News Type: Roundtable Weekly

Positive Transit Measures Included in Reconciliation Package

Posted on by Trey Jackson

Infrastructure Virginia highway

The House Transportation and Infrastructure (T&I) Committee this week marked-up its $57.3 billion piece of the reconciliation package with a focus on mass transit and high-speed rail.

  • Many of the T&I measures are now in line with the Biden administration’s original transit priorities, which were pared down in the Senate’s final physical infrastructure bill. (Washington Post, Sept. 10)

  • Roundtable-supported measures in the T&I Committee’s bill include:

    • A competitive federal grant program to support transit access for affordable housing projects and improve mobility for low-income riders; 
    • Grants administered by the Federal Highway Administration to support transportation equity and reconnect communities divided by “existing infrastructure barriers;”
    • Funds to improve high-speed rail corridors;
    • Credit risk assistance to develop rail infrastructure under the Railroad Rehabilitation and Improvement financing (RRIF) program; and
    • Funds to convert federal buildings owned or managed by the General Services Administration to “high-performance green buildings.”    
  • Separately, the Ways and Means Committee’s package also proposed favorable tax-exempt bond financing improvements to attract greater public-private partnership investments in transportation projects.

Timing for a House vote on the sprawling reconciliation bill is uncertain. Modifications to the tax, energy or transportation sections of the bill could be introduced when it is sent to the House Rules Committee, which determines floor action – or through an amendment on the floor. House Speaker Nancy Pelosi (D-CA) can afford to lose only three votes when the final legislation comes to a vote. (Bloomberg, Sept. 15)

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House Committee Advances Bill to Expedite Emergency Rental Assistance; Treasury and FHFA Loosen Fannie, Freddie Mortgage Purchase Restrictions

Posted on by Trey Jackson

House Financial Services Committee graphic

The House Financial Services Committee (HFSC) on Sept. 14 advanced the “Expediting Assistance to Renters and Landlords Act of 2021” by a vote of 28-22 after a hearing last week that focused on urgent reforms needed to the Treasury Department’s Emergency Rental Assistance Program (ERAP). (Bill text and section-by-section)

  • H.R. 5196 would allow property owners to directly apply for rental arrears after meeting certain requirements. Landlords could apply for pandemic-related rental aid without getting the tenant’s signature, but could not evict those tenants for 120 days. (HFSC memorandum, Sept. 7 and PoliticoPro, Sept. 14) 

Assistance for Property Owners 

Emergency Rental Assistance Program graphic

  • Treasury reported that as of July 2021, only 11% ($5.1 billion) of the $46.6 billion in authorized federal rental assistance funds had been spent by state and local governments to assist approximately one million renters. (Committee Memorandum, Sept. 7) 
  • The issue of eliminating significant bottlenecks to deliver billions in rental assistance to landlords and tenants has grown more urgent in recent weeks after the Supreme Court’s Aug. 26 decision to halt the federal eviction ban. (Roundtable Weekly, Aug. 27)
  • Treasury this week announced it will speed up delivery of the remaining $13 billion in federal rental aid by targeting the high-performing state and local government grantees. (Treasury news release, Sept. 14)
  • National Multifamily Housing Council (NMHC) Chair David Schwartz (Chairman and CEO, Waterton) testified Sept. 10 on behalf of the rental housing industry at the HFSC hearing “Protecting Renters During the Pandemic: Reviewing Reforms to Expedite Emergency Rental Assistance.”
  • Schwartz supported the ramp up of rental assistance benefits and streamlining onerous application and documentation requirements, yet cautioned against the imposition of new requirements that create new barriers for property owners to participate in ERAP programs. (YouTube, full hearing and NMHC news release, Sept. 10)
  • Schwartz will join Roundtable President and CEO Jeffrey DeBoer and NMHC President Doug Bibby in a Sept. 23 multifamily webinar hosted by RealEstateConnect that will cover the economic outlook and tax law policy changes under consideration in Washington. (Register here)

Fannie, Freddie Restrictions Suspended

Fanne Mae and Freddie Mac logos

  • Treasury and the Federal Housing Finance Agency (FHFA) this week suspended Trump-era restrictions on Fannie Mae and Freddie Mac as the Biden administration reviews revisions affecting mortgage purchases. (American Banker, Sept. 14)
  • The suspended provisions include limits on Fannie and Freddie cash windows (loans acquired for cash consideration), multifamily lending, loans with higher risk characteristics, and second homes and investment properties. (FHFA news release, Sept. 14) 

Treasury stated, “FHFA will continue to measure, manage, and monitor the financial and operational risks of the Enterprises to ensure that they operate in a safe and sound manner and consistent with the public interest. During the suspension, FHFA will review the suspended requirements and consult with Treasury on any recommended revisions.” (Treasury news release, Sept. 14) 

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House Committees Advance Clean Energy Measures Favorable to CRE

Posted on by Trey Jackson

Austin TX solar panels

House committees this week advanced “clean energy” portions of the $3.5 trillion reconciliation plan along party lines, including several measures supported by The Real Estate Roundtable. 

Clean Energy Tax Incentives

  • The Ways & Means Committee this week approved “green energy” portions of the reconciliation package. (Bill text [Subtitle G); section by section)
     
  • The Committee approved significant changes to existing tax credits that incentivize investments in solar, wind, combined heat and power (CHP) and fuel cell systems – and expanded them to also include energy storage and dynamic glass properties.
  • These renewable energy investments would be subject to an “elective pay” option that can allow entities with little appetite for tax credits to request a payment equal to the value of the credit.
  • Investments in EV charging stations and high-voltage transmission lines (needed to support delivery of renewable power over long distances) would also benefit from the elective pay option.
  • The Committee also made changes intended to improve the 179D tax deduction for energy efficient buildings. The proposed changes are geared to support existing building retrofits.
  • The amounts of these incentives would start at a “base rate” – and could increase to a “bonus rate” if the property owner meets certain labor provisions for Davis-Bacon wages and hiring registered apprentices.

Climate and Energy

House Energy and Commerce Committee

  • The House Energy and Commerce (E&C) Committee passed a $456 billion section of the reconciliation bill. (Bill text / Committee memorandum, Sept. 9 and Markup summary, Sept. 13)
     
  • The centerpiece of the E&C package is a Clean Electricity Performance Program (CEPP). It would offer federal Energy Department “incentive payments” to electric utilities that meet clean energy targets and shift to zero-emissions sources (i.e., nuclear, hydropower, wind, solar, geothermal).
     
  •  A nationwide CEPP could accelerate “greening” the grid and help real estate and other sectors accommodate increasing demands from investors and regulators to source the electricity they purchase from renewable power.
     
  • However, Sen. Joe Manchin (D-WV), chair of the Senate Energy and Natural Resources Committee and a key centrist vote needed for ultimate passage of a reconciliation package, has questioned the need for the CEPP program. He has stated that utilities should not receive taxpayer funds because the electricity sector’s’ transition to clean power sources is already happening. (Politico and E&E News, Sept 14) 

Other elements of the E&C Committee’s bill include:

  • Grants for state/localities to adopt most recent and zero-energy building codes; and
  • A rebate program for electric vehicle charging infrastructure with set asides for individuals, small businesses, and low-income communities.

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House Ways and Means Committee Advances Historic Legislation with Safety Net Expansion and $2.1 Trillion in Tax Increases

Posted on by Trey Jackson

House Ways and Means Committee graphic

The House Ways and Means Committee voted to advance legislation that would expand benefits for low-income families, invest in affordable housing and other Democratic priorities, and finance the initiatives with a $2.1 trillion tax increase that primarily falls on high-income individuals, pass-through businesses, and corporations. The legislation excludes several tax proposals put forward by the Biden administration and Senate lawmakers that would increase the tax burden on real estate. (Ways and Means news release and markup resources) 

  • Real Estate Roundtable President Jeffrey DeBoer stated, “The House Ways and Means Committee’s proposals include significant tax increases on corporations and income received by upper income taxpayers, and not on business activities like real estate.  Even so, the combined tax hikes on income received from pass-through entities could threaten job creation and business expansion. As the bill moves forward, we encourage Congress to review the suggested tax hikes, particularly those on pass-through businesses, and work to ensure that unnecessary and unintended damage is not done to the economy. Substantial commercial real estate activities are conducted by pass-through entities and these activities create jobs, support retirement savings, and boost tax revenue for critical public services provided by local governments. The Roundtable is encouraged, yet cautious, at this still relatively early stage of the legislative process. Further changes may be on the horizon, both positive and negative.” 
  • Tax issues affecting CRE are summarized in The Roundtable’s summary on Real Estate Tax Issues and Budget Reconciliation Legislation. The real estate tax issues addressed by the W&M Committee include: 

Ways and Means markup


Real Property Like-Kind Exchanges (Section 1031) 

  • The bill wisely preserves taxpayers’ ability to defer capital gain when exchanging real property for another property of like kind. 

Step-Up in Basis and Taxation of Gains at Death 

  • The bill preserves the step-up in basis that applies to appreciated gain when real estate is transferred from a decedent to an heir. The bill does not impose capital gains tax on appreciated real estate when transferred by a decedent or donor.

Capital Gains 

  • The bill increases the maximum capital gains rate from 20% to 25%. The 3.8% investment tax is maintained and extended to all taxpayers, thus making the effective capital gain tax rate 28.8%. The President’s budget proposed increasing the capital gains rate to 39.6% to create parity between the tax rate on ordinary income and capital gains.

Real Estate Carried Interest 

  • The bill generally extends from 3 years to 5 years the holding period for partnership gains attributable to a profits interest to qualify for the long-term capital gains rate. However, the bill preserves the shorter 3-year holding period for capital gain related to a real property trade or business.  The President’s budget proposed converting all carried interest income derived from a profits interest in a real estate partnership to ordinary income.

Pass-Through Business Income Deduction (Section 199A) 

  • The bill limits the maximum deduction available for pass-through business income under section 199A to no more than $400,000 for an individual and $500,000 in the case of a joint return ($2.5 million).

Net Investment Income Tax 

  • The bill would apply the 3.8% net investment income tax to income derived from a trade or business, capital gain, dividends, interest, and rental income regardless of whether the taxpayer is active or passive in the activity.

Other Tax Issues 

  • Other tax issues addressed by the committee included affordable housing, infrastructure financing, grantor trusts, deductibility of active losses and REIT constructive ownership rules. These issues are also summarized in The Roundtable’s summary on Real Estate Tax Issues and Budget Reconciliation Legislation.
  • House Speaker Nancy Pelosi (D-CA) is expected to address a provision affecting the $10,000 limit on state and local deductions (SALT) before a final bill is assembled for a floor vote. (CNBC, Sept. 15)
  • The committee’s proposals on clean energy incentives are detailed in the Roundtable Weekly story below on energy policy. 

The House is expected to try to resolve major differences between their final bill and the Senate’s version before voting on the package. Senate Majority Leader Chuck. Schumer (D-NY) has not set a formal deadline for the Senate to complete its work but he said Tuesday “there’s going to be a lot of intense discussions and negotiations over the next few weeks.” (RollCall, Sept. 14) 

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

Posted on by Trey Jackson

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

Posted on by Trey Jackson

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

Posted on by Trey Jackson

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

Posted on by Trey Jackson

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

Posted on by Trey Jackson

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

Posted on by Trey Jackson

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.