Tag: Capital and Credit

Roundtable and Coalition Weigh In on Sweeping SEC Proposals Impacting Private Fund Investors

Posted on by Trey Jackson

logo - U.S. Securities and Exchange Commission

The Real Estate Roundtable and 12 trade organizations recently responded to a set of sweeping, proposed Securities and Exchange Commission (SEC) rules that would significantly increase the compliance obligations of advisers to “private funds.” (Coalition letter, March 1)

Time Extension Request

  • The coalition letter detailed why time extensions are needed for comprehensive responses to two recently introduced SEC NPRMs (“Notice of Proposed Rulemaking”), which include more than 800 questions and an extensive expansion of cost-benefit analysis requests. The SEC provided a tight deadline for stakeholders to respond to the proposed rules.
  • The SEC issued two NPRMs on Jan. 26 and Feb. 9 that would significantly change how private funds are regulated. If approved, the proposed rules would require private-equity and hedge-fund managers to provide new statements on fund performance, compensation, fees and expenses. The NPRMs passed the Commission on a 3-1 party-line vote, with one dissenting Republican. (Wall Street Journal and PoliticoPro, Feb. 9)

SEC building

  • Currently, under most conditions, private companies are exempt from registration requirements put forth by the SEC, above – instead, they are regulated at the state level, where registration and disclosure requirements vary by state. The proposed rules would increase the compliance burden for private fund advisers, potentially impeding capital formation. (SEC resources: Jan. 26 News Release | Fact Sheet | Proposed Rule and Feb. 9 News Release | Fact Sheet | Proposed Rule)
  • The coalition response provided context to the NPRM requests, noting the deluge of recent SEC regulatory initiatives. The coalition letter stated, “We and our members will need simultaneously to analyze and prepare comments for these proposals as well as other significant proposals on short-selling (with the related re-opened proposal on securities lending), shortening the securities transaction settlement cycle, beneficial ownership reporting, security-based swap position reporting, and cybersecurity risk management (collectively representing more than 1,000 additional pages of text and thousands of additional individual questions from the Commission).”

A “LawFlash” report on the proposed SEC rules is available from Morgan Lewis. The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) will continue to respond to the SEC’s various proposed regulatory initiatives with its industry and coalition partners.

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House Again Passes Cannabis Reform Legislation Providing a Safe Harbor to CRE Owners

Posted on by Trey Jackson

A Roundtable-supported bill that would allow federally regulated banks to provide mortgage and financial services to state-licensed, cannabis-related businesses (“CRBs”) without the threat of federal penalties passed the House April 19 on a strong bipartisan vote. 

The SAFE Banking Act

  • The Secure and Fair Enforcement (SAFE) Banking Act [H.R. 1996 (117)] would provide commercial property owners a safe harbor if they lease space to a CRB, whose mortgages would not be subjected to corrective action by a bank.
  • The SAFE Banking Act, which has been introduced in every Congress since 2013 by Rep. Ed Perlmutter (D-CO), passed the House multiple times in the last Congress – both as a stand-alone measure and as an addition to coronavirus relief legislation.
  • Rep. Perlmutter commented on the passage this week, “After years of bringing up this issue, I feel optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws.” (Perlmutter news release, April 19)

Roundtable Support

  • The Real Estate Roundtable is a long-standing supporter of the SAFE Act. Roundtable President and CEO Jeffrey DeBoer noted in March 2019 letter to policymakers that the legislation, “… clarifies that banks could not take adverse action on a loan to a real estate owner solely because that owner leases property to a legitimate CRB.  The measure also protects sellers and lessors of real estate and other CRB ‘service providers’ by clarifying that proceeds from legitimate marijuana-related transactions do not derive from unlawful activity, and thus do not provide a predicate for federal criminal money laundering.”  (Perlmutter news release, March 18, 2021 and Roundtable letter, March 25, 2019)
  • The legislation is supported by a wide variety of other organizations, including the National Association of State Treasurers and Governors from 21 states and territories.  (Perlmutter news release, April 19)
  • The Roundtable also advocates that Congress should provide fuller protections to real estate business through legislation that clarifies state-compliant cannabis transactions are not illegal federal “trafficking” – and do not produce unlawful proceeds under money laundering statutes.

Cannabis and CRE

The estimated value of the U.S. cannabis industry is $17.7 billion, a substantial amount of which remains unbanked. As of January 2021, the legal cannabis industry supports 321,000 jobs across the country. (Perlmutter news release, April 19)

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Financial Regulators Call for Federal Legislation to Ease LIBOR Transition

Posted on by Trey Jackson

Rep-Brad-Sherman--Chair-x475w

Officials from the Fed and other top federal financial regulatory agencies testified on April 15 before a House Financial Services subcommittee that they support federal legislation to transition away from using the London Interbank Offered Rate (Libor) as an interest rate benchmark for US dollar contracts.  (Subcommittee hearing video and background memorandum)

Libor Deadlines

  • Libor is currently used in many outstanding financial contracts – including mortgages, student loans and derivatives – worth trillions of dollars.
  • Using LIBOR for new contracts is scheduled to end at the end of 2021. Additionally, all Libor maturities will stop in June 2023, although some will cease at the beginning of next year.
  • Rep. Brad Sherman (D-CA), photo above – who chairs the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets that held the hearing – has circulated draft legislation of a proposal entitled the Adjustable Interest Rate (LIBOR) Act of 2021 to smooth the transition away from Libor to the Secured Overnight Financing Rate (SOFR). (Pensions & Investments, April 16)
  • Lawmakers from both parties also voiced their support for federal Libor legislation during the hearing. Sherman stated that the need for federal action on Libor would test Congress to see if it can pass “necessary legislation that isn’t Democrat, isn’t Republican.” (CQ, April 15)

Roundtable Support

Libor transition to SOFR image

  • The Real Estate Roundtable and 17 national trade organizations on April 14 sent a letter of support for federal Libor legislation to leadership of the House Financial Services Committee.
  • The letter notes that the trillions of dollars of outstanding contracts, securities, and loans that use LIBOR for their interest rates do not have appropriate contractual language to address a permanent cessation of LIBOR. 
  • The coalition states in their letter that “Ineffective or ambiguous fallback provisions will result in uncertainty, litigation, and harm to consumers, businesses, and investors. Only federal legislation can uniformly address all 50 states, and only federal legislation can address issues such as the need for narrow relief from certain federal laws.”
  • On April 6, 2021, New York Governor Andrew Cuomo signed the first state-passed legislation (Senate Bill 297B/Assembly Bill 164B) intended to reduce risks associated with the transition away from LIBOR. Since New York law governs many of the financial products and agreements referencing LIBOR, the legislation will provide legal clarity for these contracts and will lessen the burden on New York courts. (Pensions & Investments, March 25) 

The American College of Real Estate Lawyers recently published a detailed overview of the Libor transition – “LIBOR’S Endgame: a Brief Pause, Not a Reprieve; a Safe Harbor, but a New Penalty” – by Joe Forte (Senior Legal Councel, AmTrust Title), who is a member of The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC). 

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Regulators Urge Banks to Cease Use of LIBOR for New Contracts by End of 2021 as Benchmark Rate is Scheduled to Sunset on Legacy Contracts in June 2023

Posted on by Trey Jackson

Libor transition to SOFR image

US and UK regulators are urging banks using the London Interbank Offered Rate (LIBOR) as a benchmark interest rate to stop writing new LIBOR contracts by the end of 2021, while most legacy contracts will be able to mature before use of the rate sunsets in June 2023. (Federal Reserve and Wall Street Journal, Nov. 30)

  • The UK-based ICE Benchmark Administration (IBA) announced it will consult in early December on its intention to cease US$ LIBOR. IBA intends to eliminate, subject to confirmation, one week and two month US$ LIBOR settings at the end of 2021. (Financial Conduct Authority, Dec. 4)
  • LIBOR is used as a reference rate in an estimated $200 trillion of financial contracts, including $1.3 trillion of commercial real estate loans.  UK financial authorities are phasing out LIBOR in response to manipulation concerns.
  • The Federal Reserve Board, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation on Nov. 30 released a joint statement supporting the proposal and explaining that the June 30, 2023 proposed LIBOR cessation date would allow time for “legacy contracts”—USD LIBOR transactions executed before January 1, 2022—to mature.
  • The joint statement also notes, “Failure to prepare for disruptions to USD LIBOR, including operating with insufficiently robust fallback language, could undermine financial stability and banks’ safety and soundness.”
  • Federal Reserve Vice Chair for Supervision Randal K. Quarles on Nov. 30 said, “Today’s plan ensures that the transition away from LIBOR will be orderly and fair for everyone—market participants, businesses, and consumers.”
  • “These announcements represent critical steps in the effort to facilitate an orderly wind-down of USD LIBOR,” said John Williams, President of the Federal Reserve Bank of New York and Co-Chair of the Financial Stability Board’s Official Sector Steering Group. “They propose a clear picture of the future, to help support transition planning over the next year and beyond.”
  • The Fed has urged banks to prepare for a transition away from LIBOR to the Secured Overnight Financing Rate, which will use rates that investors offer for bank securities such as loans and assets backed by bonds, instead of relying on bank quotes.

The US Treasury Department on October 9, 2019 released proposed regulations to clarify the tax consequences of replacing LIBOR in existing financial contracts, including real estate loans. The proposed rules largely align with Roundtable recommendations submitted in June 2019. (Roundtable Weekly, June 7, 2019)

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Federal Pandemic Risk / Business Continuity Insurance Program Focus of House Hearing

Posted on by Trey Jackson

House lawmakers heard testimony about a possible federal pandemic risk / business continuity insurance program during a hearing yesterday entitled, Insuring against a Pandemic: Challenges and Solutions for Policyholders and Insurers. (Webcast of hearing and witness statements)

  • The Business Continuity Coalition (BCC), which includes The Real Estate Roundtable, submitted a hearing statement for the record to The House Financial Services Subcommittee on Housing, Community Development and Insurance. The subcommittee played a key role in last year’s seven-year extension of the Terrorism Risk Insurance Act (TRIA). (List of BCC members)
  • The BCC announced on Oct. 28 that it aims to develop a public/private business continuity insurance program with policymakers and other stakeholders. Such a program would enable employers, in the event of a government-ordered shutdown, to keep payrolls and supply chains intact; help limit job losses and furloughs; reduce stress on the financial system; and speed economic recovery when government-imposed limitations on operations are lifted. (BCC launch news release)
  • The BCC has emphasized that the COVID-19 crisis has shown the current lack of insurance availability for business continuity coverage for catastrophic pandemic events. This coverage gap raises concerns for policyholders and shows the need to enact an effective federal program.
  • The BCC hearing statement submitted this week notes, “… if not remedied, these insurance gaps will hinder any recovery, especially impacting business lending, new leasing activity, retail and hospitality, housing construction and development, as well as media production. Private insurance alone cannot and will not remedy the gaps – at least not in the short-term – but private insurers need to be part of the solution. What is urgently needed is a federally-backstopped availability mechanism similar to the highly successful one which Congress put in place for terrorism following 9/11– in short, a TRIA-style program for pandemic risk.”
  • A number of legislative proposals have been introduced to address the need for business continuity coverage – including the Pandemic Risk Insurance Act of 2020 (H.R. 6983).
  • Roundtable President and CEO Jeffrey DeBoer on Sept. 25 discussed prospects for developing and enacting a federal pandemic risk-business continuity insurance program with Rep. Steve Stivers (R-OH), the Ranking Member on the House Subcommittee. (Video of the discussion)
  • “We’ve seen business interruption insurance not being willing to cover any pandemics. I think you’re going to start to see lenders … requiring some type of pandemic coverage in their loan covenants in the coming years,” Stivers said.
  • He added, “I think we need to make sure that if this ever happens again and the government shuts down the economy, [Congress] holds people harmless and businesses harmless in the future.” (Video of the discussion)

DeBoer commented, “The pandemic crisis has exposed gaps in business continuity insurance coverage that can only be filled by a national program that will provide the American economy with the coverage it needs to minimize the economic impact of pandemic-related shutdowns and aid economic recovery.”

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Real Estate Coalition Urges Federal Banking Regulators to Extend Relief Period for COVID-19 Related Loan Modifications

Posted on by Trey Jackson

Logo compilation of Commercial Real Estate Coalition

A coalition of national real estate organizations, including The Real Estate Roundtable, this week urged federal banking agencies to provide additional guidance that would reaffirm financial institutions may use reasonable judgment when assessing credit risk during the unique circumstances of the pandemic – such as allowing borrowers and lenders additional time to see properties and loans through the pandemic.

  • The guidance would preserve financial institutions’ ability to continue work with borrowers and grant additional incremental accommodations that would total more than six months after December 31, without being classified as a troubled debt restructuring (TDR). (Coalition letter and MBA Newslink, Nov. 10)
  • Early in the crisis, the Federal Reserve joined the Office of the Comptroller of the Currency (OCC) and other banking regulators in a March 22 Interagency Statement that encouraged banks to avoid automatically categorizing COVID-19 related loan modifications up to 6 months as a TDR. (Roundtable Weekly, March 27)
  • The March joint statement also encouraged borrowers experiencing cash flow problems due to the pandemic to reach out to any FDIC-insured lenders about modifying their loans, without adverse consequences to the bank or the borrower that traditionally come with the TDR label.  
  • The statement included, “Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.  This includes short-term — for example, six months — modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.”
  • On March 24, The Roundtable called on all owners and operators of business and residential rental real estate to voluntarily, proactively work in a positive and constructive manner with their COVID-19 impacted tenants respecting current rent obligations. (Roundtable news release, March 24)

Confluence of Events

OCC logo

  • A revised interagency statement released April 7 clarified the interaction between the March 22, 2020, interagency statement and section 4013 of the CARES Act, Temporary Relief from Troubled Debt Restructurings (section 4013). 
  • Many of the modifications granted under the revised Interagency Statement and section 4013 of the CARES Act are reaching the end of their six-month terms – at that same time that CARES Act protections are set to expire on December 31, 2020.
  • This confluence of these events creates significant, urgent challenges for any financial institution seeking to extend existing modifications of Covid-19 related loans past their six-month term.
  • The Nov. 10 coalition letter states, “…we urge the Agencies to provide guidance that a loan modification with a term greater than six months (e.g., up to 18 months combined) will not automatically result in a TDR under the Interagency Statements.”
  • “Because this issue is urgent, we request that the Agencies issue such a clarification and reaffirmation as soon as possible,” the letter concludes.
  • Brooks stated, “While banks remain sound, we see potential for troubled assets ahead in commercial and residential real estate, in small business and consumer lending, and in the travel and hospitality sectors in particular. Banks, particularly those with concentrations in those assets, must take a sober view of their risks and work with customers to the maximum extent possible consistent with safety and soundness.”

The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) continues its work with Washington policymakers to constructively support The Roundtable’s efforts to address the economic consequences of the COVID-19 crisis.

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Main Street Lending Program’s Restrictive Terms Prevent Full Access by Impacted CRE Sectors

Posted on by Trey Jackson

The Federal Reserve in Washington, DC

The Federal Reserve yesterday released its Summary of Commentary on Current Economic Conditions, showing that “commercial real estate conditions continued to deteriorate in many Districts.” There are twelve federal reserve geographic districts that gather information for the report, which is released eight times per year. 

  • The Fed report, also known as The Beige Book, adds that CRE market exceptions are the warehouse and industrial sectors, “where construction and leasing activity remained steady.”
  • The economic turbulence inflicted by the pandemic continues to damage CRE sectors such as retail and hotels, according to an Oct. 18 article in Politico. Mike Flood, senior vice president of commercial and multifamily policy at the Mortgage Bankers Association, stated, “What’s at risk here is both the ability for people to stay in their apartments and the ability for people to go to their jobs. So unless there’s a stimulus, there’s a lot less to go back to once we get back to normal times.” (Politico, “The next economic crisis: Empty retail space”)
  • The CRS report states, “Members of Congress have called on the U.S. Treasury and the Federal Reserve to open liquidity facilities to CRE and CMBS markets.”

The MSLP & CRE

Main Street Lending Program - Federal Reserve System

The New York Times and Washington Post published articles this week on the disappointing results shown to date by the Federal Reserve’s federal lending facilities, including its Main Street Lending Program (MSLP).

  • The Oct. 21 Times article reports that of the $454 billion Congress authorized in March for the Treasury Department to support various Fed emergency lending programs, $195 billion has been allocated so far – and only $20 billion in loans have been distributed.
  • The Oct. 19 Post article reports that of the $75 billion dedicated to support the Fed’s MSLP, only $3 billion has been loaned to date. According to the Post, an ongoing obstacle to making the MSLP more effective is whether the Fed and Treasury can agree on a new set of rules to significantly expand the reach of the program.
  • A broad coalition of national hotel executives on Oct 15 urged President Trump to take action by making immediate modifications to the MSLP that would increase participation in the program and help thousands of businesses crippled by the pandemic.
  • “We strongly urge you to use your executive authority to direct the Treasury to encourage the Federal Reserve to amend and expand the Main Street Lending Program … to support struggling businesses, stem the impending wave of foreclosures, and save millions of jobs to ensure the health of the entire American economy,” the letter states.
  • The hotel coalition emphasized that overly restrictive terms imposed by the MSLP continues to prevent the hardest hit businesses it was intended to support from accessing the program. “To date, only a small fraction of $600 billion in available loans have been utilized while the remaining funds – which are so desperately needed by industries like ours – sit idle and go unused,” according to the letter.
  • Real Estate Roundtable President and CEO Jeffrey DeBoer testified about the MSLP – and how to improve access to Federal Reserve credit facilities for businesses such as manufacturing, retail, restaurants, real estate owners, and other asset-based borrowers – on Sept. 9 before the Senate Banking, Housing and Urban Affairs Committee. (Roundtable Weekly, Sept. 11)
  • The Main Street program is not working, DeBoer testified, because there is little incentive for participating banks to make the loans – and the program’s eligibility, affiliation and underwriting rules are not designed to meet the needs of the businesses in need. (Video of DeBoer’s Testimony and Q&A with Senators)
  • “The result: countless mid-sized retail businesses, restaurants, hotels, commercial and multifamily building owners are moving closer to shutting their doors forever,” DeBoer stated. (Roundtable Oral Comments and written statement)
  • DeBoer added, “The recommendations that I have made on the Main Street Lending Program … really require no additional funds from the federal government. They are administrative. They could be done tomorrow by the Treasury and the Fed if they wanted to.” (Roundtable Weekly, Sept. 11)

The Roundtable continues to work with its national real estate trade partners, membership and other stakeholders to develop effective recommendations for policymakers to improve the MSLP, as well as identify alternative strategies to bolster CRE sectors and other industries struggling with the pandemic’s ongoing economic impact.

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Powell and Mnuchin Urge More Congressional Pandemic Fiscal Relief; Fed Releases FAQs on Main Street Lending Program; Democrats Considering New COVID-19 Package

Posted on by Trey Jackson

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jay Powell

Federal Reserve Chairman Jay Powell (right) and Treasury Secretary Steven Mnuchin (left) testified before House and Senate committees this week to discuss the government’s pandemic response.  Powell offered no option for administrative changes to the Main Street Lending Program (MSLP) credit lending facility while Mnuchin strongly urged Congress to repurpose unused COVID-19 relief funds in another legislative pandemic aid package.  (BGov, Sept. 23 and Reuters, Sept. 24)

  • Recommendations to improve access to the MSLP were a focus of recent testimony by Roundtable President and CEO’s Jeffrey DeBoer on behalf of the industry before the Senate Banking Committee.  (Roundtable Weekly, Sept. 11)
  • Powell responded about the MSLP that the Fed has done “… basically all of the things we can think of that are clear gains (but) we are looking to do more.”  He added, “… but I would say the things that we have done have been really to widen the appeal of that program and its effectiveness … there is nothing major that we see now that would be consistent with opening it up…”  (BGov and CQ Committee transcript, Sept. 23)

Fed Updates MSLP FAQs

Federal Reserve Building DC

The Fed on Sept. 18 issued new guidance to banks for the MSLP in an attempt to encourage increased lending.  The central bank’s revised “Frequently Asked Questions” for the MSLP emphasize that lender underwriting should look back to the borrower’s pre-pandemic condition and forward to their post-pandemic prospects. The FAQs also seek to clarify the Board and Department of Treasury’s expectations regarding lender underwriting.  (Fed news release)

  • In a news conference announcing the FAQs, Powell said, “I would say it may be that further support for commercial real estate will require further action for Congress – from Congress.”

     

  • During his three committee appearances this week, Powell consistently emphasized that more fiscal relief is needed from Congress to sustain an economic recovery from the pandemic.  Mnuchin struck a similar theme in his two committee appearances while urging Congress to pass a new package that would reuse unused funds from previous COVID-19 relief authorizations for urgent needs.

     

  • Mnuchin told the Senate Banking Committee this week that up to $380 billion could be repurposed.  “It would not cost an extra penny,” Mnuchin said.  (Reuters, Sept 24)

     

  • During the Sept. 24 hearing, Senate Banking Committee Chairman Mike Crapo (R-ID) in his opening statement referred to the committee’s earlier hearing on Sept. 9 on “The Status of the Federal Reserve Emergency Lending Facilities.”

    Real Estate Roundtable President and CEO Jeffrey DeBoer

  • Chairman Crapo said, “Jeff DeBoer (above) President  and CEO of the Real Estate Roundtable painted a bleak picture of the condition of the commercial real estate market. He said, ‘It is impacting their ability to meet their debt service obligations which increases pressure on financial institutions, pension fund investors and others.’  And he said, ‘It is pushing property values down to the detriment of local governments. It is causing much stress to pools for commercial mortgage backed securities and it is threatening to result in countless commercial property foreclosures. The situation must be addressed.’”  (Crapo’s Opening Statement, Sept. 24 and DeBoer’s testimony and Q&A, Sept. 9)
  • Crapo added, “Negotiating toward a realistic package that can actually get passed and signed into law would best serve the American people during this difficult time.”

     

  • Mnuchin told the Senate Committee that he and House Speaker Nancy Pelosi (D-CA) have “agreed to continue to have discussions.” (Wall Street Journal, Sept. 24)

Democrats Considering New Aid Proposal

House Speaker Nancy Pelosi (D-CA)

Pelosi has directed her committee chairs this week to assemble a scaled back coronavirus relief package of approximately $2.4 trillion that could be used for as a basis for potential discussions with the White House and Senate Republicans. (Politico, BGov, and The Hill, Sept 24)

  • Negotiations over a COVID-19 relief bill between Democrats and Republicans broke down in August over a nearly $1 trillion gulf between their proposals. 
  • The House passed a $3.4 trillion package in May (H.R. 6800), which is more than the $1.5 trillion President Trump indicated he would support and much larger than a $650 billion package supported by Senate Republicans.
  • House Democrats could vote on a new plan next week, which would appease lawmakers from battleground election states anxious to pass a pandemic aid package before adjourning to campaign – despite chances that a Democrat-only plan is unlikely to attract Republican support.

Speaker Pelosi said last week that the House would remain in session until an agreement is reached, and House Majority Leader Steny Hoyer (D-MD) clarified that Representatives would be on call to return to the Capitol on short notice in the event a deal is reached. (BGov, Sept. 15)

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Representative Steve Stivers Anticipates a Pandemic Risk Insurance Bill by Early 2021

Posted on by Trey Jackson

Rep. Steve Stivers (R-OH) interview - image

Rep. Steve Stivers (R-OH) discussed prospects for developing and enacting a federal pandemic risk-business continuity insurance program in an interview with Roundtable President and CEO Jeffrey DeBoer during the organization’s Fall Meeting this week.  (Video of the interview)

  • Rep. Stivers is the Ranking Member on the House Committee on Financial Services’ Subcommittee on Housing, Community Development and Insurance and played a key role in last year’s seven-year extension of the Terrorism Risk Insurance Act (TRIA).
  • DeBoer noted that the COVID-19 crisis has highlighted the lack of insurance availability for business continuity coverage for catastrophic pandemic events. Most business interruption insurance policies are denying pandemic risk-related claims, raising urgent concerns among policyholders – including owners of real estate, the event industry and professional sporting leagues.
  • Rep. Stivers emphasized the problem is growing worse and stated, “We’ve seen business interruption insurance not being willing to cover any pandemics.  I think you’re going to start to see lenders … requiring some type of pandemic coverage in their loan covenants in the coming years.”
  • While a number of legislative proposals have been introduced – including the Pandemic Risk Insurance Act of 2020 (H.R. 6983) – many are based on TRIA, which presents stark differences compared to pandemic risk.  Rep. Stivers notes in the interview how the scale and size of a terrorism attack and a pandemic are fundamentally different.  He also notes how a mandatory make-available clause that is part of the TRIA legislation is not currently part of a pandemic risk insurance bill.

Rep Steve Stivers remote interview with RER

  • Rep. Stivers (above) also said he expects a modified legislative approach to H.R. 6983 may be successful: “I believe in the first six months of next year we should have something (legislation) out of the House and pending in the Senate with the Senate starting to take action.”
  • Both DeBoer and Stivers agreed that a federal business continuity insurance program should be put into place before there is a recurrence of pandemic or government-ordered shutdown in response to a different natural catastrophe.
  • The Roundtable is working with industry partners such as Nareit and other stakeholders through the newly formed Business Continuity Coalition (BCC) to develop with policymakers an effective federal insurance program that provides the economy with the coverage it needs to provide business continuity coverage in the face of pandemic risk.  .  (Video of DeBoer’s discussion with Rep. Stivers)
  • DeBoer also asked the Congressman, as a member of the House Financial Services Committee, about the prospects for a pandemic relief bill.  Rep. Stivers responded, “I believe there will be a pandemic relief bill in the lame-duck session. The most important things to me are number one, liability protection for businesses that open.  Number 2 – some help for our state and local governments that have seen a hit in their revenues.  I’d like to see us add money for infrastructure … and for people who continue to struggle.”
  • He continued, “Instead of (increasing) unemployment insurance … I would rather see us do a temporary rental assistance program and I think it should apply to commercial as well as residential.  There’s already an eviction moratorium, but if you can’t evict somebody but you don’t get help for your rent, then you’re picking tenants over landlords and I’d like to see us fix that problem and do a temporary rental assistance program.”

Pressure for policymakers to act on another round of pandemic aid is growing since negotiations between Democrats and Republicans stalled in August.  (See story below on Coronavirus Response)

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Business Coalition Urges Senate to Pass Corporate Diversity Legislation

Posted on by Trey Jackson

The Real Estate Roundtable and 16 other national organizations sent a letter on July 27 urging leaders of the Senate Banking Committee to advance legislation that would require public companies to report the racial, ethnic and gender composition of their boards and executive officers. (The Hill and coalition letter, July 27)

  • The act would require issuers that must register under the Securities Exchange Act of 1934 to provide data regarding diversity on corporate boards and in executive management. Such diversity reporting would occur in annual reports and proxy statements regarding election of directors filed with the Securities and Exchange Commission (SEC).
  • The bill would also require securities issuers to disclose whether it has adopted a plan or strategy to promote board- and executive-level racial, ethnic, gender, and veteran-status diversity.
  • The coalition letter addressed to the Senate Committee’s Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH), cites a 2019 PwC Annual Corporate Directors Survey to show the benefits of diversity.  The survey results show that 94% of participating board directors indicated that a diverse board brings unique perspectives; 87% responded that diversity enhances board performance; and 84% responded that it improves relationships with investors.
  • Presumptive Democratic Presidential Nominee Joe Biden this week presented a series of proposals intended to address racial economic inequality. Biden said that as president, his future appointments to the Federal Reserve would be “diverse nominees for the Board of Governors and the regional Federal Reserve Banks.” (The Wall Street Journal, and The New York Times, July 29)
  • Last week the Biden campaign indicated its desire to eliminate several current law tax provisions, including like-kind exchanges under Section 1031, to pay for a 10-year, $775 billion “caregivers” proposal.

Roundtable President and CEO Jeffrey DeBoer responded, “The long-standing like-kind exchange tax law has encouraged investment in affordable housing and other properties, generated state and local tax revenue, and spurred new jobs through labor-intensive property improvement. As a result, exchanges allow cash-strapped minority, women, and veteran-owned businesses to grow their business by temporarily deferring tax on the reinvested proceeds.”  (Entire Roundtable Statement on like-kind exchanges, July 21 and Roundtable Weekly, July 24).

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