Republicans are divided on how to approach a sweeping legislative package in 2025, as debates intensify between House and Senate GOP leaders considering whether to consolidate tax, border security, energy, and defense priorities into a single reconciliation bill or pursue a two-step approach. (TaxNotes, Dec. 12)

The Debate

• The outcome will shape the GOP’s legislative strategy as they prepare to extend key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and deliver on other campaign promises.  

• House Ways and Means Committee Chair Jason Smith (R-MO) is advocating for a single reconciliation bill that combines tax policy with border and energy reforms, arguing that this approach maximizes the slim Republican majority’s ability to pass ambitious legislation.

• Rep. Smith’s stance has put him at odds with incoming Senate Majority Leader John Thune (R-SD), who prefers a two-bill strategy—one focused on border security and energy early in the year, followed by a tax package later. (PoliticoPro, Dec. 11)

• Sen. Thune, backed by Senate Budget Chair Lindsey Graham (R-SC) and incoming White House policy advisor Stephen Miller, see an early legislative win on immigration as critical to setting the stage for more complex tax negotiations. (Axios, Dec. 9)

• Rep. Smith, contends that splitting the package could jeopardize tax policy priorities, including extensions of TCJA provisions set to expire at the end of 2025. (Roundtable Weekly, Dec. 6)

• Failure to act on tax reform by the end of 2025 will lead to the expiration of many provisions of the 2017 tax law, resulting in tax increases for most individuals and some businesses. (Bloomberg, Dec. 3)

View from the Senate

• While negotiations continue, Sen. Thune said he’s eyeing a “big early win” for President-elect Trump with a party-line push on border security, military and energy provisions. “Failure is not an option as far as tax is concerned." (Politico, Dec. 11)

View from the House

• House Majority Leader Steve Scalise (R-LA) said Tuesday House leadership is still deciding on a one- or two-bill strategy, and that they have been meeting with House and Senate members, including Sen. Thune and incoming Senate Finance Committee Chair Mike Crapo (R-ID). He warned it would be challenging to pass multiple budget resolutions. (TaxNotes, Dec. 11)

• “Donald Trump is the whip right now,” Scalise said, describing how Trump would corral votes from House Republicans. “You don’t have to worry about me; I’m actually a nice guy. The guy at 1600 Pennsylvania is going to send out a tweet, a truth, or whatever, and it’s not going to be as nice.” (TaxNotes, Dec. 11)

Government Funding

• Members on both sides of the aisle expect the government will stay open past the Dec. 20 shutdown deadline. (GlobeSt. Dec. 11)

• Lawmakers anticipate leadership will settle on a stopgap measure extending through next March, though some Republicans in both chambers are advocating for a CR that ends sooner to expedite Congress's funding work. (The Hill, Dec. 11).

Challenges Ahead

• Narrow majorities: House Republicans can only afford to lose a handful of votes, making consensus critical. Senate Republicans face their own challenges under reconciliation rules requiring compliance with strict budget parameters. (NBC News, Dec. 12)

• SALT deduction disputes: Republicans from high-tax states like New York and New Jersey are expected to push for raising the $10,000 cap on state and local tax (SALT) deductions, which could complicate efforts to unify the caucus.

• Economist Stephen Moore, a member of President-elect Trump’s economic advisory transition team, told Bloomberg that expanding the tax write-off limit from $10,000 to $20,000 has been discussed. (TaxNotes, Dec. 11 | Bloomberg, Dec. 12)

What's Next

• House Speaker Mike Johnson (R-LA) faces mounting pressure to navigate the narrow majority and align the party’s legislative strategy with President-elect Trump’s priorities.

• Johnson has indicated flexibility in the approach, noting ongoing discussions with Trump and GOP leaders.

• House Republicans are preparing to move swiftly in early January, with Budget Committee Chair Jodey Arrington (R-Texas) leading efforts on a budget resolution to lay the groundwork for reconciliation. Arrington has emphasized the need for a streamlined process, warning that delays could jeopardize Republican priorities. (TaxNotes, Dec. 12)

• Passage of a budget resolution, which is the first key step in the reconciliation process, will be crucial to move forward—a challenge in itself given the slim GOP majority in the House.

The text of the funding bill is anticipated to be released over the weekend or early next week, enabling both chambers to pass the measure before lawmakers adjourn until January.

On Tuesday, a coalition of national real estate associations, including The Real Estate Roundtable (RER), wrote to Congress urging support for the Renewing Opportunity in the American Dream to Housing Act (ROAD) to Housing Act, (S. 5027 | H.R. 990). Introduced by Senator Tim Scott (R-SC) and Representative French Hill (R-AR), this comprehensive legislation aims to make housing more affordable and widely available. (Letter, Dec. 10)

Addressing Housing Affordability

• The nation faces a persistent housing affordability crisis rooted in a critical shortage of supply. Addressing this challenge requires bipartisan solutions that foster collaboration across government agencies, industry stakeholders, and policymakers.

• The coalition praised the bill as “a step forward in addressing the root cause of housing affordability challenges—supply shortages.” (Letter, Dec. 10)

• The key pillars of the bill are increasing access to affordable housing, promoting opportunity, incentivizing local solutions, and ensuring proper oversight and accountability over federal housing programs. (Sen. Scott Press Release, Sept. 12)

• Rep. French Hill (R-AR) said, “With the ROAD to Housing Act, we are taking real steps toward creating a housing market that benefits everyone—renters, homeowners, and families striving for stability. I thank my friend Senator Tim Scott for spearheading this legislation in the Senate.” (Rep. Hill Press Release, Oct. 15)

• The letter emphasized the importance of bipartisan collaboration in crafting sustainable, effective housing policy solutions.

ROAD to Housing Act

• The ROAD to Housing Act introduces targeted reforms and initiatives, including:

• Enhanced financial literacy and housing counseling: Empowering individuals with tools to navigate homeownership and rental markets.

• HUD’s Moving to Work (MTW) program: Fully authorizing this initiative to improve housing outcomes for low-income families. The MTW program helps public housing authorities and agencies implement innovative solutions that support affordable housing goals

• Boosting affordable housing construction: Encouraging development through construction grants and support for small-dollar mortgage lending.

• Opportunity Zones focus: Promoting affordable housing projects in designated Opportunity Zones to drive investment in underserved areas.

• Federal coordination: Establishing regular dialogue between federal agencies and Congress to align housing policies with on-the-ground needs.

The Roundtable and its coalition partners will continue to educate and collaborate with policymakers to advance the ROAD to Housing Act and ensure that housing supply and affordability remain top priorities.

Rep. French Hill (R-AR) was selected as the next chair of the powerful House Financial Services Committee, after securing the endorsement of the GOP steering committee in a closely watched race. (Axios, Dec. 12) (PoliticoPro, Dec.13)

Financial Policy Priorities

• The House Financial Services Committee holds broad jurisdiction over monetary policy, housing, banking, and international finance. (Axios, Dec. 12)

• As chair, Rep. Hill will play a vital role in shaping financial policy and working with President-elect Trump’s administration on priorities like banking oversight, GSE reform and cryptocurrency regulation.

• In an interview with CNBC, Rep. Hill said his top priorities as chair are making community and commercial banking more competitive by rolling back rules, removing limits on investing to make it easier for companies to become publicly traded, and overhauling cryptocurrency regulation. (CNBC, Dec. 13) (PoliticoPro, Dec.13)

• A former banker, Rep. Hill brings a wealth of experience to the role, having served as Financial Services vice chair and leader of the committee’s digital assets subcommittee.

• Rep. Hill has advocated for several Roundtable priorities, including affordable housing measures, expanding capital formation, GSE reform, reauthorization of the National Flood Insurance Program, and terrorism risk insurance.

Trump Administration Eyes Changes to Financial Regulation

• President-elect Trump advisers and officials from the newly founded Department of Government Efficiency (DOGE) are exploring ways to consolidate or eliminate major bank regulators, including potentially abolishing the FDIC and transferring deposit insurance to the Treasury Department, according to people familiar with the matter. (WSJ, Dec. 12)

• Such proposals, which would require congressional approval, mark a dramatic shift in federal oversight, though no major cabinet-level agency or regulatory body like the FDIC has ever been shuttered in Washington’s history. (Reuters, Dec. 13)

Looking Ahead

• Rep. Hill has proposed initiatives to streamline financial regulations, create a “chief economist” role within the committee, and enhance member communication on financial policy issues. (The Hill, Dec. 12)

• Rep. Maxine Waters (D-CA) will continue to serve as Ranking Democrat of the committee. (Politico, Dec. 12)

• Whether the Trump administration’s bold proposals to restructure federal regulators gain traction remains uncertain, but Rep. Hill’s experience and focus on pragmatic policy solutions could provide a steady hand in this transformative period for U.S. financial services.

The House Republican Conference is anticipated to ratify the steering committee’s selection in the coming days.

Property conversions are emerging as a critical tool to revive underutilized assets and address market demands. By transforming outdated office spaces into housing and mixed-use developments, the industry is seizing an opportunity to adapt and thrive.

Industry Voices Capture Momentum

• These strategies offer a blueprint for addressing nationwide housing shortages, while revitalizing communities and modernizing infrastructure.

• Former RER Chair Dan Neidich (CEO, Dune Real Estate Partners) likens the opportunities in office-to-residential conversions to a "fire hose," emphasizing the urgency and scale of adapting underperforming spaces. (CNBC, Dec. 10)

• RER Board Member Scott Rechler (Chairman & CEO, RXR) highlights that in New York, "70% of the vacancy is in 30% of the buildings," indicating a concentration of underutilized office space prime for conversion. (CNBC Squawk Box, Nov. 22)

• According to a recent CBRE report, 73 U.S. conversion projects have been completed this year, a slight increase from last year.

• Looking forward, another 309 projects are planned or underway, with about 75% categorized as office-to-residential, placing the total count of units in the works at 38,000. (Wall Street Journal, Nov. 26)

Community Success Stories

• New York City recently approved the "City of Yes" plan to create 80,000 new homes through adaptive reuse. NYC real estate leaders have supported this effort to streamline zoning and enable housing development, including RER Board Member Scott Rechler, who spoke in favor of the proposal on an NYU panel. (New York Times, Dec. 5 | Bisnow, Dec. 6)

• In cities such as Columbus, St. Louis, and Pittsburgh across the Midwest, developers are converting outdated office spaces into vibrant residential communities and mixed-use developments, fostering neighborhood and downtown revitalization. (Business Journal, Dec. 3)

• 2024 CommercialEdge research outlines New York City, San Francisco, Chicago, and Los Angeles as top cities with conversion feasible office space. The analysis shows that conversion in the top "30 central business districts and surrounding urban segments alone could mean turning roughly 167 million square feet of aging office space into modern residential and mixed-use properties." (CommercialCafe, Dec. 10)

Navigating Challenges

• Financing gaps, structural challenges, and community concerns remain significant hurdles for conversion projects. Regulatory obstacles such as outdated building codes, minimum unit sizes, and natural light requirements continue to increase costs of development. (Governing, Dec. 3)

• Recognizing the need for change, cities are taking steps to encourage property conversions. Methods include reductions in approval times, exemptions from affordable housing rules, changes in building code requirements, and tax incentives or subsidies to developers. (Governing, Dec. 3)

The Roundtable urges federal policymakers to adopt incentives that support and promote these transformative local projects. These measures are vital to expanding access to affordable housing and meeting the nation’s growing demand.