Senate Vote on Bipartisan “Physical” Infrastructure Deal Expected Soon, Laying Groundwork to Consider “Human” Infrastructure on Separate Track
The Senate processed amendments this week on bipartisan legislation for hundreds of billions in new investments in the nation’s “physical” infrastructure. Majority Leader Chuck Schumer (D-NY) pushed to continue votes this weekend on the bipartisan measure – with further plans next week to separately consider an anticipated $3.5 trillion budget resolution for “human infrastructure” designed to pass with only Democratic support. (BGov, Aug. 6)
Bipartisan “Physical” Infrastructure Deal
- The Senate’s Bipartisan Infrastructure Investment and Jobs Act ( text as of Aug. 3 | section-by-section – also known as the “Bipartisan Infrastructure Deal” (BID) – proposes $550 billion in new infrastructure investment.
- Summaries and fact sheets from the Biden Administration break down the amounts invested in the BID’s various infrastructure categories. The bipartisan deal is estimated to create around 2 million jobs per year over the next decade.
- The bill needs 60 votes to pass in the Senate, requiring support from at least 10 Republicans.
- The BID includes no new tax increases. Most of its proposed “pay-fors” involve repurposing previously enacted COVID relief funds.
- Senate policymakers struggled to complete work on the bipartisan deal this week amid concerns over taxation on cryptocurrency and yesterday’s release of a score by the Congressional Budget Office score, estimating the bill would add $256 billion to the deficit over 10 years. (Politico, Aug. 5; Wall Street Journal, Aug 6; The Washington Post, Aug. 6)
The BID, Real Estate, and Community Development
- The Real Estate Roundtable has summarized elements of the BID of particular interest to real estate owners and community developers, that align with The Roundtable’s longstanding infrastructure policies. ["Spending and Other Provisions Pertinent to Real Estate and Community Development"]
- The Roundtable’s summary addresses the BID’s provisions for:
- Billions of proposed investments in various infrastructure asset classes dedicated to roads, bridges, mass transit, high-speed rail, broadband, the power grid, water pipes, and electric vehicle charging;
- Supporting public-private partnerships;
- Streamlining the federal permitting process; and
- Improving the key federal energy data that supports EPA building labels (Roundtable Weekly, July 16)
“Human” Infrastructure Package
- If the BID legislation is approved, it would prompt the Senate to move to a $3.5 trillion budget plan that includes President Biden’s wide-ranging domestic priorities supporting “human infrastructure.”
- No Republicans are expected to support the $3.5 trillion measure. Democrats must first pass a joint budget resolution to avoid a Senate filibuster, that authorizes the use of special “reconciliation” rules and sets a course for passage on a party-line vote
- Senate Budget Committee Chairman Bernie Sanders (D-VT), above, signaled that the reconciliation package would include spending for health care, child care, education, paid family and medical leave, and affordable housing. Reconciliation is also expected to address immigration and climate change matters. ( Wall Street Journal, Aug. 3)
After Labor Day, Democratic members are expected to meet to decide on which provisions to include in the human infrastructure package, including tax increases on businesses and individuals.
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CDC Issues New Eviction Moratorium Until Oct. 3; Realtor Groups File Legal Challenge
The Biden administration reversed course this week and issued a new federal eviction moratorium on Aug. 3, responding to pressure from progressive Democrats to allow more time for billions in rent relief appropriated by Congress to reach tenants and landlords. (CDC news release and Wall Street Journal, Aug. 4)
New 60-Day Eviction Ban
- The new ban from the Centers for Disease Control and Prevention (CDC) is in effect until Oct 3.
- It applies to about 80% of U.S. counties with “substantial” or “high” COVID-19 transmission rates, and covers about 90% of the U.S. population. ( Reuters, Aug 4 and CDC order, Aug. 3)
- The previous eviction moratorium expired on July 31. A U.S. Supreme Court majority in June indicated the federal-level ban exceeded CDC’s authority.
- President Biden initially stated that the Supreme Court’s action prevented another CDC extension, and called on Congress to pass 11th-hour legislation establishing a new moratorium. House Democrats last Friday failed to muster enough last-minute votes to pass an extension. ( The Hill, July 30; Roundtable Weekly, July 30)
Legal Challenge Redux
- Upon the Administration’s about-face in issuing the new moratorium, President Biden said it is “likely to face obstacles” in court. (White House remarks, Aug. 3 and Associated Press, Aug. 4)
- The latest eviction ban prompted the Alabama and Georgia Associations of Realtors to file an emergency motion in D.C. federal trial court before the same judge who previously ruled that the CDC had overstepped its authority in imposing the first eviction moratorium. (Politico and Washington Post and National Association of Realtors’ statement, Aug. 4)
Need to Accelerate Federal Rent Assistance
- The Realtor groups’ motion adds more pressure on state and localities to distribute billions allocated by federal policymakers to assist renters and housing providers – an effort that has faced severe bottlenecks and delays.
- Only 6.5 percent of $46.5 billion allocated by Congress for rental aid has found its way to state and localities in the first half of 2021, according to a recent Treasury Department report. (Washington Post, July 21 and Bloomberg and July 22)
- Treasury’s Emergency Rental Assistance program, overseen by Senior Advisor to the President Gene Sperling, now faces a 60-day race for states and localities to distribute funds to tenants and landlords while the newest CDC order is in effect.
Sperling stated during an Aug. 2 White House press conference that the Emergency Rental Assistance is “so important [because] it helps struggling landlords and struggling tenants. It can pay up to 18 month, forward or backwards, of back rent or back utilities. So, it is a way to make a landlord, who is struggling, whole, while also keeping that tenant and their family safe and secure.”
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Roundtable Elects FY 2022 Leadership; 2021 Annual Report Released
The Real Estate Roundtable this week announced its new FY2022 leadership, with John F. Fish (Chairman & CEO, Suffolk), above, elected as Chair for a three-year term starting July 1, 2021 – following an effective, productive term by Immediate Past Chair Debra A. Cafaro (Chairman & CEO, Ventas, Inc.). The Roundtable’s membership also approved a 22-member Board of Directors and committee officers. ( Roundtable news release, Aug. 5)
- “I am honored and humbled to assume this new role at such a pivotal moment for the real estate industry. Our communities are facing a host of challenges – from unprecedented political polarization, to the growing threat of climate change, to the comeback from the global pandemic – but where we see obstacles ahead, we also see opportunity to expand jobs, provide housing, and assist businesses evolve in the post-Covid economy,” said John Fish, Real Estate Roundtable Chair.
- Fish also recently discussed infrastructure issues, the impact of the pandemic on commercial real estate and the industry’s leadership role in national policy issues with Roundtable member Willy Walker (Chairman and CEO of Walker & Dunlop) on the Walker Webcast. (Bisnow and Connect, July 21 and Roundtable Weekly, July 23)
- The Roundtable’s Immediate Past Chair, Debra Cafaro noted, “It has been an honor and privilege to serve as chair for the last three years, and I am delighted to pass the baton to my friend and colleague John Fish. John is uniquely well-positioned to lead this organization as we move forward with the issues of economic recovery from the pandemic, job creation, sustainability, infrastructure and tax policy, which are at the forefront of policy debates in Washington.”
Photo - center: Debra Cafaro, top right: John Fish, top left: Jeffrey DeBoer
- Cafaro was recently recognized as a “Diversity Champion” for her efforts with The Roundtable and her company Ventas on equity, diversity and inclusion by Real Estate Forum magazine in their “Women of Influence” July-August issue. The Forum’s sister publication, GlobeSt.com, also featured the award winners.
- Roundtable President and CEO Jeffrey DeBoer commented, “We are committed to sustainable national policies that reinforce and expand long-term economic growth and opportunities for all, spur job creation and encourage capital formation.” DeBoer added, “The real estate industry provides jobs for tens of millions of people, is a significant source of revenue for local governments to help fund schools, hospitals and much needed community services, and is a key investment allocation for pensions and other retirement savings funds. I thank Debra for her leadership, and look forward to working closely with our new chair John Fish on these policy issues and to continuing The Roundtable’s fact-based, data driven advocacy work.”
- The Roundtable recently released its 2021 Annual Report, which shows its effective policy activities in the areas of tax … capital and credit … housing and infrastructure … energy and climate … and homeland security. The publication’s introduction also addresses The Roundtable’s path ahead as the industry seeks to emerge out of the pandemic stronger than ever.
Roundtable Board and Committee Leadership
- The 22-member FY2022 Roundtable Board of Directors is elected from the membership and includes three elected leaders of national real estate trade organizations from The Roundtable’s 19 partner associations.
- See The Roundtable leadership news release for a complete list of outgoing and incoming Board members as well as committee leaders.
- The Roundtable’s FY 2022 Committee Leadership was also announced for the following policy advisory committees:
- Equity, Diversity and Inclusion (E,D&I) Committee
- Homeland Security Task Force (HSTF)
- Real Estate Capital Policy Advisory Committee (RECPAC)
- Research Committee
- Sustainability Policy Advisory Committee (SPAC)
- Tax Policy Advisory Committee (TPAC)
The Roundtable’s membership represents over 3 million people working in real estate; some 12 billion square feet of office, retail, and industrial space; over 2 million apartments; and more than 3 million hotel rooms. It also includes senior, student and manufactured housing as well as medical office, life science campuses, data centers, cell towers, and self-storage properties. The collective value of assets held by Roundtable members exceeds $3 trillion.
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House Republicans Urge Biden Administration to Preserve Like-Kind Exchanges
A group of 88 House Republicans, led by Rep. Randy Feenstra (R-IA), above, sent a letter to President Joe Biden on Aug. 3 urging him “not to damage the livelihood of farmers everywhere by repealing or changing like-kind exchanges.” ( Coalition letter and Feenstra news release)
Agriculture Sector Impact
- Like-kind exchanges (LKEs) allow real estate, farming, and other businesses to defer capital gain when exchanging real property used in a trade or business for property of a like kind. Like-kind exchanges also help businesses to grow organically, with less debt, by reinvesting gains on a tax-deferred basis in new and productive assets.
- President Biden has proposed restricting the use of LKEs by limiting deferred gain in any one year to no more than $500,000 for single taxpayers and $1 million for married taxpayers. (Treasury Department’s Summary of Revenue Proposals, “Green Book” budget documents, and Roundtable Weekly, April 30)
- The coalition of House policymakers emphasized in their Aug. 3 letter how LKEs allow farmers and other small business owners to improve their operations and invest in better income-producing properties. The letter noted that four out of five individuals who utilize these tax deferments are qualified as small investors by the IRS.
- The letter stated, “For the agricultural community, a cap on like-kind exchanges would limit farmers' ability to improve their operations through combining acreage, purchasing more productive land, and mitigating environmental impacts. Further, capping likekind exchanges could make it more difficult to restructure businesses so that young or beginning farmers can join operations. Retiring farmers could be prevented from using like-kind exchanges to exchange their farm or ranch for other real estate, allowing for the next generation to take over, without depleting their life savings.”
- The 88 policymakers also commented how the negative impact of the administration’s LKE proposal would radiate outward from individual farm owners and agricultural investors into the larger agricultural sector and the national economy at large.
Roundtable’s Strong Support for LKEs
- On May 27, a broad business coalition that included The Real Estate Roundtable held a virtual briefing for members of Congress and their staff on the longstanding economic importance of LKEs – and detailed the potential negative unintended consequences of limiting section 1031. (Roundtable Weekly, May 28)
- The briefing, moderated by Roundtable President and CEO Jeffrey DeBoer, included expert speakers and featured recent research into the macro-economic impact of LKEs. (See “The Tax and Economic Impacts of Section 1031 Like-Kind Exchanges in Real Estate” by Professor Milena Petrova and Dr. David Ling)
- On May 18, The Roundtable and others submitted detailed comments to the Senate Finance and House Ways and Means Committees on like-kind exchanges and other pending tax issues. (Roundtable Weekly, May 21). Additionally, in March, The Roundtable and 30 national real estate, housing, environmental, farming, ranching, and forestry organizations wrote to key policymakers to underscore the vital importance of real estate like-kind exchanges. (Roundtable Weekly, March 19)
The coalition “1031 Builds America” provides an online method for stakeholders to share their experiences with LKEs with members of Congress, and urge them to preserve Section 1031.
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