Recent Proposed Treasury Regulations governing the new "Opportunity Zone" investment program – and its potential to spur productive real estate investment in struggling, low-income communities – is the focus of an Oct. 26 GlobeSt.com interview with Real Estate Roundtable President & CEO Jeffrey DeBoer and Roundtable SVP and Counsel Ryan McCormick. 

• In the interview, DeBoer and McCormick provide answers to critical questions regarding the highly anticipated regulatory guidance and its implications for the real estate industry.
• DeBoer notes, "For real estate, the proposed regulations are unquestionably positive. They clarify key technical questions and open issues, and they should allow investments in funds and in underlying projects to go forward. While some important questions remain, we continue to believe that the Opportunity Zone program will be a powerful catalyst for transformational real estate investment in these designated low-income areas."
• The Treasury in June designated more than 8,700 low-income census tracts in the United States, Puerto Rico, and territories as qualified Opportunity Zones. (IRS Notice 2018-48 and Roundtable Weekly, June 22 and Interactive Map, Economic Innovation Group)
• The Wall Street Journal reported this week that the highly-anticipated guidelines have offered investors greater certainty to begin the process of raising and investing billions of dollars into new real-estate funds targeting opportunity zones.  (WSJ , Oct 23)
• The GlobeSt Q&A also clarifies who can defer gain by investing in an Opportunity Fund; the 180-day time period when investors are required to roll capital gain into a Fund; and how the proposed rules allow a Fund to mobilize capital over a period of nearly three years. 
• McCormick explains in the article : "The proposed rule creates a 'working capital safe harbor.' Opportunity Funds have a minimum of 31 months to invest their working capital in qualified opportunity zone property. The longer runway aligns better with the practical realities of real estate investment."  
• DeBoer also offers clarifications about the "original use" and "substantial improvement" tests of an Opportunity Zone property, noting that they "… are critical elements of the Opportunity Zone program, and they are clarified in important ways in the proposed rules. Keep in mind, Congress wanted to stimulate new capital investment, not simply the transfer of income-producing assets from one owner to another. Therefore, property must either be put to its original use by the fund, or the fund must substantially improve the property. The Opportunity Zone law defines substantial improvement as the doubling of the adjusted tax basis of the property. The regulations provide that the original use and substantial improvement requirements only relate to the structure and not the underlying land."
• Further clarification about the program is expected.  According to DeBoer, "Some of the most important questions relate to Opportunity Fund transactions and the tax consequences when a fund buys, sells, and/or reinvests in Opportunity Zone property … Treasury and the White House have indicated that additional guidance is forthcoming before the end of the year. The Roundtable will be working with policymakers to ensure the next tranche of guidance and the final rules maximize productive, job-creating investment in Opportunity Zones."

The Roundtable's Tax Policy Advisory Committee (TPAC) recently convened a panel on Opportunity Zones that included the tax counsel for Senator Tim Scott (R-SC), the original author and sponsor of Opportunity Zone legislation.  TPAC's Opportunity Zone Working Group will continue to provide insight into how the industry can help the program fulfill its ambitious objective of stimulating economic development and job creation in low-income communities. (Roundtable Comment Letter, June 28 and Roundtable Weekly, July 20) 

In the wake of this this week's national pipe-bomb mail campaign, the implications for building security and terrorism risk insurance are profiled in today's The Real Deal.  (Real Deal NY, Oct. 26)

In the wake of this this week's national pipe-bomb mail campaign, the implications for building security and terrorism risk insurance are profiled in today's The Real Deal.  (Real Deal NY, Oct. 26)

• Real Estate Roundtable Senior Vice President Chip Rodgers is quoted in the article, which reports how numerous building managers are ramping up security after multiple suspicious packages containing potential explosive devices were found mailed to high-profile Democrats throughout the country. 
• The Real Deal also reports that the Terrorism Risk Insurance Act (TRIA) helps building owners manage the risks associated with large-scale acts of terrorism.
• Rodgers comments that although the small size of the devices discovered this week are not likely to trigger TRIA, the attempted attacks show how "terrorism continues to pose a clear and present danger to our nation, to American businesses and to real estate." 
• With the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) scheduled expiration date at the end of 2020, The Roundtable is advocating for the long-term reauthorization of the program.Rodgers also notes that "TRIA does not stop terrorist attacks, but it does undermine the goals of terrorists who seek to weaken or destroy our economy."  He adds other nations have permanent terrorism insurance programs because they "recognize that markets cannot underwrite this risk."
• "There is no homeland security without economic security," Rodgers told The Real Deal.

The Roundtable's Homeland Security Task Force (HSTF) and Risk Management Working Group (RMWG) met on Oct. 18 at the Federal Bureau of Investigation's New York City office to discuss the threat landscape and real estate industry concerns.  HSTF and RMWG will meet next on Nov. 13 at the FBI's Washington, DC headquarters.

This week President Trump and key Democrats have spoken out about the possibility of a "grand bargain" infrastructure deal in the new Congress, if Democrats gain control of the House in the mid-term elections next month. (Politico, Oct. 22).

In February, the Trump Administration released its long-awaited Legislative Outline for Rebuilding Infrastructure in America.

• In February, the Trump Administration released its long-awaited Legislative Outline for Rebuilding Infrastructure in America, proposing at least $1.5 trillion in new investment across infrastructure asset classes; incentivizing greater state and local funding; and shortening the project permitting process to two years. (Roundtable Weekly, February 17, 2018).
• President Trump recently told Fox Business that his administration is aiming to slash the amount of time it takes to complete transportation projects and will focus on infrastructure legislation in the upcoming congressional Lame Duck session.  "Infrastructure is going to be starting right after the midterms and we think that is going to be an easy one," Trump said.  (Fox Business, Oct. 17)
• Despite both parties acknowledging the importance of infrastructure legislation, the fundamental issue of how to pay for projects remains – with many Republicans expected to balk at massive deficit spending to fund the package.  ( Politico, Oct. 22)
• Last week, New York Gov. Andrew Cuomo sent a video to President Trump, urging him to provide federal aid for the completion of the Gateway tunnel project that connects New York and New Jersey, and services a key rail link in the Northeast Corridor between Washington, D.C. and Boston. Both New York and New Jersey have already agreed to contribute half of the estimated $12.7 billion it will cost to repair and rebuild, and the states expect the federal government to contribute the remaining amount.  (Curbed New York, Oct. 19) The Trump administration, however, has stated the federal commitment for Gateway should not exceed 20 percent.  (POLITICO Magazine, July-August 2018). 
• In September 2017, The Roundtable submitted comments to the Federal Transit Administration (FTA), in response for public input on a proposed rule that would make "greater use of public-private partnerships (P3s) and private investment in public transportation capital projects." The comments emphasize how real estate and infrastructure have a synergistic, two-way relationship, where growth in one asset class benefits the other. (Roundtable Weekly, Sept. 29, 2017)

Roundtable President and CEO Jeffrey D. DeBoer addressed the impact of these demographic trends, and their impact on real estate and the nation's evolving infrastructure needs, in an interview on CNBC's SquawkBox last June. (CNBC Squawkbox interview and Roundtable Weekly, June 9, 2017).

• Another influence on the need for innovative transit-oriented infrastructure projects are societal trends. As Millennials dominate the work force and Baby Boomers retire from it, more public transportation options will be critical as profound changes are anticipated in car use and ownership. Innovations in driverless vehicles and ride-hailing services are accelerating a "transportation revolution" as household vehicle ownership is forecast to drop, massive numbers of parking spaces may become obsolete, and billions of square feet of transit-oriented real estate could be unlocked for development.
• Roundtable President and CEO Jeffrey D. DeBoer addressed the impact of these demographic trends, and their impact on real estate and the nation's evolving infrastructure needs, in an interview on CNBC's SquawkBox last June. ( CNBC Squawkbox interview and Roundtable Weekly, June 9, 2017).
• In January of this year to President Trump on infrastructure development, Roundtable President and CEO Jeffrey DeBoer commented on the positive economic benefits that infrastructure legislation would bring to the nation. "Modernizing our roads, tunnels, mass transit, drinking water, power grid, and telecommunications systems – in rural and urban areas alike – are vitally important to economic growth, productivity and America's global competitiveness," DeBoer said.

He added, "Real Estate Roundtable members are experienced in addressing the financing, permitting and government partnership issues that frequently slow or stop infrastructure projects.  We intend to provide positive feedback and ideas to all policymakers working to facilitate improvements in our nation's infrastructure."  (Roundtable Letter on Infrastructure Funding, Jan. 11)