House Democrats Stall Efforts to Pass “Physical” and “Human” Infrastructure Bills
An intense push by Democratic leaders this week to approve a $1 trillion “physical” infrastructure bill and a $1.85 trillion “human” infrastructure plan (H.R. 5376) met resistance today from House progressives and moderates, who rejected ongoing efforts to vote on the bills until their concerns are addressed.
- The bipartisan physical infrastructure bill passed the Senate in August. House progressives have tied consideration of that bill to a separate social infrastructure package – which has been mired in weeks of ongoing negotiations and revisions over its scope and cost. Additionally, House moderates insist on a full cost estimate from the Congressional Budget Office before a final vote on the larger package. (BGov and CQ, Nov. 5)
- President Biden announced a scaled-down version for the larger bill on Oct. 28, reducing its total outlay to $1.85 trillion versus the earlier estimated cost of $3.5 trillion. (Roundtable Weekly, Aug. 13 and Oct. 29)
- The new Build Back Better plan framework includes $1.75 trillion of social and climate provisions, along with $100 billion targeting immigration needs contingent on approval by the Senate parliamentarian. (Investopedia, Nov. 5)
- President Biden today said, “I’m asking every House member … to vote ‘yes’ on both these bills right now. Send the [physical] infrastructure bill to my desk, send the Build Back Better bill to the Senate.” (Bloomberg, Nov. 5)
- House Speaker Nancy Pelosi worked to bridge the divides in her caucus, considering a possible vote on the physical infrastructure bill alone, while postponing a vote on the social spending package. (The Hill, Nov. 5)
- Rep. Pramila Jayapal (D-WA), leader of the Congressional Progressive Caucus, responded, “As we’ve consistently said, there are dozens of our members who want to vote both bills — the Build Back Better Act and the Infrastructure Investment and Jobs Act — out of the House together." (The Hill, Nov. 5)
SALT and LIHTC
- Changes were made this week to the sweeping tax and spending measure, including a new provision affecting the deductibility of state and local taxes (SALT) and an expansion of the low income housing tax credit (LIHTC).
- The new SALT provision would raise the deduction cap from $10,000 to $80,000 through 2030, then return to the $10,000 cap in 2031. A previous version of the bill would have set the cap at $72,500 through 2031.
- The revised LIHTC measure would increase state allocations, temporarily allowing the credit to cover a project without affecting state caps if at least 25% of the building and land are financed by tax-exempt bonds – instead of 50%. Additionally, projects intended to serve extremely low-income communities could receive a 50% increase in the applicable credit amount. (BGov, Nov. 5)
- The new reconciliation bill reflects continued progress on a number of tax and climate issues of importance to real estate and prioritized by The Real Estate Roundtable. Summaries of the revised bill are in the Oct. 29 edition of Roundtable Weekly.
Congress faces a crucial agenda and a tight timeframe. Policymakers return from recess Nov. 15 for one week before the Thanksgiving break. On Dec. 3, funding for the government will expire – within the same time frame when the current debt ceiling must also be addressed. Lawmakers may pass either an appropriations bill covering FY23, or opt for another "continuing resolution" to fund the government at existing levels for a specified period of time.
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Roundtable and Business Coalition Strongly Support House Reintroduction of Pandemic Risk Insurance Act
Legislation introduced this week in the House by Rep. Carolyn Maloney (D-NY), above, would create a federal backstop to ensure coverage in all critical commercial lines of insurance for business interruption losses, whether from future pandemics or other public health emergencies. The Real Estate Roundtable and the Business Continuity Coalition strongly support the bill. (ConnectCRE, Nov. 2)
PRIA & Risk Exposure
- The Pandemic Risk Insurance Act (PRIA) of 2021 (H.R. 5823) is modeled after the Terrorism Risk Insurance Act (TRIA) – the enduring, successful public-private backstop adopted following the 9/11 terrorist attacks. (Maloney | Roundtable | Coalition news releases, Nov. 2)
- Real Estate Roundtable President and CEO Jeffrey D. DeBoer, above, said, “PRIA is an important step forward that helps to address possibly the largest unhedged risk exposure in the U.S. economy today. It is important for business policyholders to be able to secure the pandemic risk coverage necessary to maintain jobs and grow the economy. The Real Estate Roundtable and its 19 national real estate trade association partners have seen firsthand how a broad range of economic risks, including terrorism (TRIA) and floods (NFIP), underscore the need for public support when private markets fail. In those circumstances, a public-private partnership is essential to support the economy. PRIA is positive, forward-thinking legislation that Congress needs to pass.”
- A RIMS survey recently found that pandemic risk is excluded or restricted on most lines of commercial property-casualty insurance, and where coverage is available, it is often cost-prohibitive without government support.
- PRIA would require insurers to offer coverage in return for a government indemnification of 95% of insured losses arising from any future pandemic that results in a public health emergency. Unlike TRIA, there is no “insurer deductible” nor would there be any post-event recoupment, although the program would begin to pay for itself after an initial “economic recovery period.”
- The bill would ensure availability of pandemic coverage while fostering the development of private reinsurance and capital market alternatives to reduce taxpayer exposure going forward.
- The Maloney bill also addresses the unavailability of coverage in other crucial lines of insurance such as event cancellation, TV and film production insurance and liability coverage for essential services.
- The bill is similar to current proposals advanced by the insurance industry that would establish a parametric program for non-damage business interruption (NDBI) losses, which recognize rapid claims payment and minimal transaction costs are critical when the aggregation of losses are so high as in a pandemic. The bill also would provide a pooling alternative for insurers that do not wish to underwrite primary NDBI coverage.
- The Roundtable’s DeBoer noted, “When private insurance markets cannot provide the coverage needed to protect jobs and help businesses meet their obligations in the event of a government mandated shutdown, those exposed gaps in business continuity insurance coverage can only be filled by a federally-backstopped mechanism. A TRIA-style program for pandemic risk can protect the American economy with the coverage it needs to minimize the economic impact of pandemic-related shutdowns and aid economic recovery.”
- The Real Estate Roundtable is a member of the broad-based Business Continuity Coalition (BCC), which testified about the importance of establishing a federal pandemic risk / business continuity insurance program in July before the Senate Banking Subcommittee on Securities, Insurance, and Investment.
- Closures and shutdowns caused by COVID-19 have significantly impacted the employees and operations of businesses across the country. The Business Continuity Coalition – representing the restaurant, entertainment, professional sports, hospitality, gaming, retail, communications, broadcasting and real estate industries, employing millions of people – encourages policymakers to develop a public-private partnership that will protect American jobs and limit future economic damage from pandemics and other national emergencies that cause business interruptions.
- The Business Continuity Coalition has also posted a collection of statements of support for the PRIA legislation.
- “The Roundtable stands with its partners in the BCC in support of PRIA’s eventual enactment. We commend the efforts of Rep. Maloney and look forward to working with policymakers as the legislation moves forward,” DeBoer added.
The legislative outlook for PRIA will be among the many issues discussed at the next meeting of The Roundtable's Real Estate Capital Policy Advisory Committee (RECPAC) on Nov. 9 in New York City.
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CRE Industry Encouraged to Participate in Energy Department’s “Better Climate Challenge” to Reduce GHG Emissions
U.S. Energy Secretary Jennifer Granholm, above, announced on Nov. 3 a “soft launch” of the multi-sector Better Climate Challenge at the COP26 international conference in Glasgow. This new Department of Energy (DOE) effort aims to recognize U.S. real estate, industrial, and other companies that voluntarily agree to slash their GHG emissions – and share their “best practices” toward achieving emissions reduction goals. (Climate Challenge Factsheet | FAQs | Informational webinar)
- The key element of DOE’s voluntary challenge is for companies to commit to reduce direct emissions (“scope 1”), and emissions from electricity purchases (“scope 2”), by 50% over 10 years. There is no requirement to quantify or reduce indirect “scope 3” emissions.
- The 10-year window is measured from a baseline of up to five years before a company joins the program.
- Commitments to reduce emissions must be across a building portfolio.
- Participating companies must also pursue an efficiency target, to prioritize energy savings that will contribute toward the 50% reduction in portfolio-wide emissions over a decade.
- Companies joining the program must pledge to share energy and emissions data for 10 years through EPA’s Portfolio Manager, publicly report on progress, participate in peer-to-peer exchanges, and help develop industry best practices.
Corporate Purchases of Clean Power
- DOE staff discussed the new program yesterday with The Roundtable’s Sustainability Policy Advisory Committee (SPAC).
- DOE explained that to reach the 50% emissions reduction target, companies can tally their long-term clean power purchase agreements (PPA) and associated renewable energy certificates (RECs). PPAs and RECs are increasingly common strategies used by CRE and other sectors to help deliver more renewable energy to the electricity grid.
- Staff further explained that it does not intend for certain carbon “offsets” (such as planting trees offsite) to count towards meeting the 50% emissions reduction target.
Partnership Agreements and Public Recognition
- Companies that pledge to participate in the Better Climate Challenge must sign a partnership agreement with DOE.
- DOE will work with organizations as they develop organization-wide GHG emissions reduction plans and provide technical assistance with meeting corporate goals.
- DOE aims for the Challenge to develop and provide “alternative pathways” that present options for companies to set and achieve climate targets.
- Organizations that have already made similar commitments are encouraged to reach out to DOE to discuss how they can participate. For example, DOE will accept pre-established corporate goals with an approved 1.5° Celsius aligned science-based target, on a case-by-case basis.
- Aside from Wednesday’s “soft launch,” DOE plans further public recognition for participating companies during a formal launch slated for early 2022. DOE also intends to feature companies that participate in the Challenge at its next annual Better Buildings Summit in Washington, D.C. on May 17-19, 2022.
- So far, 32 organizations have publicly pledged their commitment to the Better Climate Challenge as DOE elevates outreach out to private sector companies, states, municipalities and other organizations.
Contact the Department of Energy to Participate
- Those interested in participating and considering a “partnership agreement” should contact DOE:
- Climate Challenge Factsheet | FAQs | Informational webinarBetter Climate Challenge Partnership Agreement
- Better Climate Challenge Partnership Agreement for Energy Intensive Industries
- Better Climate Challenge Partnership Agreement for Multifamily (coming soon)
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