Policy Landscape

Senators Joe Manchin and Lisa Murkowski Aim for Bipartisan Compromise on Energy Policy as Alternative to Stalled Build Back Better Act

Sens. Joe Manchin and Lisa Murkowski

Senators Joe Manchin (D-WV), left, and Lisa Murkowski (R-AK), right, have led bipartisan meetings with lawmakers over the last two weeks to explore potential areas of agreement for a scaled-back energy and climate legislative package before the midterm elections. (Politico Morning Energy and E&E News, May 5 | The Hill, April 25) 

BBB Energy Measures 

  • $300 billion in clean energy tax credits were part of last year’s failed, multi-trillion Build Back Better (BBB) Act, which Democrats advanced through the House under fast-track, filibuster-proof budget reconciliation rules. The Roundtable sent a letter in November to congressional tax writers with specific recommendations to improve the BBB bill’s energy tax provisions affecting real estate. (Roundtable Weekly, Nov. 19)

  • The BBB legislation stalled in the Senate after failing to attract key Democratic votes from Sens. Manchin and Kyrsten Sinema (AZ). Manchin’s concern about rising inflation led to his opposition of the bill. (Wall Street Journal, April 28)

  • Last week, Sen. Sinema discussed the post-BBB policy landscape during The Roundtable’s Spring Meeting in Washington. Other featured speakers included Sens. Bill Cassidy (R-LA) and John Hickenlooper (D-CO), who are among the members of the bipartisan group. (Roundtable Weekly, April 29 and E&E News, May 5) 

Search for Agreement 

Sen. Tom Carper (D-DE)
  • This week, the BBB Act’s energy-related tax credits were a focus of the small bipartisan group, which also included Senate Environment and Public Works Chair Tom Carper (D-DE), above.

  • Carper on May 5 said, “I think some progress was made in better understanding what the Finance Committee voted on in the energy tax package that was debated and voted on months ago.” He added, “Republicans will not be anxious to support any kind of reconciliation bill. But let's see how much we can get done in a bipartisan approach.” (Politico Morning Energy, May 5)

  • Another meeting participant, Sen. Kevin Cramer (R-ND), said general discussions need to eventually produce an agreement on specific measures “long before” the July 4th recess. Cramer also told E&E News that any Republican support for a bipartisan package “depends on how long Santa’s list is.”

  • Support for a bipartisan clean energy package would need to clear a 60-vote threshold in the Senate to pass the evenly-divided chamber before November’s midterm elections. 

Sen. Chris Van Hollen (D-MD) recently stated, “I think it’s a make-or-break moment for the elements of Build Back Better that are still on the table. The clock is ticking. This is a perishable moment.” (Wall Street Journal, April 28) 

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Cannabis

Bipartisan Push in Senate Seeks to Include Cannabis Reform Banking Legislation in Economic Competitiveness Bill

US Capitol

A bipartisan push in the Senate is underway to pass a 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. (The Hill, May 4) 

SAFE & COMPETES 

  • The Secure and Fair Enforcement (SAFE) Banking Act (H.R. 1996) would provide commercial property owners a safe harbor if they lease space to a state-approved CRB. Additionally, owners who lease space to CRBs under SAFE could finance their properties without repercussions from federal anti-money laundering statutes. The Roundtable is a long-standing supporter of the legislation. (Roundtable Weekly, May 3, 2019).

  • The cannabis reform bill was first introduced in Congress in 2013 by Rep. Ed Perlmutter (D-CO) and has passed the House six times—either as an amendment to a larger legislative package or as a standalone bill.  Each time, the legislation has stalled in the Senate. (Rep. Perlmutter news release, Feb. 9)

  • This year, the SAFE Banking Act passed the House on Feb. 4, after it was added as an amendment to the America COMPETES Act, which aims to ease the nation’s supply chain problems and boost domestic manufacturing. 

Next: Senate-House Conference 

  • A House-Senate conference on the America COMPETES Act will aim to negotiate a final bill and pass it with the support of 60 senators before the August recess. (Reuters, May 4)

  • Sen. Steve Daines (R-MT) addressed the SAFE Act  recently with The Hill , stating, “We’ve got nine Republican co-sponsors officially on it, close to 50 Democrats. There are some other Republicans that I’m confident, if we had a vote, would vote for it.” (Sen. Daines news release, March 23, 2021)

An Unbanked Industry 

Map of State Cannabis proposals from Wikipedia
  • Sen. Patty Murray (D-WA) said she is “fighting every which way” to include the SAFE ACT in the final version of the COMPETES Act. “This [cannabis] is a cash-only business right now. It’s dangerous for the employees,” added Murray, who is the third-ranking Democrat in the Senate and a member of the bicameral conference committee. (PoliticoPro, May 5 and The Hill, May 4)

  • Public safety is an urgent reason to include the SAFE Act as part of the conference’s final bill, according to a recent letter sent to Senate leaders by the American Bankers Association and all 50 state banking associations. (April 28 letter)

  • State-licensed cannabis businesses currently operate in 37 states, with additional states weighing legalization. (ABA April 28 letter)

A Senate bill seeking wider cannabis reforms is supported by Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chair Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ). The Democratic leaders originally planned to introduce their bill this month, but recently announced it will be delayed until August. (PoliticoPro, April 14)

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Foreign Investment & CRE

Global Investors in US CRE Report Positive Outlook, Growing Influence of ESG

AFIRE 2022  investments graphic

Global investors plan to increase net investment this year in US commercial real estate, with a focus on multifamily, life science and industrial assets, according to the Association for International Real Estate Investors’ (AFIRE) 2022 Annual International Investor Survey Report. 

Positive Outlook 

  • AFIRE CEO Gunnar Branson said, “With the 2022 AFIRE International Investor Survey Report, we now have a clearer picture on the longer-term impact of the pandemic on real estate investment, with altered cultural attitudes and sustained strength in investment in secondary and tertiary US cities—led by Austin, Atlanta, Boston and Dallas.” 

  • The survey’s topline findings include:
     
    • Seventy-five percent of respondents expect their volume of investment activity and revenue growth to increase over the coming year.

    • Eighty-one percent of surveyed investors agree that the pandemic has now permanently altered cultural attitudes towards US consumption and live-work preferences.

    • Environmental change, housing, and market affordability are top social concerns for investors.

    • Austin, Atlanta, Boston, and Dallas rank top US cities for planned investment this year.

    • London is the only non-US city among the top five for global investment in 2022, followed by New York and Seattle

Market Sectors & ESG Influence 

AFIRE graphic on ESG
  • The AFIRE report shows 90% of survey respondents plan to increase investment in multifamily over the next three to five years, followed by life sciences (77%) and industrial (7 %).

  • The growing influence of Environmental, Social and Governance (ESG) criteria is also clear, with survey respondents reporting:

    • Carbon footprint reduction measures (90%) and actionable climate change strategies (89%) are rated as the most important ESG priorities for US real estate investments in the near future.

    • Diversity (74%) and talent attraction/ development (75%) follow environmental factors among ESG trends.

    • Almost nine in ten respondents recognize the future financial benefit of taking action now on ESG. Notably, more than half of respondents (55%) agree that they would accept a lower than-expected rate of return if it meant realizing other social or environmental benefits

The annual survey responses were collected in February from the AFIRE membership—which represents nearly 175 organizations from 23 countries, with approximately US$3 trillion assets under management—and the global institutional investor community.

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