News Type: Roundtable Weekly

Infrastructure Negotiations Shift to Bipartisan Congressional Groups; House, Senate Committees Advance Surface Transportation Bills

Posted on by Trey Jackson

Capitol Hill trees clouds in the evening

Months of negotiations on bipartisan infrastructure legislation between President Biden and Republicans led by Sen. Shelley Moore Capito (R-WV) collapsed this week – and talks have shifted to alternative approaches from bipartisan groups of congressional policymakers. Meanwhile, House and Senate committees are moving forward on spending bills to meet the nation’s surface transportation needs before current funding expires on Sept. 30. (White House statement, June 8 and CQ, June 10) 

Alternative Paths 

  • President Biden recently reduced his original infrastructure package proposal from $2.3 trillion to $1.7 trillion – and requested at least $1 trillion in new spending from Republicans. The Senate GOP group counteroffered with nearly $1 trillion, which included only $330 billion in new spending and the rest from repurposed COVID-19 relief funding signed into law earlier this year. Biden cancelled the talks after the gap over the package’s scope and funding could not be bridged. (The Hill and AP, June 8)
  • Yesterday, a bipartisan group of 10 senators said they would propose a plan focused on “core, physical infrastructure” infrastructure that would cost $974 billion over five years, or $1.2 trillion over eight years, including about $579 billion in new spending. (CQ and New York Times and Washington Post, June 10)
  • According to Axios, “The group proposes paying for it through unspent coronavirus relief aid, public-private partnerships, indexing the gas tax to account for inflation and allowing states to borrow necessary money through a revolving loan fund.”
  • A joint statement released by the senators said, “[We] reached a bipartisan agreement on a realistic, compromise framework to modernize our nation’s infrastructure and energy technologies. This investment would be fully paid for and not include tax increases.” (Joint statement, June 10)

  • In the House, the Problem Solvers Caucus, which has 29 Democrats and 29 Republicans, on June 9 released a $1.25 trillion infrastructure spending framework, including $761.8 billion in new spending over eight years – yet did not include any details about how to pay for the proposal. (News release, Building Bridges Infrastructure  Framework and section-by-section summary)
  • The co-chairs of the House caucus – Reps. Josh Gottheimer (D-NJ) and Brian Fitzpatrick (R-PA) – are also in contact with a key group of bipartisan group of senators, including Bill Cassidy (R-LA), Kyrsten Sinema (D-AZ), Rob Portman (R-OH) and Joe Manchin, (D-WV) about developing a bipartisan, bicameral infrastructure package. (CQ, June 9)

  • White House Press Secretary Jen Psaki this week said, “[President Biden] feels it’s encouraging to see multiple proposals put out there, both from Republicans in the House and the Problem Solvers Caucus, as well as a bipartisan group that’s working on a proposal. Both will have increased numbers over what we’ve seen and been negotiating to date. Those are all positive steps.” (White House Press Gaggle, June 9)

Surface Transportation Legislation 

road construction and workers

  • Yesterday, the House Transportation and Infrastructure (T&I) Committee advanced a five-year, $547 billion surface transportation bill by a vote of 38-26 that included two supporting Republican votes. (Section-by-section summary of the INVEST in America Act)
  • Although the House Ways and Means Committee needs to address how to fund the bill’s costs, many of the provisions align with Biden administration transportation priorities – and could serve as a possible cornerstone for a larger infrastructure package. (CQ and BGov, June 10)
  • House Majority Leader Steny Hoyer (D-MD) said the chamber will take up the T&I committee bill the week of June 28.  A reauthorization bill for surface transportation is considered must-pass legislation as current funding expires Sept 30. (Washington Post, June 10)
  • In the Senate, several committees have jurisdiction over portions of that chamber’s surface transportation bill. The Environment and Public Works Committee unanimously voted on May 26 to advance a $303.5 billion bill over the next five years to fund the nation’s roads, bridges, tunnels, and mass transit projects. (Roundtable Weekly, June 4)
  • The Senate Commerce, Science and Transportation Committee is scheduled to consider rail and safety issues on June 16. Separately, a spokeswoman for Senate Banking, Housing and Urban Committee said Chairman Sherrod Brown (D-OH) said he continues to work with Ranking Member Patrick Toomey (R-PA) “in hopes of reaching a bipartisan agreement on a robust transit title for a surface transportation bill.” (CQ, June 10)

Reconciliation

Schumer fists podium

  • Democrats are also considering the use of the budget “reconciliation” process, which would allow them to bypass the Senate’s 60-vote requirement to pass legislation and push through an infrastructure package on a party line vote. (Roundtable Weekly, June 4)
  • Senate Majority Leader Charles Schumer (D-NY), above, said yesterday, “We continue to proceed on two tracks. A bipartisan track and a reconciliation track — and both are moving forward.” (Washington Post, June 10)
  • Schumer said last week that he wants to move forward on an infrastructure bill in July, whether it is bipartisan or not. (The Hill, May 25)
  • A National League of Cities’ 2021 State of Cities report released this week supported the need for infrastructure investment nationwide. Of the 600 mayors who provided information for the report, 91 percent said they did not have the funds to make needed infrastructure investments. (NLC news release, June 10)

The Roundtable will focus on the evolving infrastructure negotiations and their possible impact on CRE during its June 15-16 Annual Meeting and Policy Advisory Committee Meetings in Washington, DC.

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Senate Committee Unanimously Reauthorizes Highway Trust Fund; “Gateway” Hudson Tunnel Project Reaches Major Milestone

Posted on by Trey Jackson

Senate Environment & Public Works Comittee

The Senate Environment and Public Works (EPW) Committee’s unanimous vote last week to advance $303.5 billion over the next five years to fund the nation’s largest source for roads, bridges, tunnels, and mass transit may help advance negotiations over President Biden’s infrastructure proposal. (BGov, May 26)

A Bipartisan Signal

  • Senate EPW Ranking Member Shelly Moore Capito (R-WV) is the lead GOP negotiator on the White House’s infrastructure proposal, which includes $115 billion for repairing Main Street roads, highways and bridges. (White House Fact Sheet: The American Jobs Plan, March 31)
     
  • Sen. Capito said the 20-vote committee vote to advance the Surface Transportation Reauthorization Act “… is further proof that a bipartisan infrastructure deal is possible. I’m hopeful this bipartisan product can be the anchor of a larger infrastructure package moving forward.” (Senate EPW Markup and news release, May 26)
     
  • The Senate committee’s measure would set a new baseline funding level for the Department of Transportation’s Highway Trust Fund – an increase of more than 34 percent from the last reauthorization to pass Congress in 2015.  (Full text of the EPW bill and one-page summary)

Time Considerations

Road Construction ramp

  • The Senate EPW Committee only has jurisdiction over the surface transportation bill’s highway section. The Senate Commerce Committee is next, with a markup expected the week of June 14. The Senate Finance Committee will eventually address how to pay for the measure and the Senate Banking Committee will consider sections dealing with mass transit programs.
     
  • In the House, Democrats on the Transportation and Infrastructure Committee  introduced the INVEST in American Act today and plan to mark up their surface reauthorization bill on June 9. (Bill Text | Fact Sheet | Section-by-Section and Washington Post, June 4)
  • The Biden administration was encouraged by the Senate EPW vote. White House Press Secretary Jen Psaki said during a May 25 briefing that the$303 billion dollar bill “is a great down payment” for a broader infrastructure package. (BGov, May 26)
     
  • However, the administration has expressed it is on a tighter deadline to advance a comprehensive infrastructure proposal. Transportation Secretary Pete Buttigieg recently said, “I think we are getting pretty close to a fish-or-cut-bait moment.” (CNN, May 30) 

Gateway Progress

Gateway Hudson Tunnel Project

  • The Biden Administration on May 28 approved a key step allowing the multi-billion dollar “Gateway” rail tunnel project between New York City and New Jersey to move forward, ending years of delay and clearing the way for state officials to apply for federal funding.  (New York Times, May 28)
     
  • The administration’s approval of a long-awaited environmental impact statement clears the way for pre-construction activities to begin on the crucial infrastructure project, which aims to repair tunnels damaged by Superstorm Sandy. (Politico, May 28)
     
  • Transportation Secretary Buttigieg commented on the approval – clearing the way for the project to advance to the next steps such as engineering, final design development, and property acquisition, as well as construction. “This is a big step for the Northeast, and for the entire country, as these tunnels connect so many people, jobs, and businesses,” he said. (DOT statement, May 28)

Senate Majority Leader Chuck Schumer (D-NY) said, “It’s probably the most important public works project in America. If those tunnels fail and can’t be used, 25 percent of our economy would be at risk from Boston to Washington.” (Politico, May 28) 

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Policymakers Remain Far Apart on Bipartisan Infrastructure Package; Senate Ruling Limits Reconciliation as Fast-Track Option

Posted on by Trey Jackson

President Biden and Sen. Capito

Policymakers this week remained far apart on the scope and cost of a possible bipartisan infrastructure package, as President Biden floated a 15% minimum corporate tax to partially fund his pared-down proposal. Meanwhile, a recent Senate Parliamentarian ruling would limit the use of a fast-track budget process called “reconciliation” that could allow Democrats to bypass Republicans and pass legislation on a party-line vote. (Washington Post, June 3, The Hill and New York magazine, June 2)  

[Photo above: President Biden discusses infrastructure with Sen. Shelley Moore Capito (R-WV)]

Seeking New Spending

  • President Biden recently reduced his original infrastructure package cost from $2.3 trillion to $1.7 trillion – and is now looking for at least $1 trillion in new spending from Republicans on infrastructure. Biden this week proposed raising these funds partially through a new 15% minimum corporate tax, which would replace his initial proposal to raise the corporate income rate to 28% from 21%. (BGov and New York Times, June 3)
  • Sen. Shelley Moore Capito (R-WV), who is leading GOP lawmakers in negotiations with the White House, last week counteroffered with $928 billion – although it limits new spending to $257 billion for traditional “hard” infrastructure such as roads, bridges and other public works. Republicans proposed the remaining $671 billion come from repurposed funding previously passed as part of the American Rescue Plan Act’s Covid-19 relief effort. Democrats have rejected repurposing of funds. (Roundtable Weekly, May 28 and AP, May 27)
  • The U.S. Conference of Mayors, National League of Cities and National Association of Counties recently expressed their “adamant opposition to any proposal that would detrimentally recoup and repurpose funds allocated to local governments” from coronavirus relief funds. (NLC news release, June 1 and joint letter, May 27)
  • The coalition’s joint letter to congressional leadership, stated, “Local governments are using these critical recovery funds to invest in public safety, vaccine distribution, housing and rental assistance, local economic support, economic and workforce development, broadband expansion, social safety-net services, hospitality and tourism development, and hazard pay for public employees.”

Time is Short

The White House with Washington Monument

  • White House Press Secretary Jen Psaki this week said, “Patience is not unending, and [President Biden’s] wants to make progress. His only line in the sand is inaction. He wants to sign a bill into law this summer.” (White House Press Briefing, June 2)
  • The No. 3-ranked House Democrat, Rep. Jim Clyburn of South Carolina, yesterday said time is short to complete negotiations on a bipartisan package. “I don’t think we should run the risk of not getting something done because the other side is not cooperating.” (Bloomberg’s Balance of Tower, June 3)
  • Sen. Ben Cardin (D-Md.) on Thursday added that Democrats would soon take actions to use the budget reconciliation process to bypass the Senate’s 60-vote requirement to pass legislation and push through a bill on a party line vote.  Cardin said that Democrats are “going as far as we can with Republicans and not delay[ing] it beyond this work period without seeing some action.” (Politico, June 3)
  • Senate Majority Leader Charles Schumer (D-NY) said last week that he wants to move forward on an infrastructure bill in July, whether it is bipartisan or not. (The Hill, May 25)

Limits on Reconciliation

Senate side - Capitol Building

  • The Democrats’ alternative plan to use reconciliation to bypass Republican opposition on infrastructure legislation may be slowed by a recent Senate Parlimentarian ruling. Congressional Democrats used reconciliation in March to pass the administration’s $1.9 trillion pandemic relief package. (Roundtable Weekly, March 12)
  • Senate Parliamentarian Elizabeth MacDonough’s four-page opinion, issued to Senate staff on May 28, stated, “overuse and over-reliance on a hyper-fast track procedure in the ordinarily deliberative Senate … will change the culture of the institution to the detriment of the committee and amendment processes and the rights of all Senators.” (CQ, June 2)
  • The new guidance adds that lawmakers intended the reconciliation provision to be used only “in extraordinary circumstances and not for things that should have been or could have been foreseen and handled” in a regular budget resolution. 

The ruling suggests that Democrats will be restricted to one additional opportunity this year to use reconciliation to pass a filibuster-proof legislative package.  (Roll Call, June 2 and The Hill, June 4)

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Realtor Coalition Submits Emergency Appeal to Supreme Court to Reject CDC Eviction Moratorium Ban

Posted on by Trey Jackson

The U.S. Supreme Court building

A coalition of Realtor associations on June 3 submitted an emergency appeal to the Supreme Court to reject the U.S. Centers for Disease Control and Prevention (CDC) national eviction moratorium, which is scheduled to expire June 30. (SCOTUSblog, June 3)

Why It Matters

  • The federal eviction moratorium – originally enacted by Congress more than a year ago in the CARES Act – was extended by both the Trump and Biden Administrations by executive orders to prevent mass evictions in the face of a public health emergency. A further extension by President Biden is likely. 
  • The Supreme Court appeal in Alabama Association of Realtors v. Department of Health and Human Services comes after a DC Circuit court this week upheld a federal judge’s May 5 ruling, which allowed the moratorium to remain in effect. (Roundtable Weekly, May 7)
  • The Realtor coalition argued in its 35-page pleading to the high court that “Congress never gave the CDC the staggering amount of power it now claims.” (NBCNews and CNN, June 3)
  • The filing also emphasized that the CDC’s moratorium “shifted the pandemic’s financial burdens from the nation’s 30 to 40 million renters to its 10 to 11 million landlords—most of whom, like applicants, are individuals and small businesses—resulting in over $13 billion in unpaid rent per month.” (Case number 21-5093 in the U.S. Court of Appeals for the D.C. Circuit.)
  • National Multifamily Housing Council CEO Doug Bibby on June 2 told Connect CRE that rental housing is dominated by non-institutional, ‘mom and pop” property owners. Bibby stated, “When eviction moratoria policies are treated as ‘rental holidays,’ these individual property owners tend to suffer disproportionately – as do renters, who end up with fewer options.”
  • Bibby added, “While federal policymakers ultimately provided $46.5 billion for emergency rental assistance, the continuation of eviction moratoriums has renewed focus on broader questions of eviction practices, as well as raised concerns about the disruption in the market once the moratoriums expire.” (ConnectCRE, June 2)
  • The Federal Housing Finance Agency announced yesterday that it is extending for a third time the ongoing moratorium on evictions on multifamily properties backed by Fannie Mae and Freddie Mac, which the agency oversees. The housing regulator’s extension is now in effect until the end of September, preventing affected housing providers from evicting tenants for not paying rent, or charging late fees for unpaid rent. (Reuters, June 3)

Distribution Problems 

Capitol Dome Dusk

  • Congress approved $25 billion of emergency rental assistance in December 2020 under the Consolidated Appropriations Act. An additional $21.6 billion was allocated in March 2021 under the American Rescue Plan Act. The Treasury Department announced on May 7 that it was releasing the second allocation, along with new guidance for local municipalities administering emergency rental assistance programs. (Roundtable Weekly, May 14)
  • State and local authorities have been overwhelmed with how to allocate the influx of funds, leaving many tenants and housing providers waiting weeks or months for the assistance. (Washington Post, June 4 and Wall Street Journal, April 13)
  • The Roundtable is part of a broad real estate coalition that has urged state, county and municipal officials to distribute the allocated federal funds as soon as possible. (Coalition letter, April 15)
  • The coalition letter emphasized the need “to quickly and fully allocate available American Rescue Plan federal funds to provide assistance to renters, consumer-facing small businesses, and impacted industries such as retail, tourism, travel, and hospitality that are having trouble paying rents, mortgages or remaining viable enterprises due to the COVID-19 pandemic.”
  • The letter adds, “Such assistance would make a big difference in the lives of thousands upon thousands of COVID-19 affected renters and businesses in their cities, counties, and states – and would also provide stability to the buildings and communities in which they live.”

As this week’s emergency appeal is considered by to the Supreme Court, there are several states that will continue to ban evictions beyond June 30. Additionally, the state of Washington last month guaranteed tenants facing eviction the right to counsel. Maryland and Connecticut are considering similar measures. (CNBC, June 3)

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Senate Finance Committee Advances Energy Tax Bill with Enhanced Incentive for Energy Efficient Building “Retrofits”

Posted on by Trey Jackson

The Senate Finance Committee on Wednesday advanced an improved energy efficiency tax deduction for commercial buildings (Section 179D) that would make the incentive more usable for “retrofits” of older buildings, multifamily structures, and REITs. (Clean Energy for America Act (S. 1298), mark-up video and supporting documents)

 Section 179D & CRE 

  • The modified bill introduced by Chairman Ron Wyden (D-OR), above,  included amendments originally proposed by Sen. Ben Cardin (D-MD) to improve Section 179D. Overall, the bill would replace a patchwork of more than 40 energy tax policies with incentives for commercial and residential energy efficiency, clean electricity, and clean transportation fuels, and eliminate fossil fuel subsidies. 
  • The Section 179D enhancements would allow:
    • A retrofit project tax deduction for efficiency investments that lower an existing building’s energy consumption from a “pre-retrofit” baseline measured through EPA’s Portfolio Manager benchmarking tool;
    • All multifamily buildings to qualify for the Section 179D incentive;
    • REITs to benefit from the incentive by allowing the amount of the 179D tax deduction to reduce earnings and profits (“E&P”) in the year that energy efficient equipment is placed in service. 
       
  • The legislation also includes new rules requiring that taxpayers claiming Section 179D or other tax benefits in the bill comply with the Department of Labor’s prevailing wage standards and use qualified apprentices for at least 15 percent of the labor hours associated with any construction, alteration, or repair work on the project.  

Roundtable Recommendations

Davis-Bacon Prevailing Wage Concerns

  • The  Roundtable’s letter opposed new prevailing wage mandates proposed by the bill. The Roundtable warned that the excessive costs from Davis-Bacon compliance will greatly exceed the amount of any tax deduction that Section 179D might provide to incentivize an energy efficient construction project.
  • “Davis-Bacon has never been applied simply because the Internal Revenue Code provides a deduction to lower a private entity’s taxable income,” the letter stated. “The Roundtable recommends that the Clean Energy for America Act avoid unchartered territory that would transform the Internal Revenue Code into a ‘Davis-Bacon Related Act.’”
  • Committee Ranking Member Mike Crapo (R-ID), above, said, “I cannot support attaching labor requirements to energy tax policy. Linking labor policy to energy-related tax credits is unprecedented, and I have concerns not only about the policy, but also about the dangerous precedent it sets for amending the tax code.” 
  • After the committee voted 14-14 along party lines to advance the $260 billion energy tax bill, Chairman Wyden said he would place the bill on the Senate calendar. (CQ, May 26).
  • The bill’s prospects in the full Senate are uncertain, yet specific elements within the bill could be incorporated into a larger economic package proposed by President Biden. Wyden has not said whether he will work to roll the measure into the president’s infrastructure plans. (BGov, May 26)

Energy and tax policies affecting commercial real estate will be a focus of discussions during The Roundtable’s June 15 all-member Annual Meeting – and during its June 16 Tax Policy Advisory Committee (TPAC) and Sustainability Policy Advisory Committee (SPAC) Meetings.

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Congressional Briefing on Section 1031 Exchanges; ‘Stand with Cities’ Event Focuses on Economic Growth

Posted on by Trey Jackson

A broad business coalition that includes The Real Estate Roundtable held a virtual briefing this week on the economic importance of like-kind exchanges (LKEs) for members of Congress and their staff. Additionally, several Roundtable members focused on the future of urban areas and economic growth during a “Stand With Cities” webcast.

  • The May 27 briefing focused on the longstanding, positive role of like-kind exchanges in the economy and the potential negative unintended consequences of limiting section 1031. (View video of the briefing)
  • DeBoer said that as Washington policymakers consider whether and how to pay for infrastructure, clean energy, education, child care, housing and other policy goals,  various tax provisions are under consideration, including the Section 1031 exchanges. He also noted how LKEs have been used to finance economic development and support local communities for 100 years – the provision is nearly as old as the income tax itself. (Exeter, history of Section 1031)

LKE Examples & Data

  • Nadji described the practical uses of LKEs, which help small business, partnerships and family farms to reinvest profits—in this case, the capital gain earned in a real estate business or investment—on a tax-deferred basis so that a business can continue to grow. He noted that if the exchanges are restricted, it would stifle transactions and hamper the marketplace.
  • Mayor Chirico gave real-world examples of how like-kind exchanges have provided an essential tool for attracting economic investment to his community. He stated that because of 1031, Naperville was able to secure a Costco store, which has produced jobs and as much sales tax revenue as their entire downtown business district. “The halo effect of all the Mom and Pop businesses that have now occupied vacant spaces in that very worn-out and distressed area that we once had – it has now been transformed, and it happened during the pandemic,” Chirico said.
  • Professor Petrova addressed her extensive research into the macro-economic impact of LKEs with Dr. David Ling. In their recent study, “The Tax and Economic Impacts of Section 1031 Like-Kind Exchanges in Real Estate,” data shows how LKEs have helped preserve capital, allowed investors to upgrade their portfolios and make capital improvements.
  • Petrova’s research also demonstrates how elimination of LKEs would likely lead to a decrease in CRE prices, less investment in real estate, greater use of leverage and a decrease in liquidity.
  • Dr. Carroll discussed his recent study on the “ Economic contribution of the like-kind exchange rules to the US economy in 2021.” His key results focused on the positive economic activity supported by LKEs; employment supported by the exchanges, listed by industry; and taxes paid by and related to businesses that make use of Section 1031.

Stand With Cities

Like-Kind exchanges and economic growth proposals under consideration by Washington policymakers will be a focus of discussion during The Roundtable’s June 15-16 Annual Business Meeting and Policy Advisory Committees Meetings (all remote).

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Biden Administration Issues FY22 Budget with Tax Policy Details; Policymakers Face Deadline on Bipartisan Infrastructure Negotiations

Posted on by Trey Jackson

The Biden Administration today issued its FY22 budget proposal, which serves as a benchmark of its tax policy priorities, accompanied by the Treasury Department’s “General Explanations of the Administration’s Revenue Proposals.” Meanwhile, negotiations continued this week between Senate Republicans and the White House on the scope and cost of President Biden’s multitrillion infrastructure investment proposal.

Budget Pay-fors 

  • The administration’s $6 trillion 2022 budget beginning Oct. 1 represents some of the highest levels of federal spending of the postwar era. The revenue portion of the proposal would sharply raise taxes on corporations and high-income households to fund President Biden’s infrastructure, climate change and social safety net goals. (BGov, White House Fact Sheet and budget appendix, May 28)
  • Although Congress will eventually determine final legislation that controls the federal government’s annual spending, today’s White House budget influences the debate on how to pay for its proposed programs with a variety of taxes, including:
    • An increase in the corporate tax rate to 28% from 21%;
    • Nearly doubling the tax rate on long-term capital gains to 40.8% from 23.8%;
    • Limiting capital gains treatment to invested cash and disregarding other forms of risk taken by partners;
    • Limiting taxpayers’ ability to defer gain that is reinvested in property of a like-kind; and
    • Making death a taxable event at far lower levels of income and potentially taxing the unrealized gain on appreciated assets not once but twice when an individual dies.

GOP Infrastructure Counteroffer 

  • Senate Republicans yesterday outlined a $928 billion infrastructure proposal over eight years as a counteroffer to Biden’s $1.7 trillion infrastructure initiative. The GOP proposal would repurpose funds from the $1.9 trillion pandemic relief law enacted in March, an approach rejected by Democrats. The Republican proposal also includes $257 billion in new spending for traditional “hard” infrastructure such as roads, bridges and other public works. (NPR / New York Times / AP, May 27)
  • Democrats are weighing whether to advance the Biden infrastructure plan under the same “reconciliation” budget process that was used to pass the March pandemic relief package by a simple majority vote – thereby bypassing the 60-vote requirement typically needed to advance most legislation in the 50-50 Senate.
     
  • President Biden yesterday referred to the infrastructure talks, stating, “We’re going to have to close this down soon.” He added that he plans to meet next week with Sen. Shelley Moore Capito (R-WV), above at podium, who has led Republican policymakers in infrastructure negotiations. (Bloomberg, May 27) 
  • Senate Majority Leader Chuck Schumer (D-NY) on May 25 said, “The bottom line is very simple, that it has always been our plan regardless of the vehicle to work on an infrastructure bill in July. And that’s our plan, to move forward in July.” (The Hill, May 28) 
  • Senate Minority Leader Mitch McConnell (R-KT) stated during a May 27 CNBC interview, “We’re open to spending some more … we’re going to keep talking.”  
  • White House Press Secretary Jen Psaki issued a May 27 statement on the Republican infrastructure proposal. “We are concerned that the proposal on how to pay for the plan remains unclear: we are worried that major cuts in COVID relief funds could imperil pending aid to small businesses, restaurants and rural hospitals using this money to get back on their feet after the crush of the pandemic.” The statement added, “As for the path forward … we will work actively with members of the House and Senate next week, so that there is a clear direction on how to advance much needed jobs legislation when Congress resumes legislative business during the week of June 7.” 

According to Axios, Senate Democrats intend to continue working on bipartisan infrastructure negotiations through the week after Memorial Day congressional recess “… then forge ahead on their own if there’s no deal.” (Axios, May 24) 

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Commercial Real Estate Executives Report Improved Current Markets and Caution Ahead

Posted on by Trey Jackson

Q2 2021 Sentiment Index Graph - RWCommercial real estate executives report Q2 market conditions have stabilized since the previous quarter, yet note the future is clouded by concerns about labor shortages, inflationary pressures and the outcome of current policy proposals in Washington, according to The Real Estate Roundtable’s Q2 Economic Sentiment Index.  

Current and Future Sentiment

  • The Roundtable’s Overall Sentiment Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any result over 50 is viewed as positive. This quarter’s Overall Sentiment registered a score of 77.

  • The Roundtable’s Q2 Current Sentiment score of 78 is a 34-point increase over Q1, reflecting increased vaccination, a reduction in the number of positive COVID tests, and moves to reopen businesses. The current sentiment score also stands in contrast to the economic environment of one year ago, when the current sentiment score hit 13, an 11-year low. 

  • However, sentiment reported in Q2 about Future Conditions registered a flat score of 75 – only one point more than the previous quarter – reflecting continued concerns about the pandemic’s long-term impacts.  

Roundtable Insight

  • Roundtable President and CEO Jeffrey DeBoer said, “Industry leaders are encouraged by the steady progress of vaccinations, rapidly declining infection rates and businesses reopening, but their ongoing concerns over increasing construction costs, inflationary pressures and labor supply have resulted in a more measured outlook.”

  • “As the long-term economic repercussions of the pandemic remain unclear, Washington lawmakers should prioritize new policies that encourage continued economic growth over initiatives that could hinder the recovery,” DeBoer added. 

  • The Roundtable’s survey for the Q2 Sentiment Index also shows that eighty-three percent of respondents believe that general market conditions today are “much better or somewhat better” versus one year ago – and that availability of capital remains plentiful compared to one year ago.

  • The Roundtable’s Q2 Economic Sentiment Index’s Topline Findings include:

    • An Improvement in Current Market Conditions
      Respondents’ views reflect the progress of the national vaccination rollout and improvements in near-term conditions, compared to the economic trough one year ago.
    • Increasing Values for In-Demand Asset Classes
      Respondents report investors are starting to bid up asking prices for in-demand asset classes such as life science and storage.
    • Steady Capital Markets
      Most respondents cited accessible capital market for debt and equity, especially when compared to a far more difficult overall market one year ago.   

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Policy Updates – RER YouTube Channel

Posted on by Trey Jackson

The Real Estate Roundtable’s YouTube Channel

May 28, 2021 – Real Estate Like-Kind Exchanges Congressional Briefing

April 19, 2021 – Discussion with John Anzalone – Partner, ALG Research 

April 12, 2021 – Interview – Robert S. Kaplan, President and CEO, The Federal Reserve Bank of Dallas

January 28, 2021 – A Conversation on Leadership – Penny Pritzker – Former U.S. Secretary of Commerce

January 27, 2021 – Leading on Tax Policy – Sen. Ron Wyden (D-OR) – Chairman, Senate Finance Committee

January 27, 2021 – Interview – Sen. Sherrod Brown (D-OH), Chairman of the Senate Banking, Housing, and Urban Affairs Committee

January 25, 2021 – Finding Unity – An Interview with Sen. Joe Manchin (D-WV) 

2020

October 5, 2020 – Listening Session with EPA Administrator Andrew Wheeler

September 22, 2020 – FY 2021 Nominations for the Board of Directors – Fall Roundtable Meeting

September 22, 2020 – Emerging Global Real Estate Investment Trends Panel-Fall Roundtable Meeting

September 22, 2020 – The Roundtable’s Equity, Diversity, and Inclusion Committee – Fall Roundtable Meeting

September 21, 2020 – A View from the Senate – Interview with Sen. Tim Kaine (D-VA)

September 21, 2020 – Prospects for a Pandemic Risk Insurance Act – Rep. Steve Stives (R-OH)

September 21, 2020 – Senate Majority Leader – Sen. Mitch McConnell (R-KY)

September 9, 2020 – Testimony and Q&A – Jeffrey DeBoer – The Status of the Federal Reserve Emergency Lending Facilities

September 4, 2020 – Bisnow Interview – Jeffrey DeBoer On His Game Plan To Push The CRE Agenda Before The Election

July 30, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Walker Webcast – All Eyes On Washington: What will the next stimulus bill do for CRE?

July 24, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Interview with Rep. Darin LaHood (R-IL)

July 10, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Public Policy in the Age of COVID: Shaping the CRE Recovery 

May 14, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – National Economic Policy Responses to the COVID-19 Crisis

May 6, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Interview with Dr. Joseph Gardner Allen, Assistant Professor with the Harvard T.H. Chan School of Public Health

May 5, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – “The Policy Response to COVID-19: Implications for Real Estate” – hosted by the Pension Real Estate Association (PREA)

May 1, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert – Unpacking the Federal Stimulus – Bisnow Webinar

April 21, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert

April 10, 2020 – The Real Estate Roundtable COVID-19 Economic Crisis Alert 

April 3, 2020 – The Real Estate Roundtable’s COVID-19 Economic Crisis Alert 

 

 

Biden Administration Officials Hold Summit with CRE Leaders to “Decarbonize” Buildings

Posted on by Trey Jackson

Better Buildings webcast with Sara Neff speaking

The White House convened a roundtable discussion on Monday with CRE industry leaders and other stakeholders to discuss opportunities and obstacles to “decarbonize” U.S. buildings and create jobs on energy efficient construction and retrofit projects. (“Accelerating Building Decarbonization,” Department of Energy / YouTube video) 

Government and Industry Dialogue 

  • The event aimed to catalyze cooperation across government, real estate, manufacturing, and union participants as part of President Biden’s American Jobs Plan, which has a goal to build and retrofit two million homes and commercial buildings.
  • According to a White House Fact Sheet, its recommended federal investments in building energy efficiency and electrification “will create new domestic manufacturing opportunities for electric heating and cooling technology, invest in research and development to spur smart building advances, and forge collaborations that will enable buildings to be powered by clean electricity.”
     
  • White House National Climate Policy Advisor Gina McCarthy led the “Better Buildings Summit,” which also included Department of Energy (DOE) Secretary Jennifer Granholm; Environmental Protection Agency (EPA) Administrator Michael Regan; General Services Administration (GSA) Acting Administrator Katy Kale; and White House Council on Environmental Quality Chair Brenda Mallory. (YouTube video) 
  • Henry Chamberlain, president and COO of the Building Owners and Managers Association (BOMA) International, participated in the event. The White House also invited five members of The Roundtable’s Sustainability Policy Advisory Committee (SPAC) to participate:   
    • Darien Crimmin, WinnDevelopment
    • Dan Egan, Vornado Realty Trust (SPAC vice-chair)
    • Ben Myers, Boston Properties, Inc.
    • Sara Neff, Kilroy Realty Corp.
    • Dana Schneider, Empire State Realty Trust, Inc.

New Programs 

Better Buildings logo

  • The webinar revealed that GSA will act as a proving ground to adopt carbon neutral strategies in the federal building stock – and develop “performance standards” for federal buildings with metrics and targets to reach their goals for reducing emissions.
  • The White House’s Brenda Mallory announced during the event that a series of “stakeholder roundtables” will be held by the Administration to gain perspectives from industry experts on how to modernize buildings.
  • EPA Administrator Regan also announced new programs affecting CRE, along with several other initiatives impacting the residential sector, including:

Zero-Carbon Building Recognition

EPA is developing criteria for a new zero-carbon commercial building recognition award. This new program aims to encourage early adoption of efficiency, electrification, green power and renewable thermal certificates in buildings, and to complement building performance standards and ENERGY STAR certification for top performing energy efficient buildings. 

Greenhouse Gas Emissions Calculator Tool for Commercial Buildings

EPA will launch a new tool linked to the ENERGY STAR Portfolio Manager benchmarking tool used by over 25% of the commercial building space in the country. The new calculator will support scenario-building and estimating the impacts of electrification and renewable energy at the building and portfolio level by enabling the use of customized emissions factors to estimate future emissions associated with building energy use. 

  • Separately, DOE Secretary Granholm testified yesterday before the House Energy and Commerce Subcommittee on Energy on her department’s $46.2 billion 2022 FY budget request. Granholm addressed the Administration’s infrastructure plan and urged Congress to advance clean energy technologies. (Granholm testimony, May 19)
  • President Biden yesterday issued an Executive Order directing his Administration to create a strategy on quantifying climate change risks for both public and private financial assets. Treasury Secretary Janet Yellen, who leads the multi-agency Financial Stability Oversight Council, will oversee development of the federal report on information sharing requirements of the climate-related financial risk data. (White House Fact Sheet, May 20) 

The Roundtable’s SPAC will focus on the impact of the Biden Administration’s and congressional efforts to reduce carbon emissions in buildings during its June 16 meeting, held in conjunction with the organization’s Annual Meeting (remote).

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