TRIA Reauthorization Legislation: Seven-Year Extension Introduced in Senate; Vote on Similar House Bill Scheduled Next Week
A bipartisan, seven-year TRIA reauthorization bill – the Terrorism Risk Insurance Program Reauthorization Act of 2019 (S. 2877) – was introduced in the Senate yesterday by Thom Tillis (R-NC) along with 15 original cosponsors – including Senate Banking Committee Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH).
- The Senate bill is similar to a House measure that would reauthorize the Terrorism Risk Insurance Program through December 31, 2027. (Roundtable Weekly, Nov. 1).
- Both bills preserve taxpayer reforms included in the Terrorism Risk Insurance Program Reauthorization Act of 2015 and would also :
* Align the timing of mandatory recoupment from private insurers by the federal government in the event of an act of terrorism covered by the Terrorism Risk Insurance Program with the seven-year extension of the Program;
* Direct the Treasury Department in its biennial report on the Terrorism Risk Insurance Program and its effectiveness to include an evaluation of the availability and affordability of terrorism risk insurance, including specifically for places of worship; and
* Direct the Government Accountability Office to analyze and address, and report on, the vulnerabilities and potential costs of cyber terrorism, adequacy of coverage under the Program, and to make recommendations for future legislative changes to address evolving cyber terrorism risks.
- Roundtable Chair Debra Cafaro (Chairman and Chief Executive Offer, Ventas Inc.) said, “The Roundtable is encouraged to see such positive momentum on TRIA legislation in both chambers of Congress. We will continue to work with policymakers on both sides of the aisle to communicate how this essential long-term reauthorization contributes to economic growth; avoids disruption to real estate capital flows; and ensures businesses of all types nationwide can obtain terrorism insurance well before the program’s scheduled expiration at the end of 2020.”
- The Senate Banking Committee will markup the bill on Wednesday, Nov. 20. While amendments are expected to be offered, the committee is expected to approve the bill on a bi-partisan basis.
- In the House, Majority Leader Steny Hoyer today addressed legislation that will be considered next week in a leadership colloquy on the House floor. “Madam Speaker, we will consider several bills on suspension of the rules including H.R. 4634 – the Terrorism Risk Insurance Program Reauthorization Act – a very significant and very bipartisan bill,” Hoyer said.
- Bills considered under suspension of rules are subject a 40-minute limit on debate; a prohibition against floor amendments; and a two-thirds vote of those present and voting for passage.
The House Financial Services Committee on October 31 passed (57-0) the Terrorism Risk Insurance Program Reauthorization Act of 2019 (H.R. 4634). In addition to extending TRIA for seven years, H.R. 4634 would also require a study on the cyber terrorism market and expand an ongoing study to also determine the availability and affordability of TRIA coverage for places of worship. (Roundtable Weekly, Nov. 1).
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Industry and Business Coalitions Raise Concerns About Unintended Negative Consequences of Beneficial Ownership Legislation
As Congress strives to address the challenges of controlling the use of shell companies engaged in money laundering, tax evasion and terrorism financing, a number of legislative proposals are being considered that could impair capital formation and threaten important privacy protections for real estate. In two recent comment letters (Nov. 6 industry coalition letter and a Nov. 13 broad business coalition letter), The Roundtable and other organizations detail their concerns about the measures.
- As stated in the Nov. 6 industry letter to the Senate Banking Committee, “While well-intentioned, we believe the proposals currently under consideration that are designed to increase the transparency of the ownership structure of limited liability companies (LLCs) and real estate transactions would have negative, unintended consequences on the broader real estate market. Several of these bills would place a significant compliance burden on owners of small businesses classified as corporations and LLCs, subject these businesses to potentially harmful privacy breaches and expose them to excessive and punitive damages.”
- The letter also states, “While we support efforts to eliminate terrorism financing and money laundering, we remain concerned about the cost of imposing additional beneficial ownership reporting requirements on real estate partnerships and the extent to which these provisions could impair capital formation, threaten important privacy protections and increase compliance burden.”
- The four specific legislative measures under consideration in the House and Senate are:
* On Oct. 22, the House passed the Corporate Transparency Act of 2019 (H.R. 2513) – introduced by Reps. Carolyn Maloney (D-NY) and Peter King (R-NY) – that would shift FinCEN reporting requirements from banks to the business community, requiring every business with fewer than 20 employees to register their beneficial owners.
* Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings, Illicit Cash Act (S. 2563)
* True Incorporation Transparence for Law Enforcement, TITLE Act, (S. 1889)
* Corporate Transparency Act (S. 1978)
- The Financial Crimes Enforcement Network’s (FinCEN) Customer Due Diligence (CDD) rule became applicable on May 11, 2018. The CDD rule requires financial institutions to collect the beneficial ownership information of business customers when they open accounts. The congressional proposals would attempt to shift the reporting requirements from large banks – those best equipped to handle reporting requirements – to millions of small businesses – those least equipped to handle reporting requirements.
- A coalition, including The Roundtable, sent a letter June 10 to the committee's leadership opposing the Maloney-King bill. "This legislation would impose burdensome, duplicative reporting burdens on approximately 4.9 million small businesses in the United States and threatens the privacy of law abiding, legitimate small business owners," the letter states.
- In the Nov. 6 letter from six real estate organizations, concerns about several of the four bills address:
* Unreasonable Lookback Reporting
* Duplicative Reporting
* Unclear Guidance
* Access and Disclosure Raises Privacy Concern
* Notification and Process for Compliance Untested
* Severe and Punitive Penalties
- In the Nov. 13 letter, the broader business coalition expresses strong opposition to Title IV of S. 2563 – the Senate’s Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act – introduced in June by Sens. Mark Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL) and Mike Rounds (R-SD). (Homeland Preparedness News, June 12).
- The Nov. 13 letter states, “Under this legislation, millions of small businesses would be required to register personally identifiable information with FinCEN, file updated reports within 90 days of any ownership changes, and file additional updated reports within a year of any ownership information changes, such as an expiration of a passport number or a change in address. Failure to comply with these reporting requirements could result in civil penalties of $500 per day up to $10,000, criminal penalties of up to 4 years in prison, or both.”
The Roundtable is working with policymakers to stake out a balanced position on the beneficial ownership issue that would inhibit illicit money laundering activity, yet not place unnecessary costs and legal burdens on the real estate industry.# # #
Brand USA Reauthorization Bill Advanced by House Subcommittee
Legislation to reauthorize Brand USA – the organization that promotes the U.S. globally as a travel destination – easily cleared a markup by the House Energy and Commerce Subcommittee on Consumer Protection and Commerce on Nov. 14.
- Brand USA is a public-private partnership that attracts international travelers to the U.S. to encourage tourism spending at America's hospitality, retail, attraction and other properties. The marketing organization operates at no expense to taxpayers – private sector contributions fund the program, matched by U.S. government fees collected from foreign visitors who enjoy visa-free entry to the U.S. The federal portion of Brand USA funding is scheduled to expire in September 2020.
- Subcommittee Chairman Frank Pallone (D-NJ) during the House markup of The Travel Promotion, Enhancement, and Modernization Act (H.R. 3851) stated, “Tourism is critical to our economy and every one our communities. Overseas travelers spend more than their domestic counterparts—an average of $4,200 per trip. It is critical that we renew Brand USA as soon as possible.” (Rep. Pallone remarks, Nov.14)
- In the Senate, the Committee on Commerce, Science and Transportation passed the “Brand USA Extension Act” on July 24. S. 2203 would extend the federal cost-share until 2027, and increase the foreign traveler fees that pay for the federal portion. (Roundtable Weekly, August 9)
- The Real Estate Roundtable is part of the Visit U.S. Coalition which advocates for Brand USA reauthorization. The coalition, led by the U.S. Travel Association (USTA) and the American Hotel and Lodging Association, also includes the American Resort Development Association and the U.S. Chamber of Commerce.
- U.S. Travel Association Executive Vice President of Public Affairs and Policy Tori Barnes noted, “International visitation to the U.S. is flat at a time when global travel is booming, which means that we are leaving a huge opportunity for economic growth on the table. The situation would be far worse without Brand USA’s demonstrated effectiveness at bringing lucrative international visitor dollars to our shores, and House and committee leaders are to be commended for recognizing the urgency to renew Brand USA this year.” (USTA press release, Nov. 14)
- The importance of international travel to the domestic economy, job growth, and CRE was the focus of a panel discussion during The Roundtable's 2018 Annual Meeting. (Roundtable Weekly, June 15, 2018).
The Visit U.S. Coalition is urging inclusion of a bipartisan Brand USA reauthorization bill in must-pass legislation before the end of the year.
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