Congress passed a three-month continuing resolution on Wednesday, funding the government through Dec. 20 and avoiding a shutdown ahead of the Sept. 30 deadline. While this provides some temporary stability, lawmakers face additional fiscal challenges on the horizon—including the need for a long-term reauthorization of the National Flood Insurance Program (NFIP). (The Hill, Sept. 26)

What’s Next

• The House passed the CR package 341-82, followed by the Senate approving it 78-18.

• The bill now heads to President Biden for his signature, ensuring government operations continue through late December.

• After passing the bill, Speaker Mike Johnson reiterated he won't allow an omnibus spending bill during the lame-duck session. (The Hill, Sept. 24)

• If Congress fails to pass final spending bills in December, funding negotiations will overlap with efforts to address two other looming fiscal deadlines: the debt limit, which is waived until early January, and the expiration of many 2017 tax cuts at the end of next year. (Politico, Sept. 25)

National Flood Insurance Program (NFIP) Extended

• The Roundtable, along with nine industry organizations wrote to Congress this week urging them to act quickly to extend the National Flood Insurance Program (NFIP) before its Sept. 30 expiration. (Letter)

• As part of the CR package, the NFIP was extended until Dec. 20.

• Congress has enacted over 31 short-term extensions of the NFIP. The Roundtable has been a long-standing supporter of a long-term reauthorization of the NFIP with appropriate reforms.

• A long-term reform and reauthorization of the NFIP is essential for residential markets, overall natural catastrophe insurance market capacity, and the broader economy.

• The Roundtable, along with its industry partners, continues to work constructively with policymakers and stakeholders to address commercial insurance gaps and rising costs. The Roundtable will continue advocating for targeted policy solutions that can help alleviate increased insurance costs for housing providers nationwide.

Both the House and Senate are in recess and won’t return to Washington until Nov. 12, after the election.

The U.S. Environmental Protection Agency (EPA) is accelerating regulatory actions that will affect how real estate owners and developers design, install, and manage air conditioning systems that use refrigerants to cool buildings.

Hydrofluorocarbons (HFCs) Impact Climate Change

• Congress passed the American Innovation and Manufacturing (AIM) Act in 2020. The AIM Act requires a phasedown of certain greenhouse gases known as hydrofluorocarbons (HFCs). The Act also requires a transition to new technologies that use HFCs with lower emissions impacts. (EPA webpage).

• HFCs regulated by the AIM Act are beneficial to protect the ozone layer but contribute greatly to global warming and are much more potent than carbon emissions. (National Oceanic and Atmospheric Administration, US-EPA)

• Air conditioning and refrigeration systems in buildings depend on HFCs. An estimated 20% of the total electricity used in buildings’ worldwide electricity consumption comes from space cooling that uses high-emissions refrigerants. (International Energy Agency)  

EPA Rule on HFC Leak Detection and Repair

• EPA issued an AIM Act implementation rule on Monday focused on leak detection and repair of equipment that uses HFCs. Starting in 2026, building owners and other operators of heat pumps, chillers, and other air conditioning systems that contain at least 15 pounds of HFC-containing refrigerants are subject to these new requirements. (POLITICO, Sept.. 23)

• Large appliances that use at least 15,000 pounds of refrigerants must install automatic leak detection for new systems starting in 2026, and existing systems starting in 2027. (EPA fact sheet)

• The new rule also sets requirements for HFC disposal, and HFC recycling that must be used during installation and repair of new fire suppression systems. (EPA fact sheet)

Proposed Rule on HFC Transition

• Separately, EPA has proposed rules that would phasedown the manufacturing of HFCs controlled by the AIM Act altogether, and set “technology transition” deadlines for when buildings must install new AC systems using refrigerants that are less harmful to the environment.

• The Roundtable submitted comments yesterday on the proposed “technology transition” rules. The comments expressed concern that EPA’s deadlines do not account for permitting and construction processes in complex buildings designed to accommodate AC and refrigeration systems years before equipment is actually installed.

• As RER’s letter explains, strict, immutable deadlines that ‘strand’ buildings from HFC regulatory compliance are not what Congress intended and may not be the best interpretation of the statute.

• RER also stated it seeks a partnership with EPA “to educate our industry leaders on the AIM Act’s requirements” and help regulators better understand how the HFC phasedown may impact new construction, existing building retrofits, and real estate ownership, operations, and financing.

Yesterday, RER’s Sustainability Policy Advisory Committee (SPAC) held an educational session with members to start raising awareness about the new regulations (Slide deck). RER will continue to coordinate with the EPA as implementation of the HFC phase-down and transition unfolds.

The Federal Reserve’s recent decision to cut rates renewed optimism in the commercial real estate market, following a prolonged period of high interest rates and economic headwinds. This monetary easing is seen as critical to the CRE sector's path to recovery—reducing financing costs and helping stabilize property valuations.

Industry Insights

• The Summary of Economic Projections (SEP) report released last week forecast an additional half-point rate cut through two more quarter-point reductions over the next three months. (Roundtable Weekly, Sept. 21)

• These predicted rate cuts, alongside lower bond yields, are expected to boost commercial real estate investment activity and asset values. (CBRE, Sept. 18)

• Roundtable member Willy Walker (CEO, Walker & Dunlop) appeared on CNBC's Squawk Box, to discuss the importance of removing barriers such as zoning restrictions to increase housing supply. “It’s going to be a very healthy market for commercial real estate as rates start to come down.” (Watch)

• Roundtable member David O’Reilly (CEO, Howard Hughes Holdings) discussed the resurgence of new construction in the housing market on Fox Business, anticipating that home prices will stabilize in response to interest rates cuts, influencing both demand and affordability. He also highlighted the effects of prolonged high rates on pricing and market trends. “As long as those rates continue to trend lower… demand picks up, more sales occur, prices will remain steady as home builders continue to deliver more supply to meet that demand.” (Watch)

Housing Affordability at the Forefront

• The Senate Budget Committee, chaired by Sen. Sheldon Whitehouse (D-RI), held a hearing this Wednesday, Sept. 25, on housing unaffordability. The hearing focused on the need for significant policy reform to boost housing supply, remove regulatory barriers to new construction, and deregulate land use and zoning. (Watch Hearing)

• Chair Whitehouse introduced the Affordable Housing Construction Act, which aims to tackle the housing crisis by expanding the Low-Income Housing Tax Credit (LIHTC) program, loosening financing requirements, and ensuring affordability for 50 years— an increase from the previous 30-year mark. (Sen. Whitehouse News Release)

• The bill also pushes for more sustainable, energy-efficient, and accessible housing.

Rate cuts from the Fed are providing relief for both CRE and housing markets, but sustained recovery and resolution of the affordability crisis will require continued policy reform, increased housing supply, and greater collaboration between public and private sectors.