Roundtable Weekly - June 14, 2019
Lawmakers and Industry Leaders Discuss National Policy Challenges; Roundtable Releases Annual Report
House Ways and Means Committee Chairman Richard Neal (D-MA), Senate Banking Committee Member Sherrod Brown (D-OH) and other prominent lawmakers this week engaged Roundtable members on policies affecting the industry – including infrastructure, tax reform, the financial regulatory environment, and extending the Terrorism Risk Insurance Act – during The Real Estate Roundtable's 2019 Annual Meeting in Washington, DC.
Four Roundtable Chairs in attendance at the 2019 Annual Meeting to recognize the organization's 20th anniversary – left to right, Randall K. Rowe (1998-2000); Robert S. Taubman (2012-2015); Debra A Cafaro (current);
and Nelson C. Rising (2000-2003).
- Roundtable Chair Debra A. Cafaro (Chairman & CEO, Ventas, Inc.) launched the business meeting by recognizing the organization's 20 th anniversary of effective industry advocacy efforts; its recent success in attracting greater diversity to its membership; and its newly-released FY2019 Annual Report, " Building Strong Public Policy, Now and for the Future. "
- Cafaro noted, "During these past 20 years, our mission has been to bring the top leaders in the real estate industry together with the industry's 17 leading trade associations to identify significant policy issues affecting our industry, job creation and the overall economy. We will continue to analyze the issues for their real world impact based on solid research and facts, then advocate a nonpartisan, unified position to national policymakers."
Featured guests during the June 11-12 business and policy advisory committee meetings included:
- Ways and Means Chairman Richard Neal discussed his committee agenda for the year, including his efforts with the White House to develop a comprehensive infrastructure improvement program. He also noted the need to reform or repeal the Foreign
Investment Real Property Act (FIRPTA) of 1980. Chairman Neal added that Ways and Means next week may address the extension of numerous expired or expiring tax provisions. He also mentioned the committee's agenda may include a tax overhaul
technical corrections bill, which could include a correction to address a drafting error affecting qualified improvement property. (Roundtable Weekly, June
Roundtable President and CEO Jeffrey DeBoer introduces House Ways and Means Committee Chairman Richard Neal (D-MA)
- Senate Banking Ranking Member Sherrod Brown acknowledged the urgency to address the reauthorization and extension of the Terrorism Risk Insurance Act (TRIA) before it expires at the end of 2020. (The Senate Banking Committee will hold a June 18 hearing on TRIA.) He also said that housing finance reform, including reform of the Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac, also must address the urgent need for more affordable and workforce housing throughout the nation.
- Richard W. Fisher, former President & CEO of the Federal Reserve Bank of Dallas, discussed global and national monetary policy issues with former Roundtable Chair Robert Taubman (Chairman, President and Chief Executive Officer of Taubman Centers Inc.).
• Jeff T. Blau, CEO, Related Companies• A dam Gallistel, Managing Director, GIC Real Estate• Timothy J. Naughton, Chairman, Chief Executive Officer and President, AvalonBay Communities, Inc.• Barry Sholem, Partner, MSD Partners, L.P.
The Roundtable's newly-released FY2019 Annual Report, " Building Strong Public Policy, Now and for the Future "
- During a joint meeting of the Real Estate Capital Policy Advisory Committee (RECPAC) and Research Committee, Rep. French Hill (R-AR) provided insights on housing finance reform efforts as a member of the House Financial Services Committee.
Federal Housing Finance Agency Director Mark Calabria also shared his views on reform efforts from a regulatory perspective. ( Politico , June 12, " Housing regulator seeks power from Congress to overhaul mortgage finance ")
- An evening dialogue with former White House Chiefs of Staff Denis McDonough (2013-2017, President Barack Obama) and Reince Priebus (January 2017-July 2017, President Donald Trump) included their perspectives on current and future policymaking
- During the meeting, The Roundtable membership also approved three proposed FY2020 Roundtable Board members , effective July 1:
• Scott Jones , Vice President of Jacobs Engineering and Chair-Elect of Building Owners and Managers Association (BOMA), International• Amy Rose , President & CEO, Rose Associates• Robert Spottswood , President of Spottswood Companies and Chair of the American Resort Development Association (ARDA)
House Committee Passes Beneficial Ownership Bill; Senate Hearing on June 20
The House Financial Services Committee this week passed the Corporate Transparency Act of 2019 ( H.R. 2513), which would require corporations and limited liability companies (LLCs) to report their beneficial owners to the Treasury Department's Financial Crimes Enforcement Network (FinCEN). The bill – introduced by Reps. Carolyn Maloney (D-NY) and Peter King (R-NY) – would shift the FinCEN reporting requirements from banks to the business community, requiring every business with fewer than 20 employees to register their beneficial owners with FinCEN . ( Roundtable Weekly , May 24)
The House Financial Services Committee this week passed the Corporate Transparency Act of 2019 ( H.R. 2513 ), which would require corporations and limited liability companies (LLCs) to report their beneficial owners to the Treasury Department's Financial Crimes Enforcement Network (FinCEN).
- H.R. 2513 would also mandate that businesses update beneficial ownership information with any changes (home or business address, driver's license change, change in ownership) within 60 days, and annually for the life of the business. Failure to comply with these reporting requirements would be a federal crime with civil penalties of up to $10,000 and criminal penalties of up to three years in prison.
- The legislation, which passed the committee by a vote of 43-16, would exempt public companies, tax-exempt non-profits, and firms in highly regulated industries like banking from the reporting requirements. (CQ, June 13 and Roll Call, "House panel advances anti-money laundering bill with only some GOP support")
- A coalition that includes The Real Estate 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.
- The coalition emphasizes that it supports the overall goal of preventing wrongdoers from exploiting United States corporations and LLCs for criminal gain. Yet the coalition letter details significant problems with H.R. 2513.
- One major challenge is that the legislation would shift reporting requirements from large banks-those best equipped to handle the reporting requirements-to millions of small businesses-those least equipped to handle the reporting requirements.
- The coalition also notes the bill presents privacy, data breach and cybersecurity risks for millions of small businesses in the United States.
- On May 9, the House Financial Services Committee unanimously approved legislation entitled the "Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act" or the "COUNTER Act." The bill (H.R. 2514) would require financial institutions to determine the beneficial owners involved in certain commercial real estate transactions – similar to a FinCEN Geographic Targeting Order requirement affecting residential purchases. (CQ, May 9 and (Roundtable Weekly, May 24)
- The Roundtable also raised concerns in February about beneficial ownership reporting requirements and the potential burdens they place on the real estate industry. (Coalition letter - Feb. 6, 2018).
- In the Senate, the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act was introduced this week 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 Senate Banking Committee will hold a June 20 hearing on "Outside Perspectives on the Collection of Beneficial Ownership Information."
The Roundtable will continue to work with policymakers to stake out a balanced position on the issue that would inhibit illicit money laundering activity but does not place unnecessary costs and legal burdens on the real estate industry.
House Committee Passes Bill Extending National Flood Insurance Program for Five Years
The House Financial Services Committee on June 12 unanimously approved legislation that would reauthorize the National Flood Insurance Program (NFIP) for five years; spur the availability of private flood insurance; reduce costs for lower-income policyholders; and require updated flood zone maps for coverage. (Wall Street Journal, June 12). Next, the House of Representatives will consider the measure although the timing of a possible vote is not clear. ( Section-by-Section Committee Bill Summary )
The NFIP would be reformed and reauthorized for five years under H.R. 3167.
- The NFIP has operated under a series of temporary extensions since 2017. On June 6, President Trump signed a disaster relief bill that extended the program until Sept. 30, the end of the fiscal year.
- Following negotiations between Committee Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC), the House panel approved the flood insurance reauthorization bill ( H.R. 3167 ). (House Financial Services Committee News Releases, June 5 and June 10 )
- “The ranking member and I are convinced we can do a lot better than short-term extensions,” Waters said. “So, we are very pleased we put forth a bill today that is supported by both sides.” (CQ, June 12)
- The Real Estate Roundtable and 14 other industry groups urged Congress in a June 12, 2017 comment letter to reauthorize and reform the NFIP to help protect the nation’s commercial and multifamily business-owners, their properties, residents and the jobs they create from the financial perils of flooding.
- Under the current NFIP, commercial property flood insurance limits are very low – $500,000 per building and $500,000 for its contents. Lenders typically require this base NFIP coverage, and commercial owners must purchase Supplemental Excess Flood Insurance for coverage above the NFIP limits. A niche market of carriers typically provides this type of excess coverage. The Roundtable and its coalition partners support NFIP reauthorization with the inclusion of provisions that permit the "commercial exemption."
- The Roundtable has long advocated for a voluntary exemption for mandatory NFIP coverage if commercial property owners have adequate flood coverage.
- Sec. 402 of H.R. 3167 – Optional Coverage for Umbrella Policies – addresses commercial properties.
- John Smaby, President of the National Association of Realtors, commented on the importance of the legislation: “… including policies that address mapping, mitigation and private flood insurance, and we look forward to move responsible NFIP reforms through the House and Senate in the coming weeks” (NAR, June 13)
The Roundtable will continue to work with lawmakers and our coalition partners to assist with NFIP reforms and a long-term reauthorization that help protect the nation's commercial and multifamily business-owners, their properties and residents.