Congress Reviews Biden’s Multitrillion Infrastructure Proposals
Capitol Hill continued to assess President Biden’s “physical” and “social” infrastructure plans this week as Democrats considered how to advance the Administration’s proposals in a narrowly divided Congress. (BGov, May 4) Photo: President Biden on April 30th discussed his infrastructure proposals during Amtrak's 50th anniversary.
- Biden’s infrastructure proposals include last week’s $1.8 trillion American Families Plan, composed mainly of social spending and tax hikes on wealthy individuals – and his $2.3 trillion American Jobs Plan unveiled in March. (Roundtable Weekly, April 30 and Wall Street Journal, April 29).
- Senate Minority Leader Mitch McConnell (R-KY) on Monday said Republicans are open to funding projects that fit into a much narrower definition of infrastructure, for a much smaller cost, and funded by unspecified fees rather than tax increases. (AP, May 3)
- “We’re open to doing a roughly $600 billion package, which deals with what all of us agree is infrastructure and to talk about how to pay for that in any way other than reopening the 2017 tax reform bill,” McConnell said.
- White House Press Secretary Jen Psaki on May 5 said Biden plans to meet with key policymakers on his proposals next week, including Sen. Shelley Moore Capito (R-WV), ranking member on the Environment and Public Works Committee. “The president believes Congress can and should move forward with multiple policies at the same time. And, certainly, that is what is happening on Capitol Hill.” Psaki said. (White House press briefing, May 5 and Transport Topics, May 6)
- CNBC reported on May 6 how residential and commercial real estate could be affected by Biden's tax proposals, which would raise capital gains taxes, tax unrealized gains at death with an exception for family-owned businesses, and restrict the use of Section 1031 like-kind exchanges.
- The Wall Street Journal on May 6 also reported how Biden’s proposal to restrict 1031 exchanges would add another burden on farmers, who have used the provision to relocate operations, diversify crops, and consolidate land holdings.
- This week, Congress considered legislation that would impact issues of interest to commercial real estate, including:
- The House Energy Committee addressed the CLEAN Future Act (H.R.1512) during a hearing focused on decarbonizing the transportation sector. H.R. 1512 is a sprawling bill aimed at achieving net-zero greenhouse gas emissions by 2050 that contains provisions affecting building construction, operations, and ESG reporting. (Politico, March 3 and CQ News, Reuters, March 2)
- A May 4 House Financial Services Subcommittee hearing addressed the National Flood Insurance Program (NFIP). A discussion draft released before the hearing would reauthorize the NFIP for five years, enact reforms to place the program on sound financial footing, institute a cap on premium increases of 9% per year, and forgive over $20 billion in NFIP debt. (Committee background memorandum)
- In the Senate, legislation is expected to be reintroduced in the next few weeks that would encourage the construction of more energy-efficient new homes and commercial buildings through voluntary “model” building codes. Sens. Jeanne Shaheen (D-NH) and Rob Portman (R-OH) issued a May 3 news release on their plans to reintroduce their energy efficiency legislation.
House Appropriations Chair Rosa DeLauro (D-CT) on May 6 said she plans to mark up fiscal 2022 spending bills in June, before expected floor votes in July. Lawmakers would have to finish their spending bills by Sept. 30, when the government’s fiscal year ends, or pass a stopgap measure to avert a shutdown of government agencies. (BGov, May 6)
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Federal Judge Overturns CDC’s National Eviction Moratorium; Justice Department Appeals
A federal judge on May 5 ruled that the U.S. Centers for Disease Control and Prevention (CDC) exceeded its authority by issuing its national eviction moratorium, which is scheduled to expire June 30. (New York Times, May 6)
- The federal eviction moratorium – originally enacted by Congress more than a year ago in the CARES Act – was extended by both the Trump and Biden Administrations by executive orders to prevent mass evictions in the face of a public health emergency. (BGov, May 5)
- The 20-page ruling by Judge Dabney Friedrich of the U.S. District Court for the District of Columbia vacates the moratorium on a nationwide basis, yet does not affect similar eviction moratoriums enacted at the state or local levels. (Wall Street Journal, May 5)
- The order states, “It is the role of the political branches, and not the courts, to assess the merits of policy measures designed to combat the spread of disease, even during a global pandemic. The question for the Court is a narrow one: Does the Public Health Service Act grant the CDC the legal authority to impose a nationwide eviction moratorium? It does not.” (Washington Post, May 5)
- The Georgia and Alabama state Realtor associations, along with two housing providers and their property management companies, filed the lawsuit against the U.S. Department of Health and Human Services. (Realtor Magazine, April 29)
Justice Department Appeal
- Brian M. Boynton, Acting Assistant Attorney General for the Justice Department's Civil Division, stated on May 5 that the department would file an appeal of the decision and an emergency stay of the order.
- Boynton stated, “The Department of Justice respectfully disagrees with today’s decision of the district court in Alabama Association of Realtors v. HHS concluding that the moratorium exceeds CDC’s statutory authority to protect public health. In the department’s view, that decision conflicts with the text of the statute, Congress’s ratification of the moratorium, and the rulings of other courts.”
- Judge Friedrich also issued an order late on May 5 that would temporarily allow the moratorium to continue while she considers the Biden administration’s emergency request. The temporary stay is in place “to give the court time to consider the merits” of arguments from both sides. (BGov, May 6)
Rental Assistance Distribution
- The National Multifamily Housing Council (NMHC) responded to the ruling: “What has become clear over the course of the pandemic and resulting financial distress is that the best way to keep people in their homes is to provide them the resources necessary to meet their housing obligations and other costs. To that end, lawmakers in Congress fulfilled their responsibilities and passed almost $50 billion in rental assistance, as well as other supports like stimulus checks and extended unemployment benefits.”
- Congress has enacted billions in aid to help renters, but state and local authorities are overwhelmed with how to allocate the influx of funds, leaving many tenants and housing providers waiting weeks or months for the assistance. (Washington Post, April 8 and Wall Street Journal, April 13)
- The Roundtable is part of a broad real estate coalition that recently urged state, county and municipal officials to distribute the allocated federal funds as soon as possible. (Coalition letter, April 15)
- The coalition letter emphasized the need “to quickly and fully allocate available American Rescue Plan federal funds to provide assistance to renters, consumer-facing small businesses, and impacted industries such as retail, tourism, travel, and hospitality that are having trouble paying rents, mortgages or remaining viable enterprises due to the COVID-19 pandemic.”
- The letter adds, “Such assistance would make a big difference in the lives of thousands upon thousands of COVID-19 affected renters and businesses in their cities, counties, and states – and would also provide stability to the buildings and communities in which they live.”
Additional guidance from the Treasury Department on disbursement of federal rental assistance funds is expected this month.
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Real Estate Coalition Weighs In About Proposed Beneficial Ownership Reporting Requirements
The Real Estate Roundtable and three other national real estate organizations on May 5 submitted detailed comments to the Treasury Department's Financial Crimes Enforcement Network (FinCEN) on the development of a new federal registry that will contain beneficial ownership information.
Corporate Transparency Act
- The Roundtable, the National MultiFamily Housing Council (NMHC), National Apartment Association (NAA) and National Association of Home Builders (NAHB) submitted the comments in response to FinCEN’s effort to gather public input on the reporting, maintenance and disclosure of beneficial ownership information.
- FinCEN solicited comments on a wide range of questions related to its implementation of the Corporate Transparency Act (CTA) – enacted on January 1, 2021 – that effectively bans the registration of anonymously owned shell companies in the United States. (JD Supra, April 26 and Lexology, April 28)
- The CTA amended the Bank Secrecy Act to require corporations, limited liability companies, and similar entities to report certain information about their beneficial owners (the individual natural persons who ultimately own or control the companies).
- FinCEN is required to develop a confidential, secure, and non-public database to maintain the reported beneficial ownership information. This new reporting requirement aims to enhance the national security of the United States by making it more difficult for malign actors to exploit opaque legal structures to launder money, finance terrorism, proliferate weapons of mass destruction, traffic humans and drugs, and commit serious tax fraud and other crimes that harm the American people.
Real Estate Industry Concerns
- The real estate coalition’s extensive comments emphasize, “The scope of the CTA is far reaching and will impact many commercial and residential real estate businesses who are frequent users of the LLC structure for conducting business. If not implemented with a clear set of rules and regulations, the CTA could result in an outcome of confusion, missteps, and ultimately fines on law-abiding businesses.”
- The coalition’s comments detail “concerns and recommendations for establishing regulations to implement reporting requirements – as well as provisions regarding FinCEN’s maintenance and disclosure of reported information effectively and fairly.”
- The coalition document addresses several specific implementation issues, including how small companies targeted by the CTA will face compliance burdens. The time-consuming and challenging process of gathering required information on all beneficial owners of a reporting company that may have been created years ago is also addressed.
- Reps. Patrick McHenry (R-NC), ranking member of the House Financial Services Committee, and Blaine Luetkemeyer (R-MO), ranking member of the Consumer Protection and Financial Institutions Subcommittee, sent a letter on April 7 7 to Treasury Secretary Janet Yellen on the development of the new beneficial ownership reporting regime.
- The McHenry-Luetkemeyer letter urged Secretary Yellen to adhere to the CTA’s congressional intent by ensuring “the new reporting paradigm is focused on fighting bad actors such as human traffickers, money launderers, and State actors such as China.” The letter also emphasized that FinCEN implement the statute as intended, with a particular focus on minimizing burdens on small businesses while retaining confidentiality, unless disclosure is authorized.
FinCEN is mandated to issue regulations on the new registry for beneficial ownership information by January 1, 2022 – and specify a subsequent effective date.
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