News Type: Roundtable Weekly

Commercial Real Estate Leaders Report Improving Market Conditions Amid Uncertain Return-to-Office Trends

Posted on by Trey Jackson

Q3 2021 Sentiment Index Chart

Commercial real estate executives report improving market conditions, through consistent growth of various asset classes, despite uncertainty surrounding employees returning to the office, according to The Real Estate Roundtable’s Q3 2021 Economic Sentiment Survey released today. The report shows the continued positive momentum for industrial, multifamily and single-family assets, with hospitality continuing to improve with increased travel. 

Market Conditions

  • “As the commercial real estate industry continues to adapt in the face of the global pandemic, we recognize the changing demands and expectations for hospitality, shopping centers, office buildings, travel and convening spaces,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “Strong, stable and growing real estate markets can be a driving force for the nation’s economic recovery, and contribute productively to a world struggling to overcome COVID and its variants. Investment in these reimagined spaces presents the opportunity to move the economy forward for the benefit of all Americans.”
     
  • The Roundtable’s Q3 Current Conditions Index of 85 increased 7 points from the previous quarter, the highest index recorded in its thirteen year history.
     
  • The Economic Sentiment Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive. The Roundtable’s Overall Q3 2021 Sentiment Index registered at 78 – a one-point increase from the previous quarter. 
     
  • The Roundtable’s quarterly survey shows that 89 percent of respondents believe that general market conditions today are “much better or somewhat better” versus one year ago – with an abundance of available capital compared to one year ago.
  • However, this quarter’s Future Conditions Index of 71 decreased 4 points compared to last quarter, indicating uncertainty still remains while the country continues to recover from the COVID-19 crisis.

Topline Findings:

Chicago skyline upward

  • The Q3 2021 Real Estate Roundtable Sentiment Index registered a score of 78, an increase of 1 point from the second quarter of 2021 and a 36-point increase over Q3 2020. The speed of the economic recovery compared to only 6 months ago has provided more clarity and certainty for specific asset classes, with the biggest looming question marks being the impact of employees returning to the office and rising inflation risk.
     
  • Industrial performed exceptionally well throughout the pandemic and has maintained positive momentum through the first half of 2021. Additionally, multifamily and single-family suburban assets continue to attract strong demand. Previously challenged assets such as hospitality have rebounded and remain hopeful to reach pre-pandemic levels with increased travel and employees returning to the office.
     
  • Assets classes with durability or the perception of durability such as high-quality multifamily, long-term net lease office, and industrial have all hit record levels, all while certain sectors and regional markets (in particular, those relying heavily on mass transit) have yet to fully recover.
     
  • Respondents cited a continued abundance of available debt and equity capital, which has led to significant amounts of capital sitting on the sidelines waiting for attractive deployment opportunities.
  • DeBoer also noted, “Historically, the real estate industry has played a pivotal role in catalyzing economic recovery following national and worldwide events, and we have the opportunity to play that role again. With the recent infrastructure policy developments in Washington, it is a once-in-a-generation opportunity to rebuild cleaner, safer, and more climate-friendly buildings. With private capital readily available for investment, we are hopeful federal and public private partnerships will continue to fuel job creation and equitable economic development needed to continue the progress made in the economic recovery.”

Data for the Q3 survey was gathered in July by Chicago-based Ferguson Partners on The Roundtable’s behalf.  For the full Q3 report, visit here.

#  #  #

Senate Democrats Pass Budget Resolution that Would Authorize $3.5 trillion “Human Infrastructure” Bill with Large Tax Increases

Posted on by Trey Jackson

DC monuments night

Senate Democrats voted August 11 to advance a $3.5 trillion “human infrastructure” budget resolution, which allows development of legislation that could pass later this year without any Republican support. The budget blueprint passed on a party-line vote of 50-49 the day after the Senate passed a $1.2 trillion “physical infrastructure” bill on a bipartisan basis. (BGov, Aug 11 and Roundtable Weekly, story above) 

Why It Matters 

  • The Senate budget resolution supports President Biden’s wide-ranging domestic priorities that aim to expand the federal social safety net and combat climate change. (New York Times and The Hill, Aug. 11)
  • The sprawling human infrastructure proposal would be partially financed by raising taxes on corporations and wealthy individuals – and potentially include a variety of tax increases affecting commercial real estate.
  • The Senate measure also provided instructions for various committees to craft bills under “reconciliation” budget rules. If approved by the Senate Parliamentarian, the committees’ work would be combined into final legislation that could pass on a majority vote, thereby bypassing a Republican filibuster. (Senate Democratic Memorandum, Aug. 9)
  • The House announced this week that it will return early from summer recess on Aug. 23 to consider the budget resolution. (Associated Press and CQ, Aug. 11)
  • House Speaker Nancy Pelosi (D-CA) reiterated on Aug. 11 that until the Senate finishes and passes the massive reconciliation bill, the House will not vote on the physical infrastructure legislation. Other Members of the Democratic Caucus, including Rep. Josh Gottheimer (D-NJ), co-chair of the bipartisan Problem Solvers Caucus, have called on Congressional Leaders to decouple the measures and send the bipartisan infrastructure bill to the President without delay. (Politico, Aug. 11 and The Hill, Aug. 11) 

Taxes & CRE  

Philadelphia, PA skyline

Roundtable President and CEO Jeffrey DeBoer commented on the Senate’s $3.5 trillion reconciliation bill and the tax proposals under consideration.  

  • DeBoer on Aug 11 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)
  • The Roundtable this week produced a summary of budget reconciliation tax issues that could directly impact commercial real estate, including: 
    • Like-Kind Exchanges
    • Capital Gains
    • Pass-through Business Income
    • Step-up in Basis and Taxation of Gains at Death
    • Carried Interest
    • Energy Efficiency Incentives
    • Affordable Housing Incentives 

Roundtable Infrastructure Town Hall 

Roundtable Infrastructure Town Hall - image capture

  • The Roundtable held an all-member Infrastructure Town Hall on Aug. 12 to discuss the Senate reconciliation measure and what it means for commercial real estate. Rep. Tom Suozzi (D-NY), a member of the tax-writing House Ways and Means Committee, center in photo,  joined Roundtable Chair John Fish, top right, Jeffrey DeBoer, top left, and other Roundtable staff for the Town Hall discussion.

The congressional debate on infrastructure is expected to extend into the fall, when policymakers face multiple other deadlines that converge on Sept. 30 – government funding for FY2022, reauthorization of funding for surface transportation programs, and reauthorization of the National Flood Insurance Program. The Roundtable is scheduled to discuss all these issues at its Fall Meeting on Oct. 5 in Washington, DC (Roundtable-level members only). 

#  #  #

Senate Passes Historic Bipartisan Infrastructure Legislation

Posted on by Trey Jackson

Senate Infrastructure Vote Total
The Senate on Aug. 10 passed a historic, bipartisan $1 trillion+ infrastructure bill that would allocate $550 billion in new spending to improve the nation’s transit, utilities and broadband. The Infrastructure Investment and Jobs Act (H.R. 3684) was approved 69-30, with support from all Democrats and 19 Republican Senators, including Minority Leader Mitch McConnell (R-KY). (Wall Street Journal and New York Times, Aug. 10)   

Why it Matters 

  • Real Estate Roundtable Chair John Fish (Chairman and CEO, Suffolk) on Aug. 11 commented, “With the Senate’s passage of this bill, we are one step closer to realizing a once-in-a-generation opportunity to rebuild and reimagine the buildings of tomorrow. We applaud both this historic investment in our nation’s infrastructure, and the members of Congress who have reached across the aisle to find common ground.”
  • Real Estate Roundtable President Jeff DeBoer added, “By devoting more than a trillion dollars toward American infrastructure projects, this long-term investment in the nation’s roads, bridges, mass transit, high-speed rail, broadband, power grid, water pipes, and electric vehicle charging will prompt positive, transformational change for our communities and citizens.” (Roundtable statement, Aug 11)
  • The Roundtable held an all-member Infrastructure Town Hall on Aug. 12 to discuss the Senate bill, its prospects in the House and what it means for commercial real estate. Rep. Tom Suozzi (D-NY), a member of the tax-writing House Ways and Means Committee, joined Roundtable Chair John Fish, Jeffrey DeBoer and other Roundtable staff for the Town Hall discussion. (See Tax Policy story below and  The Roundtable’s Bipartisan Infrastructure Deal Fact Sheet)
  • Roundtable policy specialists also briefed members of the CREW (Commercial Real Estate Women) Network on Aug. 11 about how the infrastructure legislation could potentially impact CRE.  

BID Details 

Roundtable Infrastructure Senate Bill Summary August 5, 2021

  • The 2,700-page Senate bill evolved from bullet points to legislation after a painstaking journey of more than a month by a group of bipartisan senators who negotiated with the Biden Administration. (Politico and Senate Group Joint Statement, Aug. 10)
  • President Biden remarked about the Senate bill, “Forecasters on Wall Street project that over the next 10 years our economy will expand by trillions of dollars, and [the legislation] will create an additional 2 million jobs.” (White House Remarks, Aug. 10)
  • The amounts that would be invested by the “Bipartisan Infrastructure Deal” (BID) to various infrastructure categories are listed in White House summaries and The Roundtable’s BID Fact Sheet. 
  • The BID seeks no tax increases on families or businesses as “pay-fors.”
  • The Senate bill includes Roundtable-supported measures that will utilize public-private partnerships to reach ‘physical’ infrastructure goals, streamline the federal permitting process, and improve key federal energy data used in EPA building labels.

What’s Next 

U.S. Capitol dome interior

  • The Senate’s “physical” infrastructure package now goes to the House.
  • House Speaker Nancy Pelosi (D-CA) has insisted that she will not bring up the Senate’s “physical” infrastructure bill until the Senate also passes a sprawling $3.5 trillion “human” infrastructure bill with funding for climate programs, health care, education and child care.  (New York Times, Aug. 10). 

Majority Leader Steny Hoyer (D-MD) announced the House will interrupt its summer recess and return to session on Aug. 23 to consider the Senate-passed budget resolution that Democrats have insisted is a precursor to votes on the bipartisan infrastructure deal. (NBC News, Aug. 10) (See “reconciliation” story below) 

#  #  #

Senate Vote on Bipartisan “Physical” Infrastructure Deal Expected Soon, Laying Groundwork to Consider “Human” Infrastructure on Separate Track

Posted on by Trey Jackson

The Senate processed amendments this week on bipartisan legislation for hundreds of billions in new investments in the nation’s “physical” infrastructure. Majority Leader Chuck Schumer (D-NY) pushed to continue votes this weekend on the bipartisan measure – with further plans next week to separately consider an anticipated $3.5 trillion budget resolution for “human infrastructure” designed to pass with only Democratic support. (BGov, Aug. 6)

Bipartisan “Physical” Infrastructure Deal

  • The Senate’s Bipartisan Infrastructure Investment and Jobs Act ( text as of Aug. 3 | section-by-section – also known as the “Bipartisan Infrastructure Deal” (BID) – proposes $550 billion in new infrastructure investment.
  • Summaries and fact sheets from the Biden Administration break down the amounts invested in the BID’s various infrastructure categories. The bipartisan deal is estimated to create around 2 million jobs per year over the next decade.
  • The bill needs 60 votes to pass in the Senate, requiring support from at least 10 Republicans.
  • The BID includes no new tax increases. Most of its proposed “pay-fors” involve repurposing previously enacted COVID relief funds.
  • Senate policymakers struggled to complete work on the bipartisan deal this week amid concerns over taxation on cryptocurrency and yesterday’s release of a score by the Congressional Budget Office score, estimating the bill would add $256 billion to the deficit over 10 years. (Politico, Aug. 5; Wall Street Journal, Aug 6; The Washington Post, Aug. 6)

The BID, Real Estate, and Community Development

  • The Real Estate Roundtable has summarized elements of the BID of particular interest to real estate owners and community developers, that align with The Roundtable’s longstanding infrastructure policies.  [“Spending and Other Provisions Pertinent to Real Estate and Community Development”]
  • The Roundtable’s summary addresses the BID’s provisions for:
    • Billions of proposed investments in various infrastructure asset classes dedicated to roads, bridges, mass transit, high-speed rail, broadband, the power grid, water pipes, and electric vehicle charging;
    • Supporting public-private partnerships;
    • Streamlining the federal permitting process; and
    • Improving the key federal energy data that supports EPA building labels (Roundtable Weekly, July 16) 

“Human” Infrastructure Package

  • If the BID legislation is approved,  it would prompt the Senate to move to a $3.5 trillion budget plan that includes President Biden’s wide-ranging domestic priorities supporting “human infrastructure.”
  • No Republicans are expected to support the $3.5 trillion measure. Democrats must first pass a joint budget resolution to avoid a Senate filibuster, that authorizes the use of special “reconciliation” rules and sets a course for passage on a party-line vote
  • Senate Budget Committee Chairman Bernie Sanders (D-VT), above, signaled that the reconciliation package would include spending for health care, child care, education, paid family and medical leave, and affordable housing. Reconciliation is also expected to address immigration and climate change matters. ( Wall Street Journal, Aug. 3)

After Labor Day, Democratic members are expected to meet to decide on which provisions to include in the human infrastructure package, including tax increases on businesses and individuals.  

#  #  # 

CDC Issues New Eviction Moratorium Until Oct. 3; Realtor Groups File Legal Challenge

Posted on by Trey Jackson

The Biden administration reversed course this week and issued a new federal eviction moratorium on Aug. 3, responding to pressure from progressive Democrats to allow more time for billions in rent relief appropriated by Congress to reach tenants and landlords. (CDC news release and Wall Street Journal, Aug. 4) 

New 60-Day Eviction Ban 

  • The new ban from the Centers for Disease Control and Prevention (CDC) is in effect until Oct 3.
  • It applies to about 80% of U.S. counties with “substantial” or “high” COVID-19 transmission rates, and covers about 90% of the U.S. population. ( Reuters, Aug 4 and CDC order, Aug. 3)
  • The previous eviction moratorium expired on July 31. A U.S. Supreme Court majority in June indicated the federal-level ban exceeded CDC’s authority.
  • President Biden initially stated that the Supreme Court’s action prevented another CDC extension, and called on Congress to pass 11th-hour legislation establishing a new moratorium. House Democrats last Friday failed to muster enough last-minute votes to pass an extension. ( The Hill, July 30; Roundtable Weekly, July 30) 

Legal Challenge Redux 

  • Upon the Administration’s about-face in issuing the new moratorium, President Biden said it is “likely to face obstacles” in court. (White House remarks, Aug. 3 and Associated Press, Aug. 4)
  • The latest eviction ban prompted the Alabama and Georgia Associations of Realtors to file an emergency motion in D.C. federal trial court before the same judge who previously ruled that the CDC had overstepped its authority in imposing the first eviction moratorium. (Politico and Washington Post and National Association of Realtors’ statement, Aug. 4) 

Need to Accelerate Federal Rent Assistance

  • The Realtor groups’ motion adds more pressure on state and localities to distribute billions allocated by federal policymakers to assist renters and housing providers – an effort that has faced severe bottlenecks and delays.
  • Only 6.5 percent of $46.5 billion allocated by Congress for rental aid has found its way to state and localities in the first half of 2021, according to a recent Treasury Department report.  (Washington Post, July 21 and Bloomberg and July 22)
  • Treasury’s Emergency Rental Assistance program, overseen by Senior Advisor to the President Gene Sperling, now faces a 60-day race for states and localities to distribute funds to tenants and landlords while the newest CDC order is in effect. 

Sperling stated during an Aug. 2 White House press conference that the Emergency Rental Assistance is “so important [because] it helps struggling landlords and struggling tenants. It can pay up to 18 month, forward or backwards, of back rent or back utilities. So, it is a way to make a landlord, who is struggling, whole, while also keeping that tenant and their family safe and secure.” 

#  #  # 

Roundtable Elects FY 2022 Leadership; 2021 Annual Report Released

Posted on by Trey Jackson

The Real Estate Roundtable this week announced its new FY2022 leadership, with John F. Fish (Chairman & CEO, Suffolk), above, elected as Chair for a three-year term starting July 1, 2021 – following an effective, productive term by Immediate Past Chair Debra A. Cafaro (Chairman & CEO, Ventas, Inc.). The Roundtable’s membership also approved a 22-member Board of Directors and committee officers. ( Roundtable news release, Aug. 5)

Policy Leaders

  • “I am honored and humbled to assume this new role at such a pivotal moment for the real estate industry. Our communities are facing a host of challenges – from unprecedented political polarization, to the growing threat of climate change, to the comeback from the global pandemic – but where we see obstacles ahead, we also see opportunity to expand jobs, provide housing, and assist businesses evolve in the post-Covid economy,” said John Fish, Real Estate Roundtable Chair.
  • Fish also recently discussed infrastructure issues, the impact of the pandemic on commercial real estate and the industry’s leadership role in national policy issues with Roundtable member Willy Walker (Chairman and CEO of Walker & Dunlop) on the  Walker Webcast.  (Bisnow and Connect, July 21 and Roundtable Weekly, July 23)
  • The Roundtable’s Immediate Past Chair, Debra Cafaro noted, “It has been an honor and privilege to serve as chair for the last three years, and I am delighted to pass the baton to my friend and colleague John Fish. John is uniquely well-positioned to lead this organization as we move forward with the issues of economic recovery from the pandemic, job creation, sustainability, infrastructure and tax policy, which are at the forefront of policy debates in Washington.”
Real Estate Roundtable Leadership

Photo – center: Debra Cafaro, top right: John Fish, top left: Jeffrey DeBoer

  • Cafaro was recently recognized as a “Diversity Champion” for her efforts with The Roundtable and her company Ventas on equity, diversity and inclusion by Real Estate Forum magazine in their “Women of Influence” July-August issue. The Forum’s sister publication, GlobeSt.com, also featured the award winners.
  • Roundtable President and CEO Jeffrey DeBoer commented, “We are committed to sustainable national policies that reinforce and expand long-term economic growth and opportunities for all, spur job creation and encourage capital formation.”  DeBoer added, “The real estate industry provides jobs for tens of millions of people, is a significant source of revenue for local governments to help fund schools, hospitals and much needed community services, and is a key investment allocation for pensions and other retirement savings funds.  I thank Debra for her leadership, and look forward to working closely with our new chair John Fish on these policy issues and to continuing The Roundtable’s fact-based, data driven advocacy work.”
  • The Roundtable recently released its 2021 Annual Report, which shows its effective policy activities in the areas of tax … capital and credit … housing and infrastructure … energy and climate … and homeland security.  The publication’s introduction also addresses The Roundtable’s path ahead as the industry seeks to emerge out of the pandemic stronger than ever.

Roundtable Board and Committee Leadership 

The Roundtable’s membership represents over 3 million people working in real estate; some 12 billion square feet of office, retail, and industrial space; over 2 million apartments; and more than 3 million hotel rooms. It also includes senior, student and manufactured housing as well as medical office, life science campuses, data centers, cell towers, and self-storage properties. The collective value of assets held by Roundtable members exceeds $3 trillion.

#  #  # 

House Republicans Urge Biden Administration to Preserve Like-Kind Exchanges

Posted on by Trey Jackson

A group of 88 House Republicans, led by Rep. Randy Feenstra (R-IA), above, sent a letter to President Joe Biden on Aug. 3 urging him “not to damage the livelihood of farmers everywhere by repealing or changing like-kind exchanges.” ( Coalition letter and Feenstra news release)

Agriculture Sector Impact 

  • Like-kind exchanges (LKEs) allow real estate, farming, and other businesses to defer capital gain when exchanging real property used in a trade or business for property of a like kind. Like-kind exchanges also help businesses to grow organically, with less debt, by reinvesting gains on a tax-deferred basis in new and productive assets.
  • President Biden has proposed restricting the use of LKEs by limiting deferred gain in any one year to no more than $500,000 for single taxpayers and $1 million for married taxpayers. (Treasury Department’s Summary of Revenue Proposals, “Green Book” budget documents, and Roundtable Weekly, April 30)
  • The coalition of House policymakers emphasized in their Aug. 3 letter how LKEs allow farmers and other small business owners to improve their operations and invest in better income-producing properties. The letter noted that four out of five individuals who utilize these tax deferments are qualified as small investors by the IRS.
  • The letter stated, “For the agricultural community, a cap on like-kind exchanges would limit farmers’ ability to improve their operations through combining acreage, purchasing more productive land, and mitigating environmental impacts. Further, capping like­kind exchanges could make it more difficult to restructure businesses so that young or beginning farmers can join operations. Retiring farmers could be prevented from using like-kind exchanges to exchange their farm or ranch for other real estate, allowing for the next generation to take over, without depleting their life savings.”
  • The 88 policymakers also commented how the negative impact of the administration’s LKE proposal would radiate outward from individual farm owners and agricultural investors into the larger agricultural sector and the national economy at large. 

Roundtable’s Strong Support for LKEs 

  • On May 27, a broad business coalition that included The Real Estate Roundtable held a virtual briefing for members of Congress and their staff on the longstanding economic importance of LKEs – and detailed the potential negative unintended consequences of limiting section 1031. (Roundtable Weekly, May 28)
  • The briefing, moderated by Roundtable President and CEO Jeffrey DeBoer, included expert speakers and featured recent research into the macro-economic impact of LKEs. (See “The Tax and Economic Impacts of Section 1031 Like-Kind Exchanges in Real Estate” by Professor Milena Petrova and Dr. David Ling)
  • On May 18, The Roundtable and others submitted detailed comments to the Senate Finance and House Ways and Means Committees on like-kind exchanges and other pending tax issues. (Roundtable Weekly, May 21).  Additionally, in March, The Roundtable and 30 national real estate, housing, environmental, farming, ranching, and forestry organizations wrote to key policymakers to underscore the vital importance of real estate like-kind exchanges. (Roundtable Weekly, March 19)

The coalition “1031 Builds America” provides an online method for stakeholders to share their experiences with LKEs with members of Congress, and urge them to preserve Section 1031. 

#  #  #

Imminent Expiration of CDC Eviction Moratorium Prompts White House, FHFA Actions to Protect Tenants; Real Estate Groups Counter 11th Hour Attempts at Extension

Posted on by Trey Jackson

CDC signage Atlanta

The Biden Administration took steps this week to protect tenants at risk of eviction for non-payment of rent. (PoliticoPro, July 28). Announcements from the White House and the Federal Housing Finance Agency (FHFA) were prompted by the anticipated July 31 expiration of the national moratorium on residential tenant evictions – first enacted by Congress in March 2020, then extended by the Centers for Disease Control (CDC), and scheduled to sunset tomorrow. (Roundtable Weekly, June 25)

Congressional Action     

  • In response to the CDC moratorium’s expected lapse, Congressional Democrats today pursued an 11th hour attempt to resuscitate the eviction ban through legislation. The Hill reported late today that efforts to extend the federal moratorium “fell far short amid resistance from moderates and housing industry groups.” House Speaker Nancy Pelosi (D-CA) subsequently urged the CDC to unilaterally extend the current moratorium again. Politico reported earlier today that House Democrats were considering extending the moratorium to mid-October – and that there was not a plan yet to get the vote through Senate Republicans.

  • A coalition of 15 national real estate organizations – including The Real Estate Roundtable – sent a letter today to all members of Congress strongly opposing another moratorium extension. The joint letter called for policymakers to focus on disbursing the vast unspent sums of federal rental assistance appropriated in prior COVID-19 bills – instead of destabilizing rental markets with a new legislative eviction moratorium.
  • Roundtable President and CEO Jeffrey DeBoer commented, “In the first half of this year, Congress rightly appropriated more than $45 billion for rental assistance, but so far states have distributed less than 10 percent of that assistance. If the moratorium is extended, it needs to be more tightly targeted to people in distress due to the pandemic, including housing providers.”

Federal Actions Supporting Tenants 

FHFA logo

  • The FHFA announced on Wednesday that owners of all multifamily properties with a federally-backed mortgage must provide a 30-day written notice to a tenant before requiring removal for not paying rent. 
  • [Most states already have laws requiring some “wait period” or notice to tenants before eviction proceedings can commence, though typically not as long as 30 days according to this summary.]
  • The FHFA’s notice requirement had been limited to situations where a landlord received mortgage forbearance protections. Now, the FHFA requires the tenants’ notice regardless of whether the landlord benefits from delayed loan payments – where the debt is backed by Fannie Mae, Freddie Mac, or a federal agency. (See FHFA fact sheet).
  • The White House on June 24 released its fact sheet, “Initiatives to Promote Housing Stability by Supporting Vulnerable Tenants and Preventing Foreclosures.” The fact sheet also references “strict adherence” to tenant notice requirements and offers further measures such as:
    • Accelerating disbursement of Emergency Rental Assistance (ERA) to get the funds appropriated by Congress into the hands of landlords and tenants;
    • Providing a streamlined payment option so large landlords can receive “bundled” payments from multiple eligible tenants; and
        
    • Urging state and local courts to participate in “eviction diversion efforts” that encourage landlords and tenants to access ERA funds before litigation is pursued.   
  • The White House released another fact sheet on Wednesday summarizing how private sector companies, non-profits, and government agencies are notifying Americans about available emergency rental assistance – including a national “rental assistance finder” produced by the Consumer Financial Protection Bureau (CFPB) that helps tenants apply for ERA funds in their localities.

Rental Assistance Delays 

Treasury Dept building close

  • Severe delays in getting federal rental aid to those in need have added another layer of pressure on tenants at risk of eviction – as well as on housing providers who are unable to collect rent, yet remain responsible for taxes, maintenance and other property costs. (Wall Street Journal, July 22)
  • Only 6.5 percent of $46.5 billion allocated by Congress for rental aid has found its way to state and localities in the first half of 2021, according to a recent Treasury Department report.  (Washington Post, July 21 and Bloomberg and July 22)
     
  • Treasury’s report also notes some progress – more than $1.5 billion in rental assistance reached households in June, which is more than all of the money disbursed between January and May combined. 
     
  • The Roundtable is part of a broad real estate coalition that has consistently urged state, county and municipal officials to distribute the billions in allocated federal funds as soon as possible. (Coalition letter, April 15)
  • The National Multifamily Housing Council (NMHC) on July 26 urged the leadership of the Senate Banking and House Financial Services Committees to push for the swift distribution of rental assistance funds.  
  • Additionally, a recent NMHC survey of apartment owners and managers shows that 100 percent of multifamily firms surveyed worked with residents facing financial hardships since the onset of the COVID-19 crisis. 

Biden’s “Hands-Tied” by SCOTUS

The U.S. Supreme Court building

  • A U.S. Supreme Court majority indicated last month that the CDC overstepped its authority in issuing the federal-level eviction ban, with Justice Kavanaugh writing that “clear and specific” legislation from Congress would be necessary to extend the moratorium past July 31.  (New York Times, June 30)  The Biden Administration reportedly “found its hands to be tied” by the high Court’s decision. (PoliticoPro, July 29)
  • The White House issued a July 29 statement, noting, “President Biden would have strongly supported a decision by the CDC to further extend this eviction moratorium to protect renters at this moment of heightened vulnerability. Unfortunately, the Supreme Court has made clear that this option is no longer available.”
  • The statement also requested the U.S. Departments of Housing and Urban Development, Agriculture, and Veterans Affairs to extend their respective eviction moratoria through the end of September “to provide continued protection for households living in federally-insured, single-family properties.” 

Yesterday’s statement from the administration sparked today’s last-minute scramble in Congress. White House Press Secretary Jen Pskai said, “In light of the Supreme Court’s ruling, the President calls on Congress to extend the eviction moratorium to protect such vulnerable renters and their families without delay.” 

#  #  # 

Senate Advances Trillion Dollar Bipartisan “Physical” Infrastructure Deal as Democrats Push Separate $3.5 Trillion “Human” Infrastructure Package

Posted on by Trey Jackson

Capitol building sun and green

The Senate on July 28 voted to advance a $1 trillion infrastructure package that would allocate $550 billion in new spending toward transit, utilities and broadband. The plan, which has not been translated into final legislation yet, was the result of a breakthrough in month-long negotiations between a bipartisan group of senators and President Biden. (White House Fact Sheet, July 28 | E&E Daily, July 29 | Roundtable Weekly, June 25) 

Historic Step Forward 

  • The Senate vote of 67-32 included the support of 17 Republicans and all 50 Democrats – and kick-started the process of debating and amending the measure, which could draw enough support to pass the Senate next week. (BGov, July 29)
  • Real Estate Roundtable President and CEO Jeffrey DeBoer yesterday stated, “The Real Estate Roundtable strongly supports the bipartisan agreement on infrastructure reached by the White House and senators this week – and we applaud the continued hard work of policymakers to work across the aisle to create legislation that will revitalize our economy and keep us globally competitive. The trillion-dollar+ infrastructure package is a positive, historic step forward. We look forward to its enactment and the well-paying jobs it will create, the economic growth it will spur on, and how it will benefit our long-term national competitiveness and productivity.” (Read DeBoer’s full statement, July 29)
  • Roundtable Chair John Fish (Chairman & CEO, Suffolk) and 11 other Roundtable members joined more than 100 business leaders in a July 26 letter to Congress that urged policymakers to pass the bipartisan infrastructure package. (The Hill, July 28)
  • The letter noted, “New jobs generated by investment in the nation’s mass transit, roads, bridges, airports, broadband and other essential assets will create training and re-employment opportunities for millions of Americans who lost jobs during the pandemic. The public-private initiatives that are created will accelerate recovery from losses suffered due to COVID-19.” (Business leaders’ joint letter, July 26) 

Infrastructure Package & CRE 

Philly evening bridge

Pay-Fors & Timing 

Sen. Chuck Schumer Hudson Yards Subway station

  • Miller & Chevalier reported on July 28 that the bipartisan plan’s wide-ranging infrastructure investments would be paid from a variety of sources, including: 
    • certain unused COVID relief dollars;
    • certain states returning unused federal unemployment insurance aid; 
    • sales of future spectrum auctions;
    • extending fees on GSEs; economic growth resulting from a 33 percent return on investment in long-term infrastructure projects; and 
    • information reporting requirements related to cryptocurrency.
  • Senate Majority Leader Chuck Schumer (D-NY), above, would need 60 votes in the upper chamber to avoid a Republican filibuster and pass the Bipartisan Infrastructure Investment and Jobs Act. Those votes would likely come from all 50 members of his caucus and at least 10 Republicans. (PoliticoPro, July 29)
  • “My goal remains to pass both the bipartisan infrastructure bill and a budget resolution during this work period. Both,” he said. “It might take some long nights. It might eat into our weekends. But we are going to get the job done, and we are on track.” Although the Senate’s recess is scheduled to start Aug. 9, Schumer has said he could keep the chamber in session longer to pass the measures. (New York Times, July 29)  

“Human” Infrastructure Package 

DC monuments night

  • The Biden administration’s separate $3.5 trillion “human infrastructure” plan to invest in child care, paid leave, education and measures to curb climate change is traveling along a parallel budget “reconciliation” path – a process that would require the vote of every Senate Democrat to pass the bill without any Republican votes. (CNBC, July 29)
  • Senate Budget Committee Chairman Bernie Sanders (I-VT) on July 28 said he has the 50 votes to pass a broad budget resolution next week that would lead to consideration of the package, according to Bloomberg. Sanders added, “It is my absolute conviction that you’re not going to have a bipartisan bill unless you have a reconciliation bill of $3.5 trillion.”
  • However, Sen. Kyrsten Sinema (D-AZ) – the lead Democratic negotiator on the bipartisan infrastructure bill – this week told the Arizona Republic, “I have also made clear that while I will support beginning this process, I do not support a (reconciliation) bill that costs $3.5 trillion – and in the coming months, I will work in good faith to develop this legislation with my colleagues and the administration to strengthen Arizona’s economy and help Arizona’s everyday families get ahead.” (CNN, July 28) 

In the House of Representatives, Speaker Nancy Pelosi (D-CA) has insisted she will not consider either the infrastructure bill or budget measure until the Senate passes both. (CNBC, July 29) 

#  #  #

House Financial Services Committee Approves Bill to Transition Away from LIBOR

Posted on by Trey Jackson

Rep. Brad Sherman table mic

Legislation advanced this week by the House Financial Services Committee would help smooth the transition away from the London Interbank Offered Rate (LIBOR) as a reference rate for financial contracts. (House Financial Services Committee markup documents and videos, July 28 | Rep. Brad Sherman (D-CA), above)

Why It Matters 

  • Libor is currently used in many outstanding financial contracts – including commercial real estate debt, mortgages, student loans and derivatives – worth an estimated $223 trillion. (Committee memo, page 6)
  • The use of LIBOR for new contracts is scheduled to terminate at the end of 2021. Additionally, all LIBOR maturities will stop in June 2023, although some will cease at the beginning of next year.
  • The Adjustable Interest Rate (LIBOR) Act of 2021 was sponsored by Rep. Brad Sherman (D-CA) – chair of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets. The bill would authorize the Federal Reserve to issue rules to “establish a clear and uniform process on a nationwide basis for replacing LIBOR in existing contracts,” with replacement benchmark rates. An amendment to the legislation was also approved during the Financial Services Committee July 29 markup.
  • The bill would also provide a safe harbor for market participants switching existing LIBOR-referencing financial contracts over to a replacement benchmark for debt instruments. This would apply to instruments such as floating-rate bonds, which require all parties to agree to terms that cannot easily be changed.  The bill also includes a federal preemption.
  • Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell recently told the Financial Stability Oversight Council that Congress urgently needed to pass legislation to allow for a smooth transition away from LIBOR. (Bloomberg, June 11)
  • Additionally, the Fed’s Alternative Reference Rates Committee (ARRC) yesterday endorsed use of Secured Overnight Financing Rate (SOFR) Term Rates, a forward-looking version of the LIBOR alternative for financial instruments. (Bloomberg, July 29)
  • As Federal Reserve Vice Chair for Supervision Randal Quarles continues to encourage the termination of the use of LIBOR by year-end, the House bill and the ARRC endorsement of SOFR Term Rates are intended to provide market participants with the tools they need to transition away from LIBOR.  

Roundtable Support 

House Financial Services Committee

  • The Real Estate Roundtable and 17 national trade groups on July 27 submitted a letter to House Financial Services Committee policymakers in support of legislation to address “tough legacy” LIBOR contracts during the transition away from the benchmark.  (Joint Trades’ Letter on Libor)
  • The joint letter noted that currently, there is no realistic ability to modify legacy contracts that cannot be converted to a non-LIBOR rate or be amended with adequate fallback language before all LIBOR maturities are scheduled to stop in June 2023.
  • The coalition letter stated, “A state-by-state piecemeal approach does not provide the necessary comprehensive protections that is achievable at the federal level given importance of the issue and the very limited time remaining until LIBOR’s end in less than two years.” 

The letter also commended Rep. Sherman and the Committee for providing a meaningful legislative solution in support of the LIBOR transition by providing fair, equitable and consistent treatment for all tough legacy contracts. 

#  #  #