News Type: Roundtable Weekly

Impact of Tax Reform on Economic Investment, Commercial Real Estate

Posted on by Trey Jackson

As landmark tax reform enacted last December begins to reverberate through the economy, economists, Congress and industry experts are starting to assess its impact on economic investment and commercial real estate.

The House Ways and Means Committee plans to hold a  series of hearings  on the Tax Cuts and Jobs Act (TCJA) impact on job creation and the economy starting May 16. 

  • The House Ways and Means Committee plans to hold a series of hearings on the  Tax Cuts and Jobs Act (TCJA) impact on job creation and the economy starting May 16.  
  • Ways and Means Chairman Brady: “It is exciting to see tax reform boosting our economy and giving families and workers across the country the relief they deserve. Wages are growing at their fastest pace in 10 years, unemployment claims are at their lowest since the 1960s, and Main Street businesses are expanding like never before.”  (Ways and Means Advisory, May 9)

TCJA & Economic Investment:
New data shows tax reform is resulting in more capital investment and expenditures. 

  • Cycle Watch: U.S. Economic Expansion Reaches Historic Point, Cushman & Wakefield (May 1) – On July 1, 2019, the current (economic) expansion may become the longest in U.S. history. “Current estimates of the probability of a recession within the next 12 months are between 0-25%. A majority of forecasters have predictions between 10-15%. Tailwinds from fiscal stimulus and the revival of emerging markets as a global growth engine bode well for the economy in the near-term.”

TCJA’s Positive Impact on Commercial Real Estate: 

  • The Impact of Tax Reform by Peter Linneman, Commercial Property Executive (May 2) – “… Tax reform legislation is neutral to positive for commercial real estate and very positive for the economy in general.  Because the changes to commercial real estate are not dramatic, most investors should feel fairly confident.” 
  • Marcus & Millichap CEO Hessam Nadji interview ,  Fox Business  (May 1) – “The tax reform was very favorable, not just for corporations but also for commercial real estate investing. For over 50 years, the American Dream has been centered around real estate ownership, which was home ownership. That’s shifting towards renting and investing in commercial real estate in the form of small apartments or small office buildings or shopping centers – and the tax reform really made that a lot more favorable.

    The Impact of Tax Reform  by Peter Linneman, Commercial Property Executive (May 2) – “… Tax reform legislation is neutral to positive for commercial real estate and very positive for the economy in general.  Because the changes to commercial real estate are not dramatic, most investors should feel fairly confident.”  
  • Investors Find Confidence Thanks to U.S. Tax Reform, Hotel Management (April 30) – “According to the firm’s NREI/Marcus & Millichap Investor Sentiment Survey from the first half of the year, the Investor Sentiment Index grew to 163. …[D]ue to tax-law changes, 68 percent of survey respondents said that they expect the economy to grow faster. Meanwhile, 71 percent said that tax reform will have a favorable impact on commercial real estate.” 
  • U.S. Apartment Investment Market to Enjoy Boost From New Tax Plan, World Property Journal (May 11) – “According to a new report by CBRE that analyzed the implications of tax reform on the multifamily sector in the largest 35 U.S. property markets, the recently enacted U.S. tax reform is poised to benefit the U.S. multifamily investment market.”  
  • Commercial Real Estate: A Clear Winner From Tax Reform, Clarion Partners (March 2018) – “Tax reform will likely raise consumer spending, employment levels, business investment, and wage growth … interest rates will likely stay low over the long‐term due to the deflationary pressures associated with the global  savings  glut,  ongoing  technological  innovation,  and  weakening demographic trends.” 
  • The Budget and Economic Outlook: 2018 to 2028, Congressional Budget Office (April 9) – CBO projects that tax reform will spur investment in nonresidential structures to increase by an average of more than $23 billion from 2019-2028, and rise nearly $10 billion this year alone.  (Roundtable Weekly, April 13) 

Along with TCJA rulemaking and implementation, the legislation’s impact on CRE will be a focus of discussion at The Roundtable’s Annual Business Meeting and Policy Advisory Committee Meetings on June 14-15 in Washington, DC

Tax Foundation Releases Report on 15-Year Qualified Improvement Property Drafting Error; Technical Corrections Bill Likely to Address QIP

Posted on by Trey Jackson

A Tax Foundation report released this week urges policymaker to correct a technical drafting error regarding cost recovery for qualified improvement property (QIP) that was included in the tax overhaul legislation enacted last year.  The unintentional drafting mistake has resulted in a longer cost recovery period for qualified nonresidential interior improvements – a category that previously covered leasehold improvements, retail improvements, and new restaurant construction.  (“Correcting the Drafting Error Involving the Expensing of Qualified Improvement Property” –  The Tax Foundation, May 30)

Chart from “  Correcting the Drafting Error Involving the Expensing of Qualified Improvement Property  ” – The Tax Foundation, May 30 – enlarge chart image. 

 Key Points of the Tax Foundation Report:

  • The Tax Cuts and Jobs Act (TCJA) stimulated investment by allowing businesses to immediately deduct the cost of certain assets and expenditures under a 100 percent bonus depreciation provision.  It also sought to consolidate the cost recovery period for nonresidential real estate improvements into a single, 15-year period for qualified improvements. 
  • However, due to an unintended drafting mistake, the law accidentally excluded the 15-year reference, and qualified improvements defaulted to a 39-year recovery period.  As a result, investments of this type face a higher tax burden than under prior law.
  • More restrictive cost recovery treatment for interior improvements to buildings will increase costs and discourage companies from making these types of investments.
  • Policymakers should work to ensure that cost recovery for qualified improvement property (QIP) does not remain worse off due to a technical drafting error, and that it is eligible for 100 percent bonus depreciation.

Legislative vs. Regulatory Correction:

Treasury Secretary
Steven Mnuchin

  • During a February hearing in the House, Rep. Jim Renacci (R-OH) explained to Treasury Secretary Steven Mnuchin that Ways and Means members are working to address the  tax reform drafting mistake that should have provided for a 15-year recovery cost-recovery period to qualified property improvements, instead of the 39 year period that was enacted. 
  • Mnuchin responded to Renacci: “I am aware of the error and it obviously was unintended. We are looking at whether there is anything we can do with regulations. I think it is likely that this is something that may need to be fixed in the bill. We look forward to working with you.” (Ways and Means Committee  –  Mnuchin’s testimony and hearing video ).
  • The Real Estate Roundtable and its industry partners are working actively with key lawmakers to advance a legislative technical correction or obtain formal, clarifying guidance from the Treasury Department.

Along with TCJA rulemaking and implementation, potential technical corrections that impact CRE will be a focus of discussion at The Roundtable’s Annual Business Meeting and its Tax Policy Advisory Committee (TPAC) Meetings on June 14-15 in Washington, DC.

“VisitU.S.” Coalition, Roundtable Advance Policy Recommendations to Boost Economic Growth

Posted on by Trey Jackson

Robust international travel helps power economic growth and commercial real estate through tourism dollars directly spent at U.S. hotels, resorts, stores, home purchases, attraction, and investment properties. That is the message to policymakers from the multi-industry VisitU.S. Coalition, which aims to safely and securely welcome more overseas travelers to the U.S. – who stay an average of 18 nights and spend approximately $4,360 at hotels, stores, restaurants and attraction properties on business and leisure trips. (VisitU.S. Policy Agenda) 

The multi-industry  VisitU.S. Coalition  aims to safely and securely welcome more overseas travelers to the U.S. – who stay an average of 18 nights and spend approximately $4,360 at hotels, stores, restaurants and attraction properties on business and leisure trips. (  VisitU.S.Policy Agenda  )

  • The coalition advocates for policies from the Trump Administration and Congress to regain the nation’s lost share of the global travel market by 2020, which will result in 88 million international visitors who directly support 1.3 million U.S. jobs and $294 billion in travel exports – crucial to achieving the Administration’s economic goals. (Roundtable Weekly Jan. 19 Feb. 9)
  • To address policies that may encourage or discourage in-bound travel – as well as the impact of  the travel and tourism market on CRE – The Roundtable will host a panel discussion during its June 14 Annual Meeting entitled “ Enhancing International Travel and Tourism.
  • “We should be encouraging international tourism and promoting policies that not only make the visa system more secure and accessible, but also streamline the process,” said Jeffrey D. DeBoer, President and CEO of The Real Estate Roundtable. “Increasing inbound international travel to the U.S. helps power the commercial real estate industry here at home through spending at hospitality, retail, attraction, health, and investment properties – all of which generate revenues to boost overall economic growth and create American jobs,” DeBoer added.
  • Jonathan Tisch, chairman and CEO of Loews Hotels & Co. spoke about the coalition’s concerns and goals during a Monday interview with CNBC’s “Squawkbox” and at an international hospitality industry investment conference.  ( Squawkbox Interview, June 4 and GlobeSt, June 6)
  • In a June 4 Travel Weekly editorial, Tisch also addressed the Trump Administration’s proposal to eliminate Brand USA, a public-private partnership created by Congress to promote America as the best destination for international visitors.  Tisch writes, “The program returns an estimated $28 in visitor spending for every $1 invested –  without a single dollar from U.S. taxpayers. Although the fees that fund it were extended, after 2020, those monies will be diverted to the U.S. Treasury instead of Brand USA. Unless this is fixed, the program will be in limbo.”

Led by the U.S. Travel Association and the American Hotel and Lodging Association, the VisitU.S. coalition also includes The Real Estate Roundtable, U.S. Chamber of Commerce and the American Resort Development Association. 

House Congressional Committees Move Forward on Policy Agendas, Add New Members

Posted on by Trey Jackson

With Democrats now in control of the House of Representatives, key congressional committee chairs this week announced their policy agendas and appointed additional members.  (Roundtable Weekly, Jan. 11)

House Financial Service Committee:

  • Rep. Maxine Waters (D-CA), the new chair of the powerful House Financial Services Committee, on Wednesday  outlined a broad range of priorities that include policy issues affecting commercial real estate.  In her first speech as committee chairwoman, Waters said, “Some of the big issues we are going to try to work on a bipartisan basis include long-term reauthorization and reform of the National Flood Insurance Program (NFIP), Terrorism Risk Insurance (TRIA), and the reauthorization of the job-creating Export-Import Bank.”  (House Financial Committee Services, Jan. 16)

    Rep. Maxine Waters (D-CA), the new chair of the powerful  House Financial Services Committee ,  outlined a broad range of priorities  that include policy issues affecting commercial real estate.

     
    [The Terrorism Risk Insurance Act, enacted following 9/11 and extended three times since 2002, is currently scheduled to sunset at the end of 2020.  A long-term extension of TRIA is a major policy focus of The Real Estate Roundtable. Terrorism risk insurance coverage is essential for many businesses – including commercial real estate. Without TRIA, private markets cannot provide the American economy with the coverage it needs. The Roundtable also supports a long-term reauthorization of NFIP and improvements to the program that would expand private markets.]

  • Chairwoman Waters addressed a broad range of other financial policy priorities, including regulatory oversight of Wall Street; the future of the government sponsored enterprises Fannie Mae and Freddie Mac; diversity in the workplace; and housing affordability.

[A Federal Reserve report released this week addresses how student debt hinders homebuying for young adults and the role it plays on their decisions to live in rural or urban areas (Wall Street Journal and CNBC, Jan. 16).  “Over 20 percent of the overall decline in homeownership among the young can be attributed to the rise in student loan debt.  This represents over 400,000 young individuals who would have owned a home in 2014 had it not been for the rise in debt,” according to the report. “As policymakers evaluate ways to aid student borrowers, they may wish to consider policies that reduce the cost of tuition …”  (Federal Reserve, Consumer & Community Context, Jan. 2019) ]

  • Waters added in her Wednesday speech, “As Chairwoman I will continue to find areas where we can all work together. Ranking Member McHenry and I have a relationship, and just last Congress we worked together on several bills … So I am very hopeful that we will be able to get some good bipartisan work done in Committee.”  (House Financial Services Committee, Jan. 16) Rep. Patrick McHenry (R-NC), the House GOP’s former chief deputy whip, is now the committee’s ranking member.
  • House Financial Services member Rep. J. French Hill (R-AR) will address a joint Real Estate Capital Policy Advisory Committee and Research Committee (RECPAC) meeting on the morning of Jan. 29, before the start of the Roundtable’s State of the Industry business meeting.

House Ways and Means Committee:

  • New House Ways and Means Committee Chairman Richard Neal (D-MA) announced this week the committee’s membership and new chairs for its subcommittees for the 116th Congress.  (Ways and Means, Jan. 16)

    New House Ways and Means Committee Chairman Richard Neal (D-MA) announced the committee’s  membership and new chairs  for its subcommittees for the 116th Congress.  (Ways and Means, Jan. 16)
  • Treasury deputy assistant secretary Jennifer Bang responded to Neal’s invitation by offering other officials to testify. “If the purpose of the upcoming hearing is to inform Congress and the public, we are confident that goal will be best served by testimony from the senior Department officials with the deepest and broadest expertise on the subject of the hearing,” (The Hill, Jan. 17)  
  • Yesterday, Neal urged Mnuchin to reconsider the request, noting that Mnuchin’s trip to Davos, Switzerland for the annual World Economic Forum next week has been cancelled.  “With more than 70,000 Treasury employees furloughed and missing paychecks, I strongly believe Secretary Mnuchin himself should appear before our committee and answer members’ questions. Nearly a month into the shutdown and with tax filing season rapidly approaching, the Treasury Department has announced plans to call more than 35,000 employees back to work, but has not provided details about this action to our committee,” Neal stated.  (House Ways and Means News Release, Jan. 17)

Chairman Neal – the long-standing co-chair of the House Real Estate Caucus – will discuss prospects for tax policy legislation with Roundtable Board Member John Fish (Chairman and CEO, SUFFOLK) during The Roundtable’s State of The Industry Meeting on Jan. 29 in Washington, DC.  

Congress Ushers In New Leadership on Key Committees

Posted on by Trey Jackson

 

The 116th Congress convened last week with Democrats in control of the House for the first time in eight years as Nancy Pelosi (D-CA) was reelected House Speaker. Among the new leadership is a fresh slate of committee chairs who will address issues of importance to real estate in the areas of tax; capital and credit; energy; infrastructure; homeland security and other policy areas.  The lawmakers who will set agendas for key committees in a divided Congress include:

Rep. Richard Neal of Massachusetts – the long-standing co-chair of the House Real Estate Caucus – is the new Democratic chairman of the tax-writing  House Ways and Means Committee  .

Tax:

  • Rep. Richard Neal of Massachusetts – the long-standing co-chair of the House Real Estate Caucus – is the new Democratic chairman of the tax-writing House Ways and Means Committee.  He will be joined by 10 new Democratic committee members. Former Chairman Kevin Brady (R-TX) – a principal author of the 2017 tax overhaul law – now serves as ranking member.  Neal has indicated he may hold several rounds of hearings on the legislation’s economic impact and alternative proposals.  Ways and Means may also consider a technical corrections bill – including a correction related to the depreciation schedule for nonresidential, interior real estate improvements  (Roundtable Weekly, Dec. 7 and Jan. 4)
  • Sen. Chuck Grassley (R-UT) is now the chairman of the tax-writing Senate Finance Committee, following the retirement of Sen. Orrin Hatch (R-UT).  This will be Senator Grassley’s third tenure at the helm of Finance.  Sen. Ron Wyden (D-OR) retains his ranking minority member seat.  The committee may consider proposals affecting the retroactive renewal and extension of temporary tax breaks.  Grassleyreleased his tax priorities for the committee yesterday and stated this week that Congress will not grant President Trump any expansion of his executive authority over tariff and trade issues. (Reuters, Jan. 9)

Capital and Credit:

Rep. Maxine Waters (D-CA) is the first woman and African-American to lead the  House Financial Services Committee  . 

  • Rep. Maxine Waters (D-CA) is the first woman and African-American to lead the House Financial Services Committee.  Among the wide-ranging issues addressed by the committee that would require Republican support for enactment is a long-term approach to Terrorism Risk Insurance.  The Terrorism Risk Insurance Act (TRIA) has been extended three times since 2002 and is currently scheduled to expire at the end of 2020.  Waters has historically been a strong supporter of TRIA and will play a pivotal role in the reauthorization process. The committee is also expected to address the reauthorization of  National Flood Insurance Program, which is scheduled to sunset on May 31, 2019.  Waters has also expressed interest in working with the Senate on reforming government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. (Insurance Journal, Jan. 7)  Rep. Patrick McHenry (R-N.C), the House GOP’s former chief deputy whip, is now the committee’s ranking member.
  • In the Senate, the Banking, Housing and Urban Affairs Committee is led by Chairman Mike Crapo (R-ID), with Sen. Sherrod Brown (D-OH) serving as the ranking member.  Along with terrorism risk insurance, flood insurance and reform of the GSEs, several capital formation proposals considered during last year’s lame duck session may be addressed by the committee in 2019. Last year, the committee passed important banking legislation to reduce regulatory burden and clarify the High Volatility Commercial Real Estate (HVCRE) rules.

Energy and Commerce

  • The House Energy and Commerce Committee will be chaired by Frank Pallone, Jr. (D-NJ), who yesterday announced the Committee’s six subcommittees for the 116th Congress – including one on Environment and Climate Change.  Rep. Greg Walden (R-OR) is the ranking member.  Climate change will be a focus of the full committee’s first round of hearings.  Policy issues affecting energy efficiency in buildings will likely be considered by the committee. 

The Senate Committee on Energy and Natural Resources is now chaired by Sen. Lisa Murkowski (R-AK), who is expected to propose a broad energy bill that she first introduced in 2015.

  • House E&C also has jurisdiction over the public-private partnership “Brand USA” program to boost U.S. job creation, grow our economy, and reduce the foreign trade imbalance to attract more international travelers to visit our country.  The Roundtable is a member of the Visit U.S. coalition, which advocates for Congress to reauthorize BrandUSA (which expires in 2020 without legislative action). 
  • Building codes that could promote increased energy efficiency may also be addressed by the Senate Committee on Energy and Natural Resources, now chaired by Sen. Lisa Murkowski (R-AK), with Sen. Joe Manchin (D-WV) serving as the ranking member.  Murkowski is expected to propose a broad energy policy bill that she first introduced in 2015.  (Roundtable Weekly, April 25, 2016)

Climate:

  • In addition to the climate subcommittee mentioned above, a House Select Committee on the Climate Crisis was announced by Speaker Pelosi in her opening remarks for the 116th Congress  (Politico, Jan. 3).  Chaired by Rep. Kathy Castor (D-FL), the committee was formerly a select committee on global warming and energy independence.  (National Public Radio, Dec. 30)

Infrastructure:

  • The House Transportation & Infrastructure Committee will be led by Rep. Pete DeFazio (D-OR) with Rep. Sam Graves (R-MO) as ranking member.  DeFazio recently stated,  “As Chairman, I will be a tireless advocate for the kind of infrastructure investment that results in job creation, increased economic growth, and decreased emissions.” (Committee News Release, Jan. 4)
  • Roundtable President and CEO Jeffrey D. DeBoer addressed the nation’s evolving infrastructure needs in an interview on CNBC Squawkbox in June 2017.  (Roundtable Weekly, Oct. 16, 2018).
  • Sen. John Barrasso (R-WY) will continue to chair the Senate Environment & Public Works Committee while Sen. Tom Carper (D-DE) will remain the ranking Democrat.  Legislation to reauthorize surface transportation programs – including the Highway Trust Fund that finances most federal spending for roads and mass transit – will likely be a priority for both committees.

Homeland Security:

  • The Roundtable’s Homeland Security Task Force (HSTF) and Real Estate Information Sharing and Analysis Center remain focused on information sharing and working with law enforcement and intelligence agencies to encourage measures that businesses can take to more effectively mitigate and manage risk from a variety of physical and cyber threats.

   Sen. Lindsey Graham (R-SC) will Chair the  Senate Judiciary Committee .

Immigration and Visa Policy:

  • The House and Senate Judiciary committees have oversight over immigration-related issues such as the EB-5 investment program, visas to attract workers at all skill levels, and tourist visa reforms advocated by the Visit U.S. coalition to boost international travel to our country. 
  • The House Judiciary Committee will be chaired by Rep. Jerrold Nadler (D-NY) with Rep. Doug Collins (R-GA) as ranking member.  Sen. Lindsey Graham (R-SC) takes the gavel of the Senate Judiciary Committee from Sen. Chuck Grassley (R-IA), with Dianne Feinstein (D-CA) returning as Ranking Member.  

Many national policy issues affecting CRE that fall within the jurisdiction of these committees in the 116th Congress will be discussed at The Roundtable’s next State of The Industry business meeting and policy advisory committee meetings on Jan. 29-30 in Washington, DC. 

 

Roundtable, Industry Coalition Voice Concerns That “Enhanced Vetting” Proposal Could Dampen Economy by Deterring International Visitors to U.S.

Posted on by Trey Jackson

A multi-industry travel and tourism coalition that includes The Real Estate Roundtable submitted formal comments on May 29 urging the State Department to withdraw an “enhanced vetting” proposal for visitors traveling to the U.S. – a dramatic expansion of information collection that could further reduce the downward trend of in-bound tourism and its significant economic benefits.  The Roundtable is also part of the  VisitUS Coalition , which expressed concerns about the proposal in April.  [Roundtable Weekly, April 13, 2018.] 

A multi-industry travel and tourism coalition that includes The Real Estate Roundtable submitted  formal comments  on May 29 urging the State Department to withdraw an  “enhanced vetting” proposal  for visitors traveling to the U.S . 

The business coalition concerns submitted this week addressed: 

  • The “highly competitive” global market to capture foreign travelers “is sensitive to new and evolving security protocols.”  The comments also address the department’s proposal to require all visitors seeking a U.S. visa – about 15 million applicants each year – to provide extensive information on social media use, history of international travel, and other matters.  Currently, only a much smaller subset of visa applicants identified as presenting a “threat profile” to national security must answer these questions. 
  • “New requirements that make it more challenging to obtain U.S. visas can affect the willingness and interest of international travelers to visit the United States rather than other countries,” the coalition wrote.  “Safeguarding national security and growing the U.S. economy by encouraging international visitors are compatible, significant objectives. America can be both the most secure and the most visited country in the world.”     
  • Noting that the U.S. has attracted 7.4 million fewer overseas travelers in 2016-2017 – with corollary declines in visitor spending at American hotels, resorts, stores and attraction properties – the coalition urged the State Department to re-think its “enhanced vetting” proposal.  
  • The comments also explained that the dip in the U.S. share of the global travel market hinders the Trump Administration’s foreign trade goals.  “Money spent here by foreign travelers counts as an export for the United States; indeed, international travel is our country’s largest export of services accounting for $245 billion in total travel exports, and the second largest of any economic sector,” the coalition wrote.  

Roundtable Panel on Enhancing International Travel and Tourism

  • The Trump Administration also announced this week that it will begin limiting the length of validity for some visas issued to Chinese citizens, starting June 11.  (Bloomberg, May 29) 
  • To address policies that may encourage or discourage in-bound travel to the U.S.– as well as the impact of  the travel and tourism market on CRE – The Roundtable will host a panel discussion during its June 14 Annual Meeting. 

The American Hotel & Lodging Association and the U.S. Travel Association lead the multi-industry VisitUS coalition, which also includes the U.S. Chamber of Commerce and the American Resort Development Association.  (VisitU.S. Policy Agenda, Roundtable Weekly, March 2)

Industry Execs Engage Lawmakers on National Policy Issues; Ventas CEO Debra Cafaro Elected Roundtable Chair

Posted on by Trey Jackson

Congressional lawmakers and industry leaders discussed national policies affecting commercial real estate this week during The Real Estate Roundtable’s 2018 Annual Meeting, where Debra A. Cafaro (Chairman & CEO, Ventas, Inc.) was elected to a three-year term as Roundtable Chair. 

Debra A. Cafaro  (Chairman & CEO, Ventas, Inc.), right, was elected to a three-year term as Roundtable Chair, following  William C. Rudin ‘s (Vice Chairman & CEO, Rudin Management, Inc.), left, term.

  • Roundtable Chair William C. Rudin  (Vice Chairman & CEO, Rudin Management, Inc.) kicked off yesterday’s business meeting with a summary of the organization’s successful efforts to diversify the membership and announced its newly-released FY2018 Annual Report, “Building Success.”  
  • Following Cafaro’s approval as Chair starting July 1, Real Estate Roundtable and President Jeffrey DeBoer said, “Bill Rudin and Deb Cafaro follow a long line of distinguished business leaders who have pursued a fact-based, pro-growth agenda in Washington on behalf of the industry.  We are confident that our new Chair will continue that tradition and we look forward to her leadership.” 
  • Cafaro noted The Roundtable’s public policy agenda remains full of key issues that require further engagement with policymakers: “Above all, we must uphold our independent & respected position on Capitol Hill, emphasizing our optimism about the economy and the positive contributions the real estate industry provides as a job creator and as a cornerstone for retirement savings.”   
  • Cafaro’s election as the first female chair for The Roundtable culminates years of service.  She joined its board of directors in 2011, became board secretary in 2015 and chair-elect and secretary in 2017. 

National policymakers and featured speakers at yesterday’s meeting included: 

The economic importance of foreign travel and tourism to the United States’ economy and commercial real estate industry was the focus of a panel discussion during The Roundtable’s 2018 Annual Meeting. (enlarge photo)

  • House Majority Leader Kevin McCarthy (R-CA) and Senate Minority Leader Chuck Schumer (D-NY) discussed policy issue priorities for their party. 
  • House Ways and Means Committee Chairman Kevin Brady (R-TX) was presented with The Roundtable’s Champion of the Economy Legislative Leadership Award.  He also engaged meeting attendees on the results of recently enacted tax legislation. 
  • Rep. John Larson (D-CT) and Rep. Gregory Meeks (D-NY) focused on the House Democratic legislative agenda. 
  • The economic importance of foreign travel and tourism to the United States was the focus of a discussion that included Sen. Amy Klobuchar (D-MN); American Hotel & Lodging Association President & CEO Katherine Lugar; U.S. Travel Association President & CEO Roger Dow; and Empire State Realty Trust Chairman and CEO Tony Malkin. The Roundtable is a member of the VisitU.S. Coalition, which is encouraging policy solutions to address a recent drop in travel to the U.S. and the resulting loss to the economy and jobs. (Roundtable Weekly, Feb. 9) 
  • Cook Political Report National Editor Amy Walter and former Governor of Virginia Terry McAuliffe offered separate insights and remarks on the upcoming mid-term elections. 
  • An evening dialogue with former White House Press Secretary to President Barack Obama Josh Earnest and former Deputy White House Chief of Staff to President George W. Bush Karl Rove focused on how their experience with past Administrations offers perspective about current and future legislative efforts. 

The Roundtable’s Policy Advisory Committees also met this week in conjunction with the Annual Meeting for in-depth discussions in the policy areas of tax; capital and credit; energy and environment; and homeland security.  Next on The Roundtable’s calendar is the Fall Meeting on September 26 in Washington, DC (Roundtable-level members only).

29 Industry Organizations Launch “Careers Building Communities” to Encourage Real Estate Talent Development

Posted on by Trey Jackson

The Roundtable and 28 other real estate industry organizations – representing more than 10 million jobs – yesterday launched Careers Building Communities, a website highlighting diverse career paths within the real estate sector. The public policy area of the site links to Roundtable resources.

Careers Building Communities highlights diverse career paths within the real estate sector.

  • With changing demographics, technological advances and evolving preferences in how different generations live, work and play, Careers Building Communities seeks to encourage students, educators, career changers and others to explore opportunities in real estate.  
  • Housing Wire reported today that individuals can use the website to learn about real estate industry trends and take an interactive quiz to explore possible career pathways in the industry.
  • Roundtable President and CEO Jeffrey DeBoer said, “This is the kind of positive collaboration that has proven to be a winning formula for policy action in Washington.  And now, thru this new collaboration, we will apply this formula to raise the awareness that everyone, particularly young people, minorities and people of color, have regarding the tremendous career opportunities that real estate offers.”

By attracting diverse talent to the many careers available across the built environment, Careers Building Communities also responds to a consistent theme among industry stakeholders – the increased need for talent. 

House GOP Unveils “Tax Reform 2.0” Outline; Capital Gains Indexing Bill Introduced

Posted on by Trey Jackson

House Ways and Means Committee Chairman Kevin Brady (R-TX) on July 24 outlined a proposed second round of tax cuts to House Republicans, who hope to vote on “Tax Reform 2.0” before the midterm elections..

In an interview with CNBC, Brady expanded on the three core components of the Tax Reform 2.0 proposal.

  • Chairman Brady stated. “With this framework, we are taking the first step to change the culture in Washington D.C. where tax reform only happens once a generation. We plan to work off this framework to build on the growing successes of the Tax Cuts and Jobs Act and ensure this energized economy continues moving forward.”  (House Ways and Means Statement, July 24)
  • In an interview with CNBC, Brady expanded on the three core components of the 2.0 proposal: 
    • making the individual and small business tax cuts enacted by the 2017 Tax Cuts and Jobs Act permanent’
    • promoting family savings through retirement accounts, a new universal savings account, and
    • expanded 529 education savings accounts; and spurring business innovation by allowing new businesses to write off more of their initial start-up costs, and removing barriers to growth.
  • The central feature of the proposal – a permanent extension of tax cuts for individuals – is unlikely to pass the Senate, where it would need Democratic support.  (The Hill, July 24) 

    Senior Ways and Means Committee Member Devin Nunes (R-CA) has introduced legislation (H.R. 6444) to index capital gains to inflation – a proposal that would reduce the tax burden on long-lived assets, including real estate.

  • Although House Republicans aim to vote on “Tax Reform 2.0” legislation in September, a tax technical corrections bill may not be voted on until after the November elections. (Roundtable Weekly, July 20)
  • Meanwhile, senior Ways and Means Committee Member Devin Nunes (R-CA) has introduced legislation (H.R. 6444) to index capital gains to inflation – a proposal that would reduce the tax burden on long-lived assets, including real estate.  An inflation adjustment for capital gains previously passed the House in the 1990s but died in the Senate.  House tax-writers may consider indexing capital gains as part of Tax Reform 2.0.  (The Hill, July 20)
  • Separately, attention this week was focused on a mistake affecting qualified improvement property cost-recovery tax rules. An amendment (# 3597) introduced yesterday by Sen. Pat Toomey (R-PA) to an appropriations bill (H.R. 6147) would correct a drafting error in the Tax Cuts and Jobs Act that unintentionally pushed the recovery period for property improvements from 15 to 39 years.  As a result of the mistake, businesses across the country are delaying, or significantly reducing, capital expenditures for building improvements, undermining job creation and economic activity. (BGov, July 26)
  • Additionally, the Treasury Department has sent draft regulations regarding the new deduction for pass-through business income to the White House Office of Management and Budget (OMB) for formal review.  Under a recent agreement between the two agencies, OMB has 10 days to review the regulations before they are issued, unless the parties mutually agree to extend the review period.  (TaxNotes, July 25)

In January, The Roundtable wrote to Treasury Secretary Mnuchin  offering several suggestions designed to maximize the economic impact of the pass-through deduction and avoid unnecessary disruptions to business activity.  [Roundtable Letter, Jan. 18].

Bipartisan Legislation Introduced to Create Task Force on Affordable Housing Policy

Posted on by Trey Jackson

With millions of workforce and low-income Americans facing a lack of affordable housing, a group of nine bipartisan Senators recently introduced legislation that would create a task force focused on policy recommendations to address the nation’s housing scarcity problem.  (Sen. Heller News Release, July 18)

With millions of workforce and low-income Americans facing a lack of affordable housing, a group of nine bipartisan Senators recently introduced legislation that would create a task force focused on policy recommendations to address the nation’s housing scarcity problem.  (Sen. Heller News Release, July 18) 

  • The Task Force on the Impact of the Affordable Housing Crisis Act – introduced by Senators Dean Heller (R-NV), Todd Young (R-IN), Maria Cantwell (D-WA), Angus King (I-ME), Tim Kaine (D-VA), Doug Jones (D-AL), Cory Gardner (R-CO), Marco Rubio (R-FL), and Chris Coons (D-DE) – would create an 18-member Task Force with two co-chairs.  The affordable housing task force would evaluate and quantify the impact of housing costs on other government programs and provide recommendations to Congress on how to increase affordable housing.  (One-page Task Force Overview)  
  • Sen. Heller commented, “While we welcome (an) explosion of growth and the jobs and economic opportunities that come with it, there is a lack of affordable housing because the demand for it is outpacing the supply. We need to develop solutions.” 
  • Sen. Cantwell noted, “This year we were able to boost the Low Income Housing Tax Credit, which has built 90 percent of affordable housing in our country.  More needs to be done to get to the root causes of the affordable housing crisis and show that the LIHTC is cost-effective and creates jobs.” 
  • Sen. Cantwell discussed the shortage of housing for workforce and low-income Americans with Roundtable President and CEO Jeffrey DeBoer last year during a Senate Finance Committee hearing on business tax reform. (Hearing Video Clip, Sept. 19, 2017)  

    Roundtable President and CEO Jeffrey DeBoer testified before the Senate Finance Committee: “And we need to focus on ways to incentivize affordable housing, not just low-income housing, which is obviously needed, but workforce housing as well … it is certainly a growing and troubling problem. And as we go forward, that part of our nation has to be included in whatever is done in economic growth.” (Hearing Video Clip, Sept. 19, 2017)
  • In response to a question from Sen. Cantwell, DeBoer said, “Most businesspeople that operate certainly in urban areas recognize that there’s a tremendous and growing shortage of what we would call workforce housing. And so people that are middle-American citizens, firemen, teachers, what have you, combined incomes, working very, very hard, are being priced out of our nation’s cities.”  
  • DeBoer continued, “And we need to focus on ways to incentivize affordable housing, not just low-income housing, which is obviously needed, but workforce housing as well … it is certainly a growing and troubling problem. And as we go forward, that part of our nation has to be included in whatever is done in economic growth.” (Hearing Video Clip, Sept. 19, 2017) 
  • Housing in the nation’s economically distressed communities could also benefit from the new federal “Opportunity Zones” program, which seeks to encourage investment, economic development, and job creation in low-income areas.  Opportunity Zones are the focus of a July 16 GlobeSt.com  interview with Real Estate Roundtable President & CEO Jeffrey DeBoer and Roundtable SVP and Counsel Ryan McCormick.  With implementation guidance about the program expected soon from the U.S. Department of the Treasury, the article highlights major tax considerations and regulatory questions, which are also discussed in greater detail in a Roundtable June 28 Opportunity Zone comment letter.  (Roundtable Weekly, July 20).  Treasury rules are expected to confirm that Opportunity Zone tax benefits extend to the construction and rehabilitation of affordable housing.  

The Roundtable’s 2018 Policy Agenda, released in February, recognizes the affordable housing challenge – “As many of our nation’s urban areas become more expensive, our industry continues to recognize and support housing not only for lower income residents, but also for the nation’s middle income workforce. A stable, healthy commercial and residential real estate economy facilitated by sensible federal policies can continue to improve our national standard of living.”  (Introduction, 2018 Roundtable Policy Agenda)