Democrats Approve Budget Resolution Setting Up Path for Biden COVID-19 Package
Vice President Kamala Harris broke a 50-50 tie in the Senate on Feb. 5 to pass a budget resolution that will allow President Biden’s proposed $1.9 trillion pandemic relief package to advance without GOP support. (New York Times, Feb. 5)
- The budget resolution triggers special “reconciliation” procedural protections that prevent a possible filibuster by Senate Republicans – and will give tax-writing and other committees in both chambers until Feb. 16 to report legislative language for consolidation into a final pandemic relief bill. (“Budget Reconciliation: The Basics,” House Committee on the Budget)
- Senate Majority Leader Chuck Schumer (D-NY) said, “This was a giant first step. So we will keep working as hard as we can to pass this legislation through the House, through the Senate as we go through the reconciliation process and hopefully put it on the President's desk.” (Schumer statement, Feb. 5)
- ‘House Speaker Nancy Pelosi and Senate Majority Leader Schumer issued a joint statement on Feb. 1 to unveil the budget resolution. “Congress has a responsibility to quickly deliver immediate comprehensive relief to the American people hurting from COVID-19. The cost of inaction is high and growing, and the time for decisive action is now,” according to the statement.
- Additional unemployment assistance and other pandemic aid measures are scheduled to expire in March as calls increase for more funding to support vaccine distributions, direct payments to households, school reopenings, and relief for businesses. (AP, Feb. 2)
- Earlier in the week, President Biden’s $1.9 trillion pandemic relief package proposal was countered by a $618 billion Republican proposal. The GOP counter-proposal did not include aid for state and local governments, rental assistance, or further extension of the CDC’s eviction moratorium beyond its current expiration date on March 31. (Comparisons of the Democratic and Republican proposals have been prepared by CNN, The Wall Street Journal, and USA Today).
- Roundtable President and CEO Jeffrey DeBoer said,” The Real Estate Roundtable is encouraged by both Democratic and Republican efforts to work toward additional economic relief from the pandemic. Given the continuing great need for additional assistance to cities, people and businesses, we continue to urge policy makers to find a path forward.”
Changes Possible Before Final Package
- White House Press Secretary Jen Psaki commented there may be some changes to Biden’s “American Rescue Plan” to achieve compromise on the next pandemic package, including lowering the qualifying income threshold for the proposed $1,400 in direct payments. (AP’s YouTube channel, Feb. 2)
- The reconciliation process allows for congressional tax-writing committees to consider measures that could potentially be added to the package. A group of 120 House and Senate Democrats – led by Ways and Means Member Lloyd Doggett (D-TX) and Senate Finance Committee member Sheldon Whitehouse, (D-RI) – this week urged congressional leaders to reinstate the full limitation on net operating losses and active business losses that were part of the Tax Cuts and Jobs Act of 2017. The CARES Act included tax relief that allowed businesses to carry back 2018-2020 net operating losses to prior years, thus allowing them to claim refunds for taxes paid in earlier years.
- The letter states that proceeds from reversing the NOL measure “should be repurposed to help Americans who have lost income due to the pandemic and its economic fallout.” (Feb. 2 letter)
Separately, a power-sharing agreement for the 50-50 Senate was unanimously adopted on Feb. 3 by the chamber after Majority Leader Schumer and Minority Leader Mitch McConnell (R-KY) finalized terms. The agreement allows Democrats to take control of Senate committees and formalize their leadership. (Wall Street Journal and Politico, Feb. 3)
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The Real Estate Roundtable Partners With REEC to Improve Diversity and Address Racial Disparities in Commercial Real Estate
The Real Estate Roundtable is a Founding Partner of a national program unveiled Feb. 3 by the Real Estate Executive Council (REEC) – the trade association for CRE professionals of color – that will seek to improve diversity, racial equality and inclusivity across the commercial real estate industry with a wide spectrum of partner companies and organizations. (REEC news release, Feb. 3)
- "The lack of diversity in the CRE industry, and the disparities that exist in access to capital and credit for African Americans and other people of color, are systemic problems that need a multifaceted approach. None of us can do this alone. Coming together to tackle the challenge through industry partnerships such as REEC's Diversity Partner Program will give us a fighting chance," said REEC Board Chair Tammy K. Jones, CEO and founder of Basis Investment Group.
- Ken McIntyre, CEO of the REEC and a Real Estate Roundtable Board Member, said, “We are excited to launch the Diversity Partners Program and to work with this committed group of initial partners to improve diversity and inclusion in the CRE industry. We invite other firms to join REEC as Diversity Partners to further our mission. As an industry we have a great deal of work to do to change the paradigm.”
- REEC's initial diversity partners have committed to meaningful goals for diversity and inclusion in support of REEC's mission. The founding diversity partners include:
- Ventas, Inc. –Healthcare REIT led by Debra A. Cafaro, Real Estate Roundtable Chair
- The Real Estate Roundtable
- NAIOP Commercial Real Estate Development Association
- National Multifamily Housing Council
- L+M Development Partners
- Nuveen -- Investment
- Ferguson Partners – Human Capital
- Bisnow– Media and events
- The Roundtable’s Board of Directors has established an Equity, Diversity and Inclusion (ED&I) Committee, chaired by Roundtable Board Members Jeff T. Blau, CEO, Related Companies, which is organizing members and finalizing a mission statement. (Roundtable news release, Sept. 30, 2020)
- The framework of the partnership REEC has with The Roundtable and other founding partners includes the following goals:
- Diversity Ecosystem – hiring and developing a pipeline of racially diverse talent.
- Diversity Business Plan -- focus on goals, measurements and transparency.
- Supplier or Vendor Diversity/Diversity Spend – increasing percentages of annual spend allocated to firms owned by people of color.
- Investment Allocations and Access to Capital & Credit - increase the amount of, and improve access to, capital and credit for minority-owned investment managers, developers, projects and communities.
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Bipartisan Legislation Allowing REITs to Increase Investment in Commercial Tenants Introduced
Bipartisan legislation introduced Feb. 4 by House Ways and Means Members Brad Schneider (D-IL) and Darin Lahood (R- IL). would modernize real estate investment trust (REIT) tax provisions to permit REITs to invest equity in struggling commercial tenants that have been harmed by the COVID-19 pandemic. (News release, Feb. 4)
- The Retail Revitalization Act of 2020 (H.R. 8805) – strongly supported by The Roundtable and a coalition of real estate, retail, and labor interests – would help address the challenges in the retail sector that have been exacerbated by the coronavirus. Failure to make these changes could result in further retail bankruptcies, liquidations of retail businesses, large-scale job losses and a collateral impact on related supply chains that service the sector.
- “The COVID-19 pandemic has decimated the retail sector, resulting in lost jobs and shuttered doors. Retailers across the county are already facing bankruptcy, liquidation or large-scale job losses. Allowing REIT landlords to infuse more capital into their retail tenants will help offset the retail sector’s devastating losses caused by the pandemic and save jobs,” said Rep. Schneider.
- Rep. Lahood added, “Retailers need more funding as they work to recover from the pandemic and this legislation will help infuse critical private capital into small businesses struggling.”
- Roundtable member Brian Kingston, CEO of Brookfield Property Group commented, “As one of the largest shopping mall owners in the U.S., we have seen first-hand the devastating effects the pandemic has had on many of our tenants. A modernization of the REIT rules—like those contained in the Retail Revitalization Act—will allow us to respond to our tenants request for further assistance, in turn allowing them to keep their doors open, save thousands of jobs, and continue to generate millions in tax revenue for federal, state, and local governments.”
- The bill would modify existing related-party rent rules that treat rental income received by a REIT from a tenant in which the REIT owns more than a 10 percent interest as bad income for REIT purposes. Specifically, among the changes, the bill would:
- increase the capacity of a REIT to own the equity of a tenant from 10% to 50%, and
- conform the ownership attribution rules used for determining what is considered related-party rent under the REIT rules to the general ownership attribution rules that apply to corporations.
- increase the capacity of a REIT to own the equity of a tenant from 10% to 50%, and
Speaking at a virtual event with the sponsors and stakeholders on the day of introduction, Roundtable President and CEO Jeffrey DeBoer said, “[A]s important and helpful as Congress’s actions have been for smaller businesses, a lifeline is now needed, particularly to larger retail businesses and the people who work in the retail industry.”
“The legislation is not a tax cut or a tax break,” DeBoer continued, “It is very much a private sector solution. It would provide a legal framework for property owners ... to put their own capital at risk by making equity investments in struggling retail businesses that employ tens of thousands of workers nationwide.”
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Benjamin V. Lambert, Eastdil Secured Chairman, Transformed Industry Advocacy
Benjamin V. Lambert – an industry icon who served as Chairman of Eastdil Secured and as former Chair of The National Realty Committee (predecessor of The Real Estate Roundtable) – passed away the weekend of Jan. 30. (Commercial Observer, Feb. 2 and TheRealDeal, Feb. 1)
- “Ben Lambert’s leading role in modernizing commercial real estate finance is well known“ said Jeffrey DeBoer, Roundtable President and CEO. “Less well known is the profound influence Ben had on industry advocacy efforts in Washington. He was a Founding Member and later Chairman of The National Realty Committee (NRC) – the organization that evolved to become The Real Estate Roundtable – and many of his early advocacy principles, such as industry unification across product type, remain traits of the Roundtable to this day. We will miss him but we will not forget him.”
- A Jan. 31 email by Eastdil Secured’s CEO Roy Hilton March and President D. Michael Van Konynenburg sent to friends and clients stated, “Ben was a true father-like figure to many of us, and we will miss his wisdom, warmth, leadership and love. In a tough, high stakes environment, Ben never had a bad word to say about anyone.” They added that a future ceremony may be held in honor of Mr. Lambert when large gatherings are deemed safe again.
- (Mr. March serves on The Roundtable’s Board of Directors and Mr. Van Konyenburg is also a Roundtable Member.)
- Lambert founded Eastdil in 1967, bringing a Wall Street investment banking approach to real commercial real estate for more than 50 years. He was the chief financial negotiator in the 1977 sale of Irvine ranch in California and structured the financing of San Francisco’s Embarcadero Center and the MacArthur Foundation apartment portfolio. He also led some of the largest transactions in the country, including the sale of Chicago’s Willis Tower and New York City’s General Motors.
Among his many affiliations beyond Eastdil, he served on the board of trustees for Brown University and the Silver Shield Foundation and was a Founder and Chairman of the Harlem Day Charter School.
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