Washington Prepares for Partial Federal Government Shutdown
The federal government will partially shutdown unless Washington policymakers can pass a year-end funding bill by midnight tonight. Negotiations over a spending measure have deadlocked over President Trump's request of at least $5 billion for construction of a wall on the Mexican border. (The Hill, Dec. 21)
Negotiations over a spending measure have deadlocked over President Trump's request of at least $5 billion for construction of a wall on the Mexican border. (The Hill, Dec. 21)
- The Senate passed a seven-week stopgap bill on Wednesday, which President Trump said he would not sign, due to the fact there was no funding for a wall on the southern border. On Thursday, the Republican controlled House passed its own version of a stopgap measure, which would add $5.7 billion for border security and $7.8 billion for disaster relief. (The Hill, Dec. 21) The Senate is expected to reject the House-passed measure in votes today – leaving the federal government on the precipice of its third shutdown in two years.
- A December 10 meeting between President Trump and Democratic leaders resulted in sharp disagreements over the wall that played out before the media. "I am proud to shut down the government for border security," Mr. Trump told Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Nancy Pelosi (D-CA) in the Oval Office. "I will take the mantle. I will be the one to shut it down," Trump said. (Wall Street Journal, Dec. 11)
- A possible partial government shutdown of seven agencies, including the Department of Homeland Security (DHS), would furlough hundreds of thousands of workers and cost taxpayers millions.
- A shutdown would temporarily halt DHS operations of the National Flood Insurance and EB-5 investment programs.
The federal government will partially shutdown unless Washington policymakers can pass a year-end funding bill by midnight tonight. (The Hill , Dec. 21)
- If approximately 25% of the government shuts down tonight at midnight, a decision on funding could be pushed until the new Congress is sworn in on January 3 and Democrats assume the majority in the House. Minority Leader Nancy Pelosi (D-CA) is likely to be elected House Speaker, push for a stopgap Continuing Resolution, and seek to re-open the government at that time if it remains closed over the holidays.
- In other policy news, the House voted 220-183 to advance legislation that would extend tax breaks for biodiesel and correct errors in the TCJA of 2017, including a provision that unintentionally lengthened the cost recovery period for improvements to the interior of nonresidential real estate. Both the House and Senate could take-up the legislation again after the new Congress convenes in January. (Bloomberg, Dec. 20)
In addition, after passing the House and Senate with rare bipartisan support earlier in the week, President Trump signed the First Step Act into law this afternoon. The new criminal justice reform legislation gives judges more leeway at sentencing for federal crimes, increases vocational and rehabilitation opportunities for incarcerated individuals to re-enter society, and expands early release programs. (New York Times, Dec. 18.)
Roundtable Comment Letter Recommends Additional Guidance from Treasury and IRS to Accelerate Capital Investment in Opportunity Zones
This week the Real Estate Roundtable provided formal comments regarding opportunity zones to the Treasury Department and the IRS. The letter encourages Treasury to clarify a number of tax issues that would remove uncertainty for potential investors and opportunity fund managers. This is the second Roundtable comment letter on opportunity zones, following Treasury’s publication of proposed regulations in October. ( Roundtable Weekly, Oct. 19)
This week the Real Estate Roundtable provided formal comments regarding opportunity zones to the Treasury Department and the IRS.
- The October proposed rules provided a strong foundation for opportunity fund formation and investment. Building on the rules, the Roundtable letter prioritizes five areas where additional guidance from Treasury would accelerate the pooling of capital and job creation in opportunity zones. The letter recommends that Treasury:
- Remove barriers to the formation of multi-asset opportunity funds through flexible exit rules;
- Clarify the circumstances in which land and previously vacant buildings constitute qualified opportunity zone business property;
- Allow appropriate refinancing of opportunity fund assets and avoid overly restrictive debt-distribution rules;
- Encourage continued investment in opportunity zones with flexible gain reinvestment, roll-over, and holding period rules at the investor, fund, and business level; and
- Provide additional protections in the working capital safe harbor and the substantial improvement rules for taxpayers making a good faith effort to comply with opportunity zone requirements.
- “Real estate development and redevelopment is a key component of any region’s economic strength and growth, wrote Roundtable President and CEO Jeffrey D. DeBoer. “The Roundtable foresees opportunity fund investors and fund managers actively partnering with local leaders and entrepreneurs on projects that both drive economic activity and respond to the needs of communities. Additional guidance along the lines described above will help ensure that the opportunity zone incentives fulfill their ambitious objectives.”
- The Treasury Department could issue a second set of proposed regulations on opportunity zones as soon as January, according to Treasury Assistant Secretary David Kautter (Roundtable Weekly, Dec. 14).
- The underlying legislation directs Treasury to report to Congress on opportunity zones’ effectiveness. The Roundtable letter encourages Treasury to consider, as part of its reporting, the aggregate impact of opportunity zone investments on the overall health and wellbeing of targeted communities, including the impact on the local tax base, surrounding infrastructure, and their ability to attract and retain employers.
The Roundtable comments are the product of an active Tax Policy Advisory Committee (TPAC) Opportunity Zone Working Group that includes leading real estate developers, owners, investors, lenders, industry organizations, and outside advisors. The TPAC working group will continue to work closely with government officials to help ensure the program fulfills its ambitious objective of stimulating economic development and job creation in low-income communities.