News Type: Roundtable Weekly

The Real Estate Roundtable Suspends Political Support to Members of Congress Who Objected to Electoral College Certification

Posted on by Trey Jackson

The Real Estate Roundtable announced on Tuesday that it “will suspend all political contributions to Members of Congress whose votes attempted to subvert the validly expressed will of the American people in selecting Joe Biden and Kamala Harris as the nation’s next president and vice president.” (Roundtable statement, Jan. 12)

  • The Jan. 12 statement continued, “In the time since this armed insurrection, we have become even more appalled and our anger is amplified by the dismissive reaction of many of our national leaders, beginning with the votes cast by a band of Senators and Representatives who continue to fuel baseless claims of election fraud by refusing to certify the clear results of last November’s election.”
  • The Roundtable’s statement suspending political support follows its denunciation last week of the January 6 attack on the Capitol and its commitment to “support[ ] efforts to bring about more measured tone and civility in policy debates at all levels of government, and policy actions that are balanced and sustainable.”
  • In the Jan. 8 statement, Real Estate Roundtable President and CEO Jeffrey DeBoer also noted, “We will continue to work with policymakers representing the full spectrum of political views. However, we do not intend to help advance initiatives proposed by policy makers uninterested in seeking bipartisan consensus.” (Roundtable Weekly, Jan. 8) 
  • GlobeSt reported on The Roundtable’s suspension of certain political contributions, noting that “the industry—as well as the larger business community—has not only voiced disgust with what happened but backed those sentiments with hard actions.”
  • CoStar reported, “While Trump’s business is now a focus of the fallout, the politically focused repercussions are still coming. The Washington., D.C.-based Real Estate Roundtable, commercial real estate’s most prominent national lobbying group, suspended all political contributions to members of Congress” who objected to certifying the vote of the Electoral College.

Industry and Private Sector Response

  • According to The Real Deal, (TRD) Nareit stated, “As a result of these recent events… Nareit’s political action committee, REITPAC, will immediately suspend political contributions to all members of Congress who voted to deny certification of electoral votes cast by the Electoral College.”
  • TRD also reported that the National Multifamily Housing Council (NMHC) stated it has paused all PAC disbursements, not only those connected with legislators who objected to the electoral votes and that NMHC added, “We will undertake a thorough review of our strategy for the 117th Congress.”
  • The Mortgage Bankers Association told the publication, “MBA has decided to pause disbursements from its political action committee, MORPAC, and will undertake a careful review with our member leadership of our giving strategies for the 117th Congress.” (The Real Deal, Jan. 15)
  • International Council of Shopping Centers (ICSC) CEO Tom McGee announced on Jan. 11 that the organization will be “suspending all ICSC PAC donations for the next three months.” McGee stated that “during this historically challenging period…the focus of politicians should be on governing and uniting our nation, not campaigning and raising money.”
  • The National Association of REALTORS (NAR) on Jan. 6 stated, “We urge for calm and fully support the U.S. Capitol Police and the National Guard to restore safety to the city of Washington, D.C.”  On Jan, 12, The Hill reported that NAR “paused its federal political disbursements and will monitor events in Washington in the days and weeks ahead.”
  • Cushman & Wakefield told The Washington Post this week, “Cushman & Wakefield has made the decision to no longer do business with The Trump Organization.”
  • Axios (Jan. 14) summarized the corporations that have “cut off political donations after the Capitol siege – including Marriott International, which will “pause donations ‘to those who voted against certification of the election.’”

The repercussions of the political transition and the industry’s 2021 policy agenda will be a focus of discussion during The Roundtable’s Jan. 26-27 State of the Industry Meeting (virtual attendance).

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House Ways and Means Democrats Release Legislative Framework, Senate Finance Chairman Ron Wyden Will Pursue Capital Gains Changes

Posted on by Trey Jackson

Congressional tax-writing committees this week began unveiling their agendas for the 117th Congress, with Democrats poised to control the majority in the both House and Senate. [Photo: Senate Finance Chairman Ron Wyden (D-OR), left, and House Ways and Means Chairman Richard Neal (D-MA), right]

  • In the House, Ways and Means Committee Chairman Richard Neal (D-MA) on Jan. 11 released a 14-page legislative framework describes an agenda to address health and economic inequities in the United States, particularly those rooted in racial disparities. (Ways & Means news release, Jan 11)
  • The framework, entitled “A Bold Vision for a Legislative Path Toward Health and Economic Equity,” lays out the pillars and policy priorities that will steer the committee’s work in the new Congress.  The economic proposals focus on economic justice for workers, economic justice for children and families, retirement security, investment in communities, and environmental justice.
  • The committee’s staff report, “Something Must Change: Inequities in U.S. Policy and Society,” provides key context about committee members’ legislative priorities.
  • Specific proposals in the legislative framework include increasing the supply of affordable housing through the low-income housing tax credit; providing enhanced bond incentives to state and local governments to address environmental stressors; and expanding tax credits for families with children, child care expenses, higher education costs, and more.  
  • Chairman Neal writes in his foreword, “The framework we present here is Ways and Means Committee Democrats’ plan to make our nation a more just and equitable place. Some actions we can pursue almost immediately. Other advancements may take longer to become law. But inaction is not an option. Complacency cannot be tolerated.”

Senate Finance Committee

In the Senate, incoming Finance Committee Chairman Ron Wyden (D-OR) outlined his tax agenda during a Jan. 13 call with reporters, including plans to move forward with an increase in the corporate tax rate and major changes in the taxation of individual capital gains.

  • Wyden presented and released a detailed white paper outlining his plan to reform the taxation of capital gains in September, 2019.  (News Conference Video, Center for American Progress Action Fund, Sept. 12, 2019)
  • His proposal, entitled “Treat Wealth Like Wages,” would raise the top tax rate on capital gains (currently 20%) and create parity with the tax rate on wages and other ordinary income.  In addition, his plan would impose annual mark-to-market taxation of capital assets for taxpayers above certain income thresholds.  Both proposals represent dramatic departures from existing tax law. 
  • During this week’s press call, Wyden said, “If you are a nurse in America taking care of COVID patients, you don’t get to defer paying your taxes. If you’re a billionaire, you can defer, defer and defer some more and then pretty much never pay any taxes at all.” 
  • A mark-to-mark system would require taxpayers to pay tax on the annual appreciation of capital assets – regardless of whether the property has been sold and cash is available to pay the levy – or impose a “look-back charge” on illiquid assets when a sale occurs or certain revaluation events take place. It could greatly diminish the incentive to start a busines or invest in any asset with a long, productive life. Such a dramatic change in the basic rules for how capital is taxed could have severe unintended consequences for future economic growth and job creation. ( Roundtable Weekly, Sept. 13, 2019)
  • Wyden added he would also pursue raising the current 21% corporate tax rate and change the tax treatment of carried interest.
  • Any tax changes in the Senate will have to advance through a 50-50 chamber. How committees will work through their arrangements and procedures has yet to be determined by Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) 
  • More details related to Senate and House leadership positions and their respective committees can be found on JDSupra’s “Welcome to the 117th Congress” (Jan. 8).

Sen. Ron Wyden is scheduled to speak with Roundtable members at the organiation’s upcoming State of the Industry business meeting on Jan. 26. Additionally, The Roundtable’s Tax Policy Advisory Committee meeting will address the 117th Congress’ tax agenda on Jan. 27 (all virtual).

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The Real Estate Roundtable Suspends Political Support to Those Who Objected to Electoral College Certification

Posted on by Trey Jackson

All Members of Congress are Urged to Put Country Before Party in Coming Votes

The Real Estate Roundtable last week strongly denounced the planning, acquiescence, and participation in the baseless January 6th attacks on the Capitol and our Republic itself. The images of rioters defiling the Capitol, putting members of Congress and their staff at grave risk of harm, and resulting in the deaths of five people, shock the conscience.

In the time since this armed insurrection, we have become even more appalled and our anger is amplified by the dismissive reaction of many of our national leaders, beginning with the votes cast by a band of Senators and Representatives who continue to fuel baseless claims of election fraud by refusing to certify the clear results of last November’s election.

In response, The Real Estate Roundtable will suspend all political contributions to Members of Congress whose votes attempted to subvert the validly expressed will of the American people in selecting Joe Biden and Kamala Harris as the nation’s next president and vice president.

The Roundtable firmly backs the Senators and Representatives who put country before party and fulfilled their oaths to uphold the Constitution by certifying the Biden-Harris victory.  Furthermore, we implore congressional leadership to allow the members in their caucuses to freely vote their conscience in how to deal with the current president during his waning days in office.

PDF Statement

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Treasury Department Finalizes Regulatory Projects on Carried Interest, Deductibility of Business Interest

Posted on by Trey Jackson

Treasury Department x475

Treasury Department officials are working overtime to complete several multi-year tax regulatory projects before handing authority over to the new Biden Administration. These rules largely relate to the implementation of the Trump Administration’s signature legislative accomplishment, the Tax Cuts and Jobs Act of 2017. 

  • The recently finalized regulations address carried interest and the deductibility of business interest.
  • The IRS on Dec. 29 issued a final revenue procedure (Rev. Proc. 2021-9) creating a safe harbor for senior housing to qualify for an exception to the new limitation on the deductibility of business interest. The statutory exception is available to a “real property trade or business.” Uncertainty regarding whether an assisted living facility would qualify as a real property trade or business has hung over the senior housing industry since the legislation’s enactment. The new revenue procedure puts those lingering concerns to rest and clarifies that senior housing qualifies for the exception, as long as certain requirements are met.
  • In addition, Treasury released supplemental, final regulations on the deductibility of business interest this week.  The rules address changes made in the CARES Act, as well certain transition relief for partnerships (T.D. 9943)
  • The long-awaited carried interest final regulations implement the new three-year holding period requirement for carried interest to qualify for the long-term capital gains preference (T.D. 9945). 
  • The final carried interest regulations address several comments submitted by The Real Estate Roundtable. Roundtable comments aimed to ensure the rules are consistent with legislative intent of the provision (Oct. 5, 2020 comment letter). 
  • Specific improvements in the final carried interest rules provide greater flexibility for a general partner to finance an equity interest in a partnership with a loan from other partners in the partnership. The final rules also clarify that the three-year holding period does not override other provisions of the tax code that treat certain transactions as nontaxable events. 
  • Proposed regulations still outstanding include tax rules related to the transition away from LIBOR as a reference rate in mortgages and other financial contracts (Roundtable Weekly, Oct. 11, 2019).

The Roundtable’s Tax Policy Advisory Committee (TPAC) will discuss these regulatory efforts in detail on January 27 in conjunction with The Roundtable’s State of the Industry Meeting (all virtual).

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Treasury Launches $25 Billion Emergency Residential Rental Assistance Program Supported by The Roundtable

Posted on by Trey Jackson

treasury-department-building_x475w

A $25 multi-billion residential rental assistance program launched on Jan. 5 by the Treasury Department will use funds from the year-end $900 billon coronavirus relief package signed into law by President Trump on Dec. 27. (Roundtable Weekly, Dec. 22)

  • Treasury Secretary Steven Mnuchin said, “The Emergency Rental Assistance Program will help to keep American families in their homes during this challenging time. Treasury is implementing this program with unparalleled speed so our state, local, and tribal partners across the country can provide assistance to families in need.”  (Treasury news release, Jan. 7, 2021)
  • States, U.S. Territories, tribal and local governments covering more than 200,000 people are now able to enroll in the ERAP through a web portal by providing payment information and accepting award terms. Households or landlords that qualify can apply through the enrolled programs that receive funding from Treasury.
  • Qualifying households include at least one person who is eligible for unemployment insurance or suffered a coronavirus-related financial hardship; is at risk of homelessness or housing instablity; and has a household income at or below 80 percent of “the area median.”
  • A federal rental assistance program—advocated by The Real Estate Roundtable since April 2020—comes as the National Multi-Housing Council reports that 76.6 % of apartment households paid rent as of January 6. (NMHC Rent Tracker)
  • The Roundtable last year called for the establishment of a rental assistance fund for impacted residential and business tenants. Calling it the “rental obligation chain,” The Roundtable emphasized that rent payments support owner payrolls, utility, taxes and debt service and further benefit capital providers and local governments. (Bisnow, April 30, 2020 interview with Roundtable President and CEO Jeff DeBoer and Roundtable Weekly,  Sept. 11, 2020 on MSLP testimony)
  • The enacted year-end omnibus bill took a partial step by establishing a $25 billion fund only for impacted residential tenants, although The Roundtable continues to support a similar, if not greater, fund for small business tenants.
  • The bill also extended the Centers for Disease Control and Prevention (CDC) current federal eviction moratorium one month (through Jan 31, 2021).

The Hill reported that “housing experts, advocates and economists have called on the federal government to provide sufficient rental assistance to protect tens of millions of Americans from eviction when the CDC ban expires.”  (Jan. 7, 2021 and Oct. 11, 2020)

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Democratic Control of White House, Senate and House Ushers in New Policymaking Dynamic

Posted on by Trey Jackson

Washington DC wide shot image

The riot at the Capitol this week occurred during a momentous political power shift in Washington, as Congress certified the Electoral College’s votes confirming the incoming Biden-Harris Administration – and as the Jan. 5 Georgia runoff election determined the ruling party in the Senate.

  • The Georgia election, won by Democratic candidates Raphael Warnock and Jon Ossoff, gives Democrats a razor-thin edge as Vice President-elect Kamala Harris will be able to cast tie-breaking votes in the Senate after she is sworn in Jan. 20
  • The Democrats will control the White House, House and a Senate that will have no voting margin for defections. The 50-50 chamber will require close collaboration between Senate Democrats and the Biden Administration to advance legislative initiatives.
  • With Sen. Chuck Schumer (D-NY) as Majority Leader, moderate Democrats in the Senate will have a significant influence on advancing bills through committee and on final votes that Schumer allows to the Senate floor.
  • Yet Democrats who effectively now control the Senate will also assume chairmanships of committees that consider issues of importance to real estate. Among them are the tax-writing Senate Finance Committee, whose gavel will go to Sen. Ron Wyden (D-OR), the panel’s senior Democrat who served as chair six years ago.
  • Other new Senate committee chairs include:
    • Banking, Housing and Urban Affairs Committee Chair Sherrod Brown (D-OH)
    • Energy and Natural Resources Committee Chair Joe Manchin (D-WV)
    • Environment and Public Works Chair Tom Carper (D-DE)
    • Homeland Security and Governmental Affairs Gary Peters (D-MI)
  • More details related to Senate and House leadership positions and their respective committees can be found on JDSupra’s “Welcome to the 117th Congress” (Jan. 8).
  • Democrats are likely to advance additional COVID relief packages in close cooperation with the Biden Administration, including fiscal assistance for State and Local governments. Other policy issues expected to be addressed soon by Democrats include transportation and infrastructure funding.  
  • President-elect Joe Biden also said today, “I will introduce an immigration bill immediately” after he assumes office.  (B-Gov, Jan. 8)
  • The Roundtable and 12 national real estate organizations on Dec. 16 congratulated President-elect Joe Biden and Vice President-elect Kamala Harris on their historic election and submitted detailed policy recommendations to the incoming administration on COVID-19 relief, sustainability, housing, immigration, tax policy infrastructure, and other policy issue areas. (Roundtable Weekly, Dec. 18)
  • The industry letter acknowledges the many economic and social challenges confronting the country as the Biden Administration prepares to take office, including the national response to COVID-19. The letter and supporting policy memo were also sent to every congressional office on Capitol Hill.

The Roundtable plans to debut its 2021 Policy Agenda during its upcoming State of the Industry Meeting that begins Jan. 26.

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Mob Storms Capitol as Congress Certifies Electoral College Vote; Roundtable Denounces Violence, Urges Unity

Posted on by Trey Jackson

Capitol Building Stormed 1-6-21 image

The violent mob attack on the U.S. Capitol Jan. 6 by pro-Trump supporters as Congress debated the Electoral College’s final votes shook the nation to its core this week, resulting in Democratic leadership calling for a second impeachment proceeding or invocation of the 25th amendment to immediately remove the president, whose term expires on Jan. 20. 

  • Real Estate Roundtable President and CEO Jeffrey DeBoer issued the following statement:
  • “The Real Estate Roundtable strongly denounces the armed violent protestors, and their baseless election claims, who stormed the U.S. Capitol this week. The mob chaos was contrived to inflict great damage on our democracy. A member of the Capitol Hill police died bravely defending others against the attack. Thankfully, democracy again defeated anarchy.
  • “Those involved in plotting, acquiescing or participating in this despicable act are not patriots. They are violent lawbreakers and must be treated as such. This chaotic, seditious mob also could have inflicted serious damage to America’s fight against the deadly pandemic – a crisis that has already taken over 400,000 lives and caused enormous economic hardships.
  • “As we all continue to work to overcome the challenges of the pandemic we must also unify to make sure that this week’s violence is not repeated. The Real Estate Roundtable pledges to do its part. We commit to supporting efforts to bring about more measured tone and civility in policy debates at all levels of government, and policy actions that are balanced and sustainable. We intend to continue to analyze policy based on its benefit to jobs, community and opportunity. We will continue to work with policymakers representing the full spectrum of political views. However, we do not intend to help advance initiatives proposed by policy makers uninterested in seeking bipartisan consensus,” DeBoer said. 
  • Congress certified the Electoral College vote results hours after the storming of the Capitol, and planning for the Jan. 20 inauguration of President-elect Joe Biden and Vice President-elect Kamala Harris is underway.  
  • The Capitol has not been attacked since 1814 when British troops burned federal buildings in Washington, D.C. during the War of 1812.

The Roundtable’s State of the Industry Business Meeting and Policy Advisory Committee Meetings will address the ramifications of the political transition on Jan. 26-27 (all meetings will be held virtually). 

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The Real Estate Roundtable Denounces Mob Attack On Capitol, Calls for Unity

Posted on by Trey Jackson

“The Real Estate Roundtable strongly denounces the armed violent protestors, and their baseless election claims, who stormed the U.S. Capitol this week. The mob chaos was contrived to inflict great damage on our democracy. A member of the Capitol Hill police died bravely defending others against the attack. Thankfully, democracy again defeated anarchy.  

“Those involved in plotting, acquiescing or participating in this despicable act are not patriots. They are violent lawbreakers and must be treated as such. This chaotic, seditious mob also could have inflicted serious damage to America’s fight against the deadly pandemic – a crisis that has already taken over 400,000 lives and caused enormous economic hardships.

“As we all continue to work to overcome the challenges of the pandemic we must also unify to make sure that this week’s violence is not repeated. The Real Estate Roundtable pledges to do its part. We commit to supporting efforts to bring about more measured tone and civility in policy debates at all levels of government, and policy actions that are balanced and sustainable. We intend to continue to analyze policy based on its benefit to jobs, community and opportunity. We will continue to work with policymakers representing the full spectrum of political views. However, we do not intend to help advance initiatives proposed by policy makers uninterested in seeking bipartisan consensus,” DeBoer said.

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Congress Passes Pandemic Relief Aid and FY’2021 Funding in Overwhelmingly Bipartisan Fashion; “Omnibus” Includes Important Measures for CRE

Posted on by Trey Jackson

U.S. Capitol Dome with flag

Congress passed a multi-trillion “omnibus” bill Dec. 21 that provides approximately $900 billion in coronavirus relief, as well as $1.4 trillion to fund government operations through Sept. 30. (Text of the 5,550-plus page bill )

  • The legislation is the culmination of months of bipartisan negotiations to further stimulate the COVID-era economy. It will also keep the federal government operational for the rest of the current fiscal year. The Senate approved the legislation on a 92-6 vote, and the House on a 359-53 vote. 

  • “The size of the deal approximates the 2009 stimulus act that Congress passed at the beginning of the Obama administration – and sits on top of the much larger stimulus bill” known as the CARES Act, the $2.2 trillion legislation that President Trump signed last spring.  (New York Times editorial (Dec. 20). See also Roundtable Weekly, March 27) 
  • “The COVID-19 relief package is welcome news to help America’s families, businesses, and communities cope with the pandemic in the midst of the holiday season,” said Roundtable President and CEO Jeffrey D. DeBoer. “With vaccinations underway, this bipartisan package provides hope for a robust economic recovery in 2021 – and is a bridge for the real estate industry to work with President-elect Biden and Vice President-elect Harris on additional measures to push health and economic solutions forward.”  

  • A broad coalition of national real estate organizations endorsed many of the components included in the emergency COVID measure, through a Dec. 16 letter and supporting policy memo sent to the Biden-Harris transition team. (Roundtable Weekly, Dec. 18)  These include direct assistance to families and workers in the form of “stimulus checks” and expanded unemployment benefits; funding for states to distribute coronavirus vaccines; a new round of Paycheck Protection Program (PPP) loans for qualifying small businesses; and an emergency assistance fund to help households that have suffered economic hardship during the pandemic meet their monthly rent and utility bill obligations. 

  • “While there remains much work to do in the coming weeks and months, this effort is clearly a step in the right direction and will come as welcome news for so many households facing financial distress,” said National Multifamily Housing Council President Doug Bibby, and National Apartment Association President and CEO Bob Pinnegar, in a joint statement.  “We are heartened that the legislation includes such critical resources that will allow those impacted by COVID and resulting economic stress to meet their financial obligations, including rent.”     

Summaries provided by various Congressional offices regarding the $900 billion COVID-19 relief package include:

Matters of particular interest to the real estate sector are summarized below.  Additionally, a Roundtable summary PDF can be downloaded.

Direct relief to families, individuals, and the unemployed: $286 billion

  • “Stimulus checks”: $166 billion
    • $600 per individual earning up to $75K per year ($1200 under CARES Act)
    • $1200 per couple earning up to $150K per year 
    • $600 for each dependent child
    • For example, family of four receives $2400 assistance

  • Additional Unemployment Benefits: $120 billion
    • $300 boost in weekly unemployment insurance to supplement existing state and federal unemployment benefits (CARES Act provided $600/week boost)
    • From December 26, 2020 until March 14, 2021 
    • Available to “gig” workers and the self-employed
Paycheck Protection Program (PPP) “Round 2”: $284.5 billion
  • Extends PPP through March 31, 2020
  • Borrower eligibility more limited than CARES Act “Round 1.”  Small business must have:
    • 300 or fewer employees, and
    • 25% revenue loss for any quarter in 2020 (compared to same quarter in 2019)
    • 501(c)(6) organizations now eligible – but not lobbying organizations (501(c)(3)s)
  • Loan amount is generally 2.5-times payroll (same as CARES Act) – with max loan amount of $2 million (CARES Act was $5 million)
    • Loan amount formula is increased to 3.5-times payroll for qualifying small businesses in the restaurant and hospitality industries (NAICS Code 72)
  • Round 2 borrower must have exhausted initial Round 1 PPP loan
  • Expedited forgiveness for loans up to $150K 
  • “60/40 Rule” remains in effect.  That is, no more than 40% of loan proceeds can be used for rent and other non-payroll items.
  • Expanded “allowable uses” for Round 2 PPP loans.
    • COVID-related expenses like PPE purchases, indoor air quality improvements, workplace protection measures
    • Repair property damage from recent social unrest
    • Costs associated with outdoor dining
    • Round 1 allowable uses still apply: payroll, benefits, rent, mortgage, utilities
  • “Passive real estate” remains ineligible for PPP loans.  New law codifies SBA’s “ineligibility rule” at 13 CFR 120.110 for purposes of “passive real estate.”
  • Codifies that “publicly traded companies” are prohibited from accessing PPP loans 
  • PPP and Tax Issues:
    • Forgiven PPP loans are not treated as taxable income
    • Business expenses paid with forgiven PPP loans are tax deductible (a reversal of Treasury guidance and retroactive to enactment of the CARES Act in March)
COVID Vaccine Distribution, Testing, Tracing: $69 Billion. Includes – 
  • $9 billion for CDC and states to distribute vaccines
  • $22 billion directly to states for testing, tracing, and “COVID mitigation” 

Transportation Assistance: $45 billion. Includes – 

  • $15 billion: Airline workers
  • $14 billion:  Mass transit agencies
  • $10 billion: State highway agencies
  • $2 billion: Airports and airport concessionaires
  • $1 billion: Amtrak 

Residential Rent Assistance, Eviction Moratorium: $25 billion

  • CDC’s current federal eviction moratorium extended one month (through Jan 31, 2021)
  • Funds available through December 31, 2021
  • Covers household rent past due, coming due, and utility bills
    • Assistance not to exceed 12 months of payments, with a limit up to three months for prospective rent.  Household can apply for additional assistance depending on availability of funds.
  • States/localities receive “grants” from U.S. Treasury, apportioned based on Social Security formula.
  • Households apply to state/local for assistance.  Landlords can help household apply. 
  • Assistance paid directly to landlord.
  • Households at 50% AMI are “prioritized” for assistance; no household over 80% AMI can receive assistance.
  • Renter must have experienced “financial hardship” due to COVID, or is “at risk” of homelessness. 
  • State/local grantee only considers the household’s monthly income at the time the household applies for assistance, or total income for calendar year 2020. 
  • State/local grantee “shall ensure” “to the extent feasible” that any emergency rental assistance here does not duplicate other Federal rent assistance (e.g., Section 8)
  • Emergency rental assistance is not income for tax purposes.
  • No provisions regarding allowable forbearance on mortgage payments by property owner (as in CARES Act).
 

Shuttered Theaters and Live Venues: $15 billion 

  • Small Business Administration grants available to eligible live venues, independent movie theaters, museums
  • Maximum grant amount is $10 million
 

Unwinding the Federal Reserve’s Emergency Lending Facilities

  • Winds down the 13(3) emergency lending facilities created under the CARES Act (the Main Street Lending Program for mid-size businesses, and three other facilities aimed to boost purchases of municipal and corporate bonds)
  • These 13(3) program cannot be re-opened or duplicated in the future by the Fed without Congressional authorization
  • $429 billion in unspent CARES Act funds intended for Fed facilities repurposed to offset the overall $900B package
  • Fed retains more flexibility over the Term Asset-Backed Securities Loan Facility (TALF), initially launched during the 08-09 financial crisis to jumpstart the economy and increase banks’ liquidity. TALF supports the issuance of CMBS and other asset-backed debt securities. This bill closes TALF, but the Fed can re-start this facility in the future as emergency economic conditions may arise.
  • More details on the cessation of the CARES Act 13(3) programs as reported in The Hill (Dec. 20). 
 

Real Estate-Related Tax Relief and Tax Extenders

  • Reduces the cost recovery period for residential rental property placed in service before 2018 to 30 years under the alternative depreciation system (relevant to owners of multifamily housing who elect out of the new TCJA limits on the deductibility of business interest)
  • Minimum 4% credit amount for low-income housing tax credit projects that involve the rehabilitation and renovation of affordable housing (in recent years, the 10-year credit for qualifying projects has fluctuated between 3.15% and 3.97%)  
  • Temporary reinstatement of the full 100% deduction for business meals expenses (food and beverages) in 2021 and 2022
  • 6-month extension and expansion of the employee retention tax credit for businesses that retain their employees despite government-ordered shutdowns or steep declines in business revenue (>20%) 
  • Permanent extension of the enhanced deduction for energy-efficient commercial buildings (section 179D)
  • 5 year extension of the new markets tax credit, tax incentives for Empowerment Zones, and the tax exclusion for mortgage debt forgiveness on a principal residence
  • 2-year extension of the tax credit for residential solar property and other residential renewable energy improvements tax (section 25D)
  • 1-year extension of the $2,000 tax credit new energy efficient homes (section 45L), the deductibility of mortgage insurance premiums, and the tax credit for energy efficient improvements (e.g., windows, insulation, roofing, doors) to owner-occupied homes (section 25C)
 

Troubled Debt Restructurings (TDRs)

  • CARES Act’s TDR provisions extended until January 1, 2022. (ABA Banking Journal, Dec. 21)
  • Extension provides an additional year of relief from accounting and disclosure requirements on loan modifications made in response to the COVID-19 pandemic.
     
  • The Roundtable and other real estate groups recently requested an extension to the TDR relief period  “to offer prudent relief to commercial real estate owners who have been acutely affected by the pandemic.” (Roundtable Weekly, Nov. 13)
 

What’s Not Included in the $900 billion package 

  • Liability protections for businesses, non-profits, schools, hospitals
  • Federal aid to state and local governments for general revenue shortfalls (but aid for vaccine distribution provided as noted above) 
 

Omnibus Appropriations Bill for FY 2021

  • $1.4 trillion in federal spending through end of FY’2021 (Sept. 30, 2021)
  • EB-5 Regional Center investment visa program extended until June 30, 2021 – with no legislative reforms at this time

The omnibus and its impact on The Roundtable’s 2021 policy agenda will be a focus of discussion during The Roundtable’s State of the Industry Meeting and Policy Advisory Committee Meetings Jan. 26-27 (all virtual).

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Congress Struggles to Complete COVID-19 Aid Package for Inclusion in Multi-Trillion Omnibus Funding Bill

Posted on by Trey Jackson

Capitol Dome Stormy weather

Congressional leaders will work through the weekend in an effort to reach agreement on an omnibus bill that would attach approximately $900 billion in coronavirus relief to a $1.4 trillion bill to fund the government until Oct. 1, 2021 – the final piece of legislation in the lame-duck session. Another short-term stopgap measure needs to be passed before midnight tonight to extend current funding, prevent a partial government shutdown and allow more time for Congress to complete the omnibus negotiations. (BGov, Dec. 18 and Deloitte Tax News and Views, Dec. 18)

  • Republicans and Democrats have inched toward a deal on a coronavirus relief package this week that currently includes $600 in direct payments for individuals, $300 for enhanced weekly unemployment benefits, aid to small businesses, distribution of the Covid-19 vaccine and other measures. (Wall Street Journal, Dec. 18 and Roundtable Weekly, Dec. 11)
  • A bipartisan group of US Senators on Dec. 14 released text of the Bipartisan Emergency COVID Relief Act of 2020, which is under negotiation by House, Senate and White House policymakers – see section-by-section summary and draft text of the bill.
  • The Act includes $25 billion for residential rental assistance, augmented unemployment insurance benefits, a scaled-down Paycheck Protection Program (PPP) – as well as money for vaccine development, supply, and testing and tracing programs.

  • The bill also provides for emergency rental assistance, which may soften the impact of the Centers for Disease Control (CDC) moratorium that expires Dec. 31.The Act would also extend the moratorium through Jan. 31, 2021. Landlords/owners could assist or apply for rental assistance on behalf of renters.
  • Politico reported this week that state and local funding and a business liability shield would be excluded from the final bill, although talks remain in flux. (Politico, Dec. 16) 
  • Extended troubled debt restructuring (TDR) relief is also currently not included in the package. (Roundtable Weekly, Nov. 13) 
  • Senate Majority Leader Mitch McConnell (R-KT) said today, “I am even more optimistic now than I was last night that a bipartisan, bicameral framework for a major rescue package is close at hand.  Like I’ve said, the Senate will be right here until an agreement is passed, whenever that may be.” (NBC News, Dec. 18) 
  • Disagreements continue among policymakers about the Fed’s emergency lending programs, stimulus check eligibility and the use of disaster relief funds. (Politico, Dec. 17 and CQ, Dec. 18) 

The Roundtable and 12 national real estate organizations this week sent President-elect Joe Biden and Vice President-elect Kamala Harris several policy options for COVID-19 relief, as well as recommendations aimed at long-term challenges – see story below for details. 

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