also held an all-member Town Hall discussion this afternoon to address specific measures in the House’s human infrastructure bill, including its tax policy aspects. The event featured The Roundtable’s John Fish, Jeffrey DeBoer and Senior Vice President & Counsel Ryan McCormick. 
  • A coalition of 13 real estate trade organizations, including The Roundtable, yesterday urged congressional leaders to raise the statutory debt limit as soon as possible. The letter stated, “Given the more than $8.6 trillion in mortgage debt backed by the federal government through Fannie Mae, Freddie Mac, Ginnie Mae and other federal agencies, the housing and real estate markets are particularly susceptible to any instability stemming from concern about the U.S. meeting its financial obligations.” (Coalition letter, Sept. 16) 

The many policy issues now in play for CRE will be the focus of discussions during The Roundtable’s Fall Meeting on Oct. 5 in Washington, DC (Roundtable-level members only). 

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House Ways & Means Scheduled to Mark-up Revenue Measures Next Week

Ways and Means Committee wiki

The Real Estate Roundtable continued to weigh in with lawmakers with concerns on a number of Biden administration tax proposals as the House Ways and Means Committee prepared to mark-up tax measures early next week that may potentially affect commercial real estate. 

Ways & Means Timeline 

  • Congressional committees are aiming to complete work by Sept. 15 on various portions of the massive infrastructure package, which Democrats will consider under “reconciliation” budget rules that require a simple majority to pass in the narrowly divided Congress. (Wall Street Journal, August 24)
  • Ways and Means Chairman Richard Neal (D-MA) expects to release details on his revenue proposals over the weekend. The top ordinary tax rate and the corporate tax rate are expected to be a key focus of the committee’s deliberations. (The Hill, Sept. 9)
  • Ways and Means member Stephanie Murphy (D-FL) stated this week she will vote against the committee’s measures unless more time is available to review the proposals. (CNN, Sept. 9)
  • Rep. Murphy, a moderate, said she supports the use of reconciliation to enact Democrats’ economic priorities, but at this stage, she said, “I have no choice but to vote ‘no’ on each subtitle and on final passage,” she said.  (Roll Call, Sept. 9)
  • “I don’t know how much we’re spending, how much we’re raising, how we’re spending some of the money and how we’re raising any of the money,” she said. (Murphy statement, YouTube, Sept. 9) 

Revenue Raisers 

Tax issues grid choice image

President Biden’s tax proposals that may be considered by Ways & Means include: 

Like-kind Exchanges (Section 1031) 

  • A coalition of 27 business organizations, including The Real Estate Roundtable, wrote to congressional tax-writing committee leadership on Sept. 7 about how Biden’s proposed legislative restrictions on like-kind exchanges, if enacted, would undermine the economic recovery while causing unintended and unnecessary risks to the strength and stability of U.S. real estate.
  • The coalition’s letter details how like-kind exchanges under section 1031 support jobs and investment; the health of U.S. commercial real estate and real estate markets; and the preservation of family-owned farms, ranches, and forestland.
  • Tax Notes on August 9 published an article entitled “The Tax Policy Case for Section 1031” by Roundtable Tax Policy Advisory Committee Member Don Susswein (Principal, RSM US LLP), Roundtable Senior Vice President and Counsel Ryan McCormick and Kyle Brown (Senior Manager, RSM).
  • The article addresses how like-kind exchanges increase net investment, boost state and local tax revenue, stimulate capital expenditures which leads to job growth, reduce leverage and financial risk, lower rents for households, and support healthy property values.  The article also shows how use of section 1031 also creates a ladder of economic opportunity for minority-, veteran-, and women-owned businesses and cash-poor entrepreneurs who may lack access to traditional sources of financing.
  • Advertising messages on the need to preserve section 1031 will begin running on Sept. 13 in Politico’s Morning Money

Pass-Through Business Income Deduction (Section 199A) 

  • More than 120 business trade associations, including The Roundtable, are part of the broad-based Main St. Employers coalition, which wrote to Ways and Means Chairman Neal on Sept. 8 about new Biden tax proposals affecting individually- and family-owned businesses. (Coalition letter)
  • The letter states, “Proposals to raise rates on pass-throughs and C corporations, cap the Section 199A deduction, increase the capital gains tax, and impose capital gains at death would raise taxes on Main Street businesses when they operate, when they are sold, and when they are passed on to the next generation.” 

Step-up in Basis and Taxation of Gains at Death 

  • A Sept. 9 letter to congressional tax-writing committee leadership from a large multi-industry trade association coalition that includes The Roundtable strongly opposed Biden administration proposals to death a taxable event for inherited assets and eliminating stepped-up basis.
  • The Family Business Estate Tax Coalition letter also cited a recent EY report that showed if stepped-up basis were repealed via carryover basis, 40,000 jobs would be lost every year in the first 10 years after enactment and GDP would decrease by $50 billion over 10 years.
  • The National Association of Realtors also weighed in on the administration’s tax proposals above in a Sept. 7 letter to leaders of the House Ways and Means and Senate Finance Committees. The letter emphasized how these the proposals could negatively impact the health of the commercial real estate market and limit the production of much-needed affordable rental housing and result in higher rent costs.
  • Policymakers are also expected to address tax issues such as raising the capital gains rate, the 3.8% net investment income tax, and carried interest, as well as tax incentives for important priorities like affordable housing and energy efficiency.  

Roundtable members are encouraged to contact the Ways and Means Committee directly about the Biden tax proposals. The Roundtable and its coalition partners expect this fall will be a critical time for decisions on national tax policy affecting CRE. 

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Roundtable Raises Concerns about New and Complex Senate Proposal to Raise Taxes on Real Estate Partnerships

Jeffrey DeBoer testimony on behalf of The Real Estate Roundtable

Real Estate Roundtable President and CEO Jeffrey DeBoer expressed strong concerns following the Sept. 10 release of Senate Finance Committee Chairman Ron Wyden’s (D-OR) draft legislation to restructure pass-through tax rules and raise $172 billion in additional tax revenue from the country’s 4 million partnerships and LLCs. (Wyden Draft, Proposal Overview and Summary

Possible Economic Disruption 

  • DeBoer stated, “Partnerships are used to bring parties together to create and grow businesses that propel job creation, new investment, and productive economic activity. Partnerships contribute immensely to the culture of dynamic entrepreneurship and risk-taking that is missing in many parts of the world where business activity is dominated by large, public corporations. In this current environment, Congress should be working on ways to encourage and strengthen partnerships, not cut their knees out from under them.”
  • Over the last several decades, partnerships have grown to become a dominant form of business organization in the United States, accounting for $8.7 trillion in annual business receipts and $34.3 trillion in total assets, according to the IRS.
  • Senator Wyden’s proposal, if enacted, could have enormous and unanticipated consequences for U.S. real estate, capital investment, and economic activity. Real estate, rental, and leasing businesses represent more than half (50.4 percent) of all partnerships.
  • “The Chairman’s proposal is big, comprehensive, and not yet vetted in any meaningful way. Partnership taxation is a complicated area of the law that has evolved over decades. The proposals would apply retroactively to economic arrangements negotiated years ago. Past experience with retroactive changes to partnership tax law, in 1986, generated huge and damaging economic disruption, including massive bankruptcies, stress on all lenders, and the end of the saving and loan industry. We don’t need that kind of rash policy action again,” DeBoer added.  

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

  • Proposals in Chairman Wyden’s discussion draft that would have a significant impact on real estate partnerships include: 
  • Modifying the rules for determining whether a partner has recourse debt with respect to partnership property. The provision would require all partnership debt to be allocated in accordance with partnership profits except where a partner is the lender (sec. 752).
  • Restricting the methods available for allocating the tax attributes of contributed property among the partners in a partnership by mandating the remedial method under section 704(c).

  • In the case of property contributed to a partnership with built-in gain, requiring gain recognition by the contributing partner if the property is subsequently distributed to another partner, even if the distribution occurs after 7 years (e.g., the “mixing bowl” rule that currently applies for 7 years would apply forever).
  • Mandating partnership basis adjustments that relate to disparities between inside and outside partnership basis that arise due to partnership distributions or transfers of partnership interests. These basis adjustments are currently elective under section 754 and mandated in only certain substantial cases in sections 734 and 743.
  • Other provisions in the draft legislation would: eliminate substantial economic effect as a basis for partnership allocations and instead require partnerships to make allocations in all instances based on the “partners’ interests in the partnership” standard (except in certain “abusive” situations involving related partners). Among the other proposed changes, the bill would also subject publicly traded partnerships that earn qualifying passive income to corporate-level taxation. 

The Wyden proposal comes as Congressional Democrats are seeking new revenue sources to finance their ambitious $3.5 trillion human capital initiative. 

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The Roundtable Commemorates 20th Anniversary of 9-11 and TRIA’s Positive Impact

9-11Tribute NYC skyline

The Real Estate Roundtable this week commemorated the 20th anniversary of the 9-11 attacks by recognizing the enduring, positive impact of the Terrorism Risk Insurance Act (TRIA) and holding a joint meeting of the organization’s Homeland Security Task Force (HSTF) and Risk Management Working Group (RMWG). 

Reflection and Action 

  • Roundtable President and CEO Jeffrey DeBoer stated, “The nation and the industry reflects during this solemn anniversary week on the profound human losses, and lessons learned, from the tragic events of September 11, 2001.”
  • DeBoer added, “We also recognize the enduring, positive impact of the Terrorism Risk Insurance Act (TRIA) to help protect the economy in the event of future attacks. The Roundtable remains proud of its efforts in the wake of 9-11 and secure TRIA renewals that extend the program until the end of 2027.  Our nation remains vigilant against terrorism threats as our industry remains steadfast in working with government agencies to combat physical and cyber-terrorist attacks.” 

9-11 Legacy: TRIA 

CIAT logo

  • A Sept. 7 article in Commercial Observer reported how The Real Estate Roundtable organized a coalition of business insurance policyholders – the Coalition to Insure Against Terrorism – to win passage of TRIA.  The article states, “TRIA has provided the commercial real estate industry with a crucial backstop against losses suffered from external threats in the nearly two decades since its enactment.”

  • The article quotes Roundtable Board Member Anthony Malkin, (chairman, president and CEO, Empire State Realty Trust) on the far-reaching, positive impact of TRIA on CRE, colleges, sports stadiums and hospitals.
  • Roundtable Senior Vice President Chip Rodgers is also quoted about TRIA’s vital importance for commercial real estate, since lenders require ‘all risk’ insurance coverage — including terrorism coverage — to cover the risk of loss to the collateral. (Commercial Observer, Sept 7) 

Ongoing Industry Efforts 

REISAC logo x475

  • The Roundtable’s HSTF and the Real Estate Information Sharing Analysis Center (RE-ISAC) were launched soon after 9-11 to coordinate CRE’s response to potential future attacks and share threat information.
  • The HSTF and RMWG virtual joint meeting this week featured a discussion with Peter Bergen, whose extensive background as an expert on terrorism includes years as a journalist, documentary producer, vice president for global studies & fellows at New America, and CNN national security analyst. He is currently co-director at the Center on the Future of War at Arizona State University. Mr. Bergen discussed the current threat picture facing the United States, including the ramifications of the Taliban’s return to power in Afghanistan.
  • Roundtable participants were also joined by Shane Lamond (Lieutenant, D.C. Metropolitan Police Department) who led a discussion on civil unrest threats, the proliferation of ransomware attacks and various COVID-related challenges of re-entering buildings. 

The Roundtable is also working with the Business Continuity Coalition to develop an insurance program that protects jobs by ensuring business continuity from future economic losses from pandemics and other health emergencies that necessitate widespread government mandated closures of the economy. (Roundtable Weekly, July 23) 

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Congress Faces Daunting Fall Agenda of Infrastructure Bills, Budget Funding and Debt Limit Deadlines

red lines to Capitol

Several significant issues affecting commercial real estate converge this month as Congress faces deadlines on a $550 billion “physical” infrastructure bill, a separate $3.5 trillion “social” infrastructure package, government funding for FY2022, and the national debt ceiling.  

The full Senate will return on Sept. 13 and the House on Sept. 20. Deadlines to watch as policymakers face a daunting agenda: 

Sept. 15 — Reconciliation Bills Expected 

  • House committees this week began work on completing various portions of the massive social infrastructure package – including tax revenue raisers impacting CRE – by a Sept. 15 deadline set by House Speaker Nancy Pelosi (D-CA). The $3.5 trillion package will be considered under “reconciliation” budget rules that would only require Democratic votes to pass. (The Hill, Sept. 9 and Roundtable Weekly tax story below)
     
  • Senate Majority Leader Chuck Schumer (D-NY) has instructed his committees to finalize their parts of the upper chamber’s reconciliation bill by Sept. 15 – although this deadline is non-binding and expected to slip. (CNBC, Aug. 11)
     
  • Sen. Joe Manchin (D-WV) wrote in a Sept. 2 Wall Street Journal op-ed that Congress should take a “strategic pause” on the reconciliation package. In a 50-50 Senate, the votes of moderate Democrats such as Manchin and Krysten Sinema (D-AZ) are crucial for passage. 

Sept. 27 — House infrastructure Vote 

House of Reps vote

  • The Senate on Aug. 10 passed a bipartisan bill addressing physical infrastructure with $550 billion in new spending. (Roundtable Weekly, Aug. 13) 
  • Pelosi has set a Sept. 27 deadline for the House to vote on the Senate-passed bill. Pelosi’s move accommodated a group of 10 moderates in her caucus who insisted on de-coupling House votes on physical and human infrastructure legislation. (Roundtable Weekly, Aug. 20)
     
  • Pelosi can afford to lose only three Democratic votes in the narrowly divided House if all Republicans oppose a bill. (New York Times, Sept 5)
     
  • The Real Estate Roundtable held an all-member Infrastructure Town Hall on Aug. 12 to discuss the Senate infrastructure bill, what lay ahead in the House, and the potential impact on commercial real estate. (Roundtable Weekly, Aug. 13)   

October – Federal Government Funding and Debt Ceiling 

Treasury logo on flag background

 

  • Funding for the federal government expires Oct. 1 unless an FY22 appropriations bill is enacted. Congress is expected to pass a stopgap spending bill – known as a Continuing Resolution (CR) – that would fund agencies at current levels to avoid a partial government shutdown. 
  • The CR could also include a measure to suspend or raise the national debt ceiling, which would require at least 10 Senate Republican votes to pass under regular order. 
  • Democratic leaders plan to pursue a bipartisan vote to waive the debt limit. (Reuters and PoliticoPro, Sept. 8) However, 46 Senate Republicans pledged in an August 10 letter that they “will not vote to increase the debt ceiling, whether that increase comes through a stand-alone bill, a continuing resolution, or any other vehicle.” (Bloomberg and The Wall Street Journal, Aug. 10) 
  • Congress must address the national debt ceiling by October, according to a Sept. 8 letter from Treasury Secretary Janet Yellen to congressional leaders. 

The Roundtable will discuss how all these issues impact CRE and the national economy during its Fall Meeting on Oct. 5 in Washington, DC (Roundtable-level members only). 

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Supreme Court Blocks CDC’s Latest Eviction Ban

The U.S. Supreme Court struck the Biden Administration’s nationwide ban on residential tenant evictions yesterday, ruling that only Congress has the authority to enact such a moratorium through legislation. (New York Times, Aug. 27; Wall St. Journal, Aug. 27)

The Legal Challenge

  • The high court’s conservatives issued a majority, 6-3 opinion striking the latest iteration of the eviction ban issued by the Centers for Disease Control (CDC) on Aug. 3. (Roundtable Weekly, Aug. 20). “If a federally imposed eviction moratorium is to continue, Congress must specifically authorize it,” the Justices decided.

  • The gist of the ruling is that the CDC’s public health role could not be stretched so far to encompass the federal ban. “[T]he CDC has imposed a nationwide moratorium on evictions in reliance on a decades-old statute that authorizes it to implement measures like fumigation and pest extermination,” the majority wrote. “It strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts.”
  • The majority recognized the financial burden on landlords deprived of rent payments with no guarantee of recovery. “Despite the CDC’s determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means” the majority wrote. “And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership—the right to exclude.”
  • Three justices in the Court’s liberal minority would have kept the moratorium in place due to the surge of the Delta variant.

Focus on Disbursing Rental Assistance

  • A coalition of national real estate organizations – led by the National Apartment Association and the National Multifamily Housing Council, and including The Real Estate Roundtable – has consistently opposed the CDC’s eviction ban.
  • The groups have called upon Congress to focus on disbursing billions in unspent sums of federal rental assistance appropriated in prior COVID-19 relief bills – instead of destabilizing rental markets with a nationwide eviction ban. (Roundtable Weekly, July 30).
  • The latest figures released by the Treasury Department this week on the status of rent relief disbursements remain disheartening. While more funds are reaching tenants and landlords, only $5.1 billion out of a total $46.5 billion in Emergency Rental Assistance has been distributed by states and localities through the end of July. (AP, Aug. 25)
  • Roundtable President and CEO Jeffrey DeBoer commented, “Federal, state, and local policymakers must act with urgency to ensure that tenants and housing providers in distress due to the pandemic receive the aid the Congress appropriated for them – and help bring stability to our housing markets.” 
  • States have had varying levels of success in getting federal rent assistance out the door.  “Texas and Virginia have distributed the largest percentages of their allocated funding at around 34% and 41% respectively, while New York State hasn’t even doled out 1% of its federal rental assistance.” (U.S. News, Aug. 25).
  • The Treasury Department has a website to help tenants and landlords find rental assistance programs in their local areas. The National Multifamily Housing Council (NMHC) also has an online hub that provides resources for renters and housing providers to access COVID-19 emergency relief.

While the Supreme Court’s ruling is the end point for litigation challenging the Biden Administration’s actions, progressives in Congress could attempt to re-impose the eviction ban via legislative enactment in the coming weeks.

Tax Proposals Under Scrutiny as Timetable Moves Up for Mammoth Reconciliation Bill

The unanticipated commitment by Speaker Pelosi to allow a stand-alone vote on the bipartisan Senate infrastructure bill no later than September 27 has scrambled the Congressional calendar and put increased attention and focus on the potential for major tax changes.

Why It Matters

  • House Leaders are urging committees, including the powerful Ways and Means Committee, to complete their work on the $3.5 trillion budget reconciliation bill by September 15.  Ways and Means Chairman Richie Neal has indicated a formal mark-up could start the week of Sept. 6 and continue 4-5 days.  (E&E Daily, Aug. 25)
  • Accelerating the consideration of the $3.5 trillion reconciliation bill may allow its supporters and advocates to retain political momentum for the massive package of social safety net, environmental, tax, and other policies—momentum that could be lost once the infrastructure bill is sent to the President.
  • The shortened timetable, however, puts pressure on lawmakers who are considering complex changes to the tax code that would normally require hearings, extended debate, and substantial vetting.  

Industry Concerns

  • The Real Estate Roundtable has raised concerns regarding a number of proposals in the President’s plan that would raise the tax burden on capital formation, undermine property values and the functioning of real estate markets, and harm the industry’s ability to create jobs and support local communities through property tax revenue.  These proposals include restrictions on like-kind exchanges, an elimination of the reduced tax rate on capital gains, and the taxation of unrealized gains at death.
  • On Tuesday, the accounting industry expressed strong concerns with the President’s proposed changes to capital income. The letter noted that, “[t]he taxation of the capital gains on gift or death in many cases would be the third time that the gain is taxed.”  Imposing immediate tax on transfers by gift or death is an unreasonable requirement when the transfers are non-liquid assets such as real estate, business interests, etc., because it may require the forced liquidation of some or all of the assets transferred,” they continued.    
  • Last Friday, the Tax Foundation challenged the Administration’s claim that their tax proposals would spare 97 percent of small businesses.  The organization analyzed the most recent IRS data and concluded the President’s proposals would reach more than half of pass-through business income (because 54% of pass-through income is earned by taxpayers making more than $500,000).
  • At the same time, lawmakers are mobilizing to ensure that the $3.5 trillion bill includes priorities such as increased investment in affordable housing.  On Thursday, 111 House Democrats led by Reps. Suzan DelBene (D-WA) and Don Beyer (D-VA) wrote to Speaker Pelosi urging that the legislation include a significant expansion of the low-income housing tax credit.

Contact Congress

House Democrats Reach Deal for $3.5 Trillion Budget Framework, Schedule September Vote on Bipartisan Infrastructure Bill

The House of Representatives passed a $3.5 trillion budget resolution Tuesday, after Speaker Nancy Pelosi (D-CA) promised moderate Democrats a September vote on the Senate-passed bipartisan infrastructure bill to garner their support for a framework that sets-up the “reconciliation” process. (Washington Post, Aug. 25)

Why It Matters

  •  “I am committing to pass the bipartisan infrastructure bill by September 27,” Pelosi said. “We must keep the 51-vote privilege by passing the budget and work with House and Senate Democrats to reach agreement in order for the House to vote on a Build Back Better Act that will pass the Senate.” (Speaker Pelosi Statement, Aug. 24; Politico, Aug. 24)

CRE Impact

  • The human infrastructure proposal that may be advanced in the House under budget reconciliation rules would be partially financed by raising taxes on businesses and wealthy individuals – and potentially include a variety of tax increases affecting commercial real estate (see Tax Policy story below)
  • The Real Estate Roundtable held an all-member Infrastructure Town Hall on Aug. 12 to discuss the Senate-passed infrastructure bill, what lay ahead in the House, and the potential impact on commercial real estate.  
  • Rep. Tom Suozzi (D-NY), a member of the tax-writing House Ways and Means Committee, joined Roundtable Chair John Fish (Chairman and CEO, Suffolk), and Roundtable President and CEO Jeffrey DeBoer, for the Town Hall discussion.  (Roundtable Weekly,  Aug. 13)  
  • DeBoer, stated, “This [reconciliation] package may be financed with a variety of tax increases affecting step-up in basis, like-kind exchanges, carried interest and capital gains that would act as a cumulative drag on investment at the exact time when sectors of the economy need incentives to recover from the pandemic. The Roundtable urges Senate and House policymakers to be very cautious as they proceed on the reconciliation bill – so that one-step forward with the physical infrastructure bill is not met with two-steps backward from tax increases.” (Roundtable statement, Aug. 11)

What’s Next

  • Congressional committees are in the process of drafting different sections of the reconciliation package. They have a non-binding deadline of submitting their text by Sept. 15. (Axios, Aug. 24)
  • Reconciliation would likely move in the House first. The House Budget Committee will compile each committee’s individual text into a single package for a floor vote that, if approved, would then be sent to the Senate. 
  • Getting both packages to President Biden’s desk for his signature will be a major challenge. Congressional leadership must consider demands of centrists who balk at the $3.5 trillion price tag for “social” infrastructure, and progressives who believe the $550 billion in new spending for “physical” infrastructure is not big enough to address issues such as climate change. (CNBC, Aug. 25)

When Congress returns after Labor Day, policymakers will face other critical deadlines in addition to their anticipated actions on the infrastructure and reconciliation packages. Legislation is needed after the Treasury Department exhausts its “extraordinary measures” in mid-September to avoid defaulting on the national debt. Congress is also expected to consider a “continuing resolution” to put stop-gap spending measures in place before federal government funds run dry on Sept. 30. (Politico, Aug. 25)

Eviction Moratorium Appeal Denied; Supreme Court Challenge Expected

image Appeals Court DC Circuit

The D.C. Circuit Court today allowed the Biden administration’s latest federal eviction moratorium to remain in effect, denying an Aug. 14 emergency appeal by the Alabama and Georgia Associations of Realtors to overturn the ban. (Politico and Wall Street Journal, Aug. 20)   

The Legal Challenge 

  • The Realtor groups’ challenge was filed immediately after a federal judge’s ruling allowed the latest eviction moratorium – effective through Oct. 3 – to remain in place until higher courts decide its legality. (Wall Street Journal and Law.com, Aug 13)
     
  • The White House stated its latest moratorium from the Centers for Disease Control and Prevention (CDC) is targeted toward areas that have experienced substantial or high levels of Covid-19 transmission. (CDC news release and Wall Street Journal, Aug. 4). The extension would also allow more time for billions in rent relief appropriated by Congress to reach tenants and landlords. (Time, Aug. 3)
  • Previously, the U.S. Supreme Court ruled that an earlier CDC eviction ban could remain in effect through its expiration on July 31, yet indicated the federal agency had overstepped its authority. Justice Kavanaugh wrote in the high court’s 5-4 decision that another extension would require “clear and specific” legislation from Congress. (New York Times, June 29)
     
  • When Congress could not muster last-minute support in late July to pass an extension, the CDC issued its latest moratorium on Aug. 3. (NBC News and Roundtable Weekly, July 30) 

Impact on Housing Providers 

 image Evict Morat July29-2021 letter

  • A coalition of 15 national real estate organizations – including The Real Estate Roundtable –  sent a letter on July 29 to all members of Congress strongly opposing another moratorium extension. The  joint letter called for policymakers to focus on disbursing billions in unspent sums of federal rental assistance appropriated in prior COVID-19 bills – instead of destabilizing rental markets with a legislative eviction moratorium. (Roundtable Weekly, July 30)
  • A massive logjam in states’ disbursement of federal rental aid to tenants and housing providers has compounded the negative economic impact of the eviction moratorium. A National Rental Home Council survey issued in March showed that approximately 23 percent of small landlords leasing single-family rentals were forced to sell at least one, if not all of their properties.
  • Politico also reported on Aug. 14 that nearly 59 percent of tenant households who are behind on rent live in properties with between one and four units – and that 72 percent of those properties are operated by mom-and-pop landlords

The Realtors’ current attempt to end the moratorium, considered this week by the D.C. Circuit Court of Appeals, is likely to be appealed to the Supreme Court next week. 

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House Scheduled to Vote Next Week on Rule to Advance both “Physical” and “Human” Infrastructure Packages

US Capitol view up

The House of Representatives will briefly return to Washington the week of Aug. 23 to vote on measures affecting the future of President Biden’s sweeping infrastructure agenda. (New York Times, Aug. 17) 

Two-Track Approach

  • A group of nine moderate Democrats led by Rep. Josh Gottheimer (D-NJ) informed House leadership on Aug. 12 that they will not support a $3.5 trillion budget resolution encompassing “human” infrastructure initiatives unless the bipartisan “physical” infrastructure bill passed by the Senate last week is approved by the House and enacted. (Bloomberg, Aug. 17 and Roundtable Weekly, Aug. 13)

  • The moderates’ letter to House Speaker Nancy Pelosi (D-CA) stated, “Some have suggested that we hold off on considering the Senate infrastructure bill for months – until the (budget) reconciliation process is completed. We disagree. We will not consider voting for a budget resolution until the bipartisan Infrastructure Investment and Jobs Act passes the House and is signed into law.” (Politico, Aug. 13)
  • Progressive House Democrats countered with the opposite approach, stating that they will not support the bipartisan infrastructure plan unless it is tied to the massive budget reconciliation measure, which addresses child care, health care and climate change. (Axios, Aug. 18)
  • Pelosi this week reiterated her two-track plan to advance both measures in the House despite having just a three-vote margin majority. Republicans are expected to oppose the sprawling “human” infrastructure budget resolution. (BGov, Aug. 18) 

CRE Impact 

image - Roundtable President and CEO Jeffrey DeBoer


The human infrastructure proposal that may be advanced in the House under budget reconciliation rules would be partially financed by raising taxes on businesses and wealthy individuals – and potentially include a variety of tax increases affecting commercial real estate.

  •  The Real Estate Roundtable held an all-member Infrastructure Town Hall on Aug. 12 to discuss the Senate-passed infrastructure bill, what lay ahead in the House and the potential impact on commercial real estate.  Rep. Tom Suozzi (D-NY), a member of the tax-writing House Ways and Means Committee, joined Roundtable Chair John Fish (Chairman and CEO, Suffolk), Roundtable President and CEO Jeffrey DeBoer, and other Roundtable staff for the Town Hall discussion.  (Roundtable WeeklyAug. 13 and The Roundtable’s  Bipartisan Infrastructure Deal Fact Sheet and Tax and Fiscal Reconciliation Fact Sheet)  
  • DeBoer, above, stated, “This [reconciliation] package may be financed with a variety of tax increases affecting step-up in basis, like-kind exchanges, carried interest and capital gains that would act as a cumulative drag on investment at the exact time when sectors of the economy need incentives to recover from the pandemic. The Roundtable urges Senate and House policymakers to be very cautious as they proceed on the reconciliation bill – so that one-step forward with the physical infrastructure bill is not met with two-steps backward from tax increases.” (Roundtable statement, Aug. 11)

What’s Next

image - House floor debate

  • Pelosi and House Majority Leader Steny Hoyer (D-MD) laid out a schedule for votes next Monday and Tuesday.
  • The House is scheduled to vote Aug. 23 on a rule that governs floor debate on the $3.5 trillion budget resolution (S Con Res 14), the $550 bipartisan infrastructure bill (HR 3684) and a voting rights bill (HR 4). The chamber is then expected to vote Tuesday on the “human” infrastructure framework and the popular voting rights bill. (CQ, Aug. 16)
  • Approval of the budget resolution would allow the development of legislation to move forward that could pass later this year under “reconciliation” rules without any Republican support. The Senate voted last week to advance the same measure. (Roundtable Weekly, Aug. 13)
  • White House spokesman Andrew Bates this week told Bloomberg, “All three are critical elements of the President’s agenda, and we hope that every Democratic member supports this effort to advance these important legislative actions.” (Bloomberg, Aug. 17) 

Pelosi sent a note to her caucus this week, warning that any delay next week  “jeopardizes the once-in-a-generation opportunity” to enact Biden’s broader legislative priorities. (Politico, Aug. 17) 

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