Roundtable Weekly -- January 31, 2020

2020 State of the Industry Meeting

Policymakers and Industry Leaders Address Affordable Housing and Other National Issues as The Roundtable Rolls Out 2020 Policy Agenda

The Real Estate Roundtable’s 2020 State of the Industry (SOI) Meeting this week in Washington featured discussions with policymakers and industry leaders on affordable housing solutions, economic development and job creation, infrastructure, tax regulations affecting CRE and other national issues. 

Policy Issues & Featured Speakers   
The SOI meeting included the following speakers: 

  • Federal Housing Finance Agency Director Mark Calabria addressed his agency’s oversight of Fannie Mae and Freddie Mac – the Government Sponsored Enterprises (GSEs) – who own or guarantee $5.6 trillion in single and multifamily mortgages. Dr. Calabria spoke about the conservatorships the GSEs have operated under since 2008 and the need to responsibly privatize them while ensuring sufficient private capital is in place to protect taxpayers, along with access to affordable rental housing.

  • House Financial Services Committee Ranking Member Patrick McHenry (R-NC) focused on affordable housing in the discussion with Dr. Calabria, moderated by Willy Walker, chairman & CEO, Walker & Dunlop.  Rep. McHenry has served as Chief Deputy Whip to build consensus for the House Republican Conference’s agenda – including passage of the Tax Cuts and Jobs Act last year.  He spoke about his committee’s recent hearings on challenges for effective affordable housing policies, which include a decrease in available housing supply due in part to counterproductive regulations and zoning laws at local and state levels.

  • House Ways and Means Committee Member Stephanie Murphy (D-FL) is the first Vietnamese-American woman elected to Congress and a member of the powerful House Ways and Means Committee that originates tax legislation affecting the industry.  Rep. Murphy spoke of her efforts to build consensus among her House colleagues by co-chairing the Blue Dog Coalition, a bloc of Democrats who emphasize fiscal restraint – and her efforts to build a solutions-oriented policy approach that can bridge the gap between left and right.
  • Rhode Island Governor Gina Raimondo (D), recently re-elected, discussed her state-wide successes in attracting increased economic investment, decreasing unemployment and implementing innovative solutions to the challenges of homelessness and affordable housing.  Gov. Raimondo spoke of her recent proposal to build more affordable housing using a housing bond and dedicated funding stream, along with her support for the federal Opportunity Zones program.  She also discussed her executive order committing Rhode Island to be powered by 100 percent renewable electricity by the end of the decade. 
  • Mike Allen, co-founder and Executive Editor of Axios – a three-year old digital media company delivering news and insights on policy, politics, business and tech – discussed the confluence of this election cycle, social media and the “War for Attention” to gain consumer, and voter, brand loyalty.

  • George Will, syndicated columnist and political commentator, concluded the meeting’s evening event with comments on how historical, economic and societal trends directly influence the current political environment, providing a bellwether for what can be anticipated in future elections.

Roundtable Policy Committees 
SOI also included meetings of The Roundtable's policy advisory committees, which analyzed policy issues in detail with high-level congressional and agency staff.

  • Research and Real Estate Capital Policy Advisory Committee (RECPAC):
    During this joint meeting, two panels of industry experts addressed  investment and market insights into the current real estate market cycle, along with the state of real estate capital and debt markets.

  • Tax Policy Advisory Committee (TPAC):
    The chief tax counsels from the Senate Committee on Finance discussed what lay ahead for tax legislative priorities affecting commercial real estate.  The discussion, moderated by Russ Sullivan (Brownstein Hyatt Farber Schreck), included Mark Warren, chief tax counsel for Senate Finance Committee Republicans and Tiffany Smith, chief tax counsel for Senate Finance Committee Democrats.  Additional discussions delved into recent and future real estate-related tax regulations with Treasury Department Attorney-Advisor Bryan Rimmke, as well as new Opportunity Zone rules, proposed LIBOR tax regulations, and the tax challenges confronting foreign investment in US real estate.  
  • Sustainability Policy Advisory Committee (SPAC):
    U.S. Environmental Protection Agency speakers provided an update on the ENERGY STAR for Tenants program.  Additionally, U.S. Energy Information Administration speakers provided SPAC information on the Commercial Building Energy Consumption Survey (CBECS) and its impact on ENERGY STAR scores. The New York Independent System Operator (NYISO) discussed its efforts to create a carbon pricing market — an emerging issue as the real estate sector confronts rising obligations to draw clean power from a de-carbonized electric grid.  

  • Homeland Security Task Force meeting (HSTF) and Risk Management Working Group (RMWG):
    The joint meeting attendees heard briefings by government officials on challenges presented by homelessness – and the risk picture posed by the coronavirus to the United States.  The Task Force was also briefed on cyber threats and the state of insurance markets after the recent seven-year reauthorization of the Terrorism Risk Insurance Act (TRIA), enacted one year before its scheduled expiration date – a major policy accomplishment of The Roundtable in 2019.

Next on The Roundtable's FY2020 meeting calendar is the Spring Meeting on March 31 in Washington, DC.  This meeting is restricted to Roundtable-level members only.

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Infrastructure

House Democrats Propose $760 Billion Infrastructure Framework as Ways and Means Committee Considers Pay-Fors

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House Democratic leaders on Jan. 29 released a five-year, $760 billion framework to improve the nation’s highways, bridges, transit and broadband as the Ways & Means (W&M) Committee held a hearing to consider how to pay for the plan. (Factsheet and Framework text)

  • The 19-page “Moving Forward Framework” was unveiled by House Speaker Nancy Pelosi (D-CA) and the chairs of three House committees – Transportation Committee Chair Peter DeFazio (D-OR), Energy Committee Chair Frank Pallone (D-NJ), and W&M Committee Chair Richard Neal (D-MA).  (Video of news conference)

  • Elements of the “Moving Forward” blueprint, estimated to create 10 million jobs, include:

    • $434 billion for highways, bridges, transit and other surface transportation – comprising the package’s financial bulk – with incentives for projects that reduce carbon pollution and improve resiliency to climate change impacts;

    • Streamlining the Transportation Department’s underwriting process for low-interest TIFIA loans;

    • Prioritizing spending from the national Highway Trust Fund (“HTF”) with a “Fix It First” strategy to repair crumbling roads and bridges ;

    • A pilot to sustain the long-term solvency of the HTF (which is frequently bailed-out by Congress) through a “vehicle miles traveled” user fee;

    • Quicker federal grant approvals for transit projects of national and regional significance, to support critical investments like the NY-NJ Gateway program;

    • Priorities for investments that help transform U.S. rail and airport networks;

    • Expansion of renewable energy infrastructure and investments to de-carbonize the electric grid; and

    • New infusions of capital for Brownfields re-development.
  • The Roundtable has long supported legislation for a comprehensive infrastructure overhaul.  It has recommended a number of measures reflected in the Democratic framework. (E.g., March 20, 2019 W&M comments; April 29, 2019 T&I comments.)

  • Projects supported by federal dollars in the “Moving Forward” plan would trigger prevailing wage requirements for laborers and contractors under Davis-Bacon standards.
  • Meanwhile, the W&M Committee held a hearing Jan. 29 on “Paving the Way for Funding and Financing Infrastructure Investments.”  The hearing explored potential funding options for a national infrastructure effort, including raising the gasoline tax; expanding tax-exempt bonds; establishing a vehicle-miles traveled user fee; and greater use of public-private partnerships (P3s).  The Congressional Budget Office reported last week that P3s have accounted for only 1 to 3 percent of spending for highway, transit, and water infrastructure since 1990.

  • Chairman Neal and Ranking Member Kevin Brady (R-TX) both endorsed an expansion of dynamic budget scoring beyond tax cuts for infrastructure investments.  In his opening statement, Neal cited tax-preferred bonds, including Build America Bonds, as an important infrastructure financing tool, while also highlighting the new markets tax credit, the low-income housing tax credit, and the historic tax credit.  Rep. Brady proposed creating Opportunity Zones for infrastructure.  (Politico, Jan. 30)

The Trump Administration and Congressional Democrats have long touted a comprehensive infrastructure package as an area for bipartisan agreement.  Senate Majority Leader Mitch McConnell recently stated that infrastructure policy could advance after the impeachment trial ends. (Roundtable Weekly, Jan. 24)

However, during this election year, prospects for a more modest infrastructure plan (compared to the expansive Democratic framework) are higher.  The current Highway Trust Fund of approximately $226 billion – the main funding source for roads, bridges and transit – is set to expire on September 30, 2020.  Shoring-up the HTF is expected to be the main focus of Congress and stakeholders for the rest of FY 2020.  (Roundtable Weekly, Oct. 4)  

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Industry Leadership

National Multifamily Housing Council President Doug Bibby Announces 2021 Departure

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National Multifamily Housing Council (NMHC) President Doug Bibby – an industry leader for nearly two decades who has played a major role in advancing real estate’s policy agenda in Washington, DC – announced on Jan. 29 that he will depart the organization in 2021. 

  • “It has been, and continues to be, a great honor and privilege to serve in this position,” said Bibby. “Representing the apartment industry has been one of the most fulfilling and gratifying experiences of my career. I am proud of the work the team at NMHC has done and the strides the industry has taken during my tenure,” he added.  (NMHC’s bio on Doug Bibby)

  • Roundtable President and CEO Jeffrey DeBoer noted, “Among the 18 national real estate trade associations that The Real Estate Roundtable works with on common issues of importance to commercial real estate, NMHC is one that has shown outstanding leadership on important policies such as housing affordability, regulatory reform and the recent reauthorization of the Terrorism Risk Insurance Act.  Doug Bibby has played an essential and exemplary role in his large organization’s successes on the policy front since June 2001.  He deserves the thanks of the entire industry and we wish him well as he prepares for his next endeavor.”

NMHC’s officers have engaged an executive search firm, Russell Reynolds Associates, and hope to introduce Bibby’s successor at its January 2021 Annual Meeting.

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