Roundtable Weekly - June 28, 2019
President Trump Establishes Council on Regulatory Barriers to Affordable Housing
President Donald Trump signed an executive order Tuesday creating a White House Council on Eliminating Regulatory Barriers to Affordable Housing. ( White House Executive Order , June 25).
President Donald Trump signed an executive order Tuesday creating a White House Council on Eliminating Regulatory Barriers to Affordable Housing. ( White House video of the signing, June 25)
- Secretary of Housing and Urban Development (HUD) Ben Carson will chair the council, which will engage State, local, and tribal leaders to identify and remove obstacles that impede economic growth and the development of new affordable housing. ( White House video of the signing, June 25)
- Carson told The Wall Street Journal this week, "These are things that can be solved. A lot of [these rules] have been on the books for excessive amounts of time. They're not particularly relevant any more."
- The council will include members from across eight Federal agencies who will analyze how Federal, State, and local regulations impact the costs of developing affordable housing and the economy. It will also recommend ways to reduce regulatory burdens at all levels of government that hinder affordable housing development. (White House Fact Sheet, June 25)
According to the White House:
- Regulations are creating excessive costs that are holding back the development of needed affordable housing.
- Many of the markets with the most severe shortages in affordable housing have the most restrictive State and local regulatory barriers to development.
- More than 25% of the cost of a new home is the direct result of Federal, State, and local regulations, with the price tag even reaching up to 42% for some new multifamily construction.
- High housing prices are a primary determinant of homelessness, and research has directly linked more stringent housing market regulation to higher homelessness rates.
- State and local law barriers identified in Trump's Executive Order – that will be assessed by the Cabinet-level council – include overly restrictive zoning and environmental laws, rent regulations, excessive energy and water efficiency mandates, impediments to higher-density projects, time-consuming permit procedures, complex labor requirements, and inordinate development impact fees.
- "These regulatory barriers … are the leading factor in the growth of housing prices" and "drive down the supply of affordable housing" in markets across the United States, the Executive Order states.
The Real Estate Roundtable's policy agenda likewise encourages government programs designed to increase the nation's stock of affordable, low-income and market-rate housing, as opposed to rent control and other measures that constrict residential supplies. (Roundtable Weekly, June 21)
SCOTUS: Federal Courts Now Open to Property Takings Claims Against Local Governments
The Supreme Court of the United States (SCOTUS) issued a landmark property rights decision on June 21, ruling that the federal courts are open to decide landowners' claims for a Fifth Amendment "taking" of property by local regulatory agencies.
T he Supreme Court of the United States issued a landmark property rights decision on June 21, ruling that the federal courts are open to decide landowners' claims for a Fifth Amendment "taking" of property by local regulatory agencies.
- In Knick v. Township of Scott , the nation's highest court reversed a 1985 precedent that had forced property owners to first bring takings lawsuits in state courts, which acted as "gatekeepers" to block the claims from ultimately getting to federal court.
- The 5-4 ruling in Knick holds that suits arising under the Takings Clause can be brought as an initial matter in U.S. trial courts, and then appealed as of right in U.S. circuit courts – just like any other alleged grievance to vindicate protections in the Constitution's Bill of Rights. Such matters are no longer relegated to state judges for resolution. Federal courts are now proper venues to test the constitutionality of aggressive land-use decisions by local regulators, and can decide whether landowners are owed "just compensation" for a property taking. (SCOTUSblog Opinion Analysis, June 22.)
- Chief Justice Roberts's majority opinion corrected the litigation dilemma for property owners trapped between the state and federal judiciaries. "The takings plaintiff thus finds himself in a Catch-22: He cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court," Roberts wrote. "The federal claim dies aborning."
- Roberts added, "Takings claims against local governments should be handled the same as other claims under the Bill of Rights. We now conclude that the state litigation requirement imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of our takings jurisprudence, and must be overruled."
- In an amicus brief supporting the property owners, AARP advocated the "state court first" rule imposed "costly and needless litigation burdens" which "pose a threat to the economic security of older Americans of modest means especially, given their higher vulnerability to property tax foreclosure and lack of resources." (Forbes, June 22).
The attorney representing the property owners before SCOTUS remarked that Knick "reject[s] barriers that unfairly deny property owners their day in court [and] sends a message that property rights are just as sacred as all other rights." (Pacific Legal Foundation, June 21.)
Roundtable Cautions Policymakers on Potential Economic Harm of New Duties on Fabricated Structural Steel Imports
The Real Estate Roundtable this week urged Commerce Department Secretary Wilbur Ross to reject calls from domestic producers of fabricated structural steel (FSS) to change the rules governing how trade subsidies or dumping are calculated – and to consider how potential tariffs on FSS from Canada and Mexico could have a significant impact on jobs and growth in U.S. real estate. ( Roundtable comment letter , June 27)
Fabricated structural steel is a key material used in major real estate and infrastructure projects, including high-rise developments, bridges, and ports.
- The Commerce Department, in conjunction with the U.S. International Trade Commission (USITC), is conducting an antidumping and countervailing duty investigation into imported FSS from Canada, China and Mexico. (Commerce Department announcement, Feb. 26 and ITC initial report on FSS, March 2019)
- FSS is a key material used in major real estate and infrastructure projects, including high-rise developments, bridges, and ports. The Roundtable wrote to the USITC commissioners about the FSS issue in March, urging a cautious approach to the investigation and emphasizing the potential economic harm that new tariffs could cause. (Roundtable comment letter, March 1)
- In March, the USITC found that U.S. imports of fabricated structural steel from the three identified countries are causing injury to U.S. domestic producers. (Reuters, March 20, 2019) Commerce is now analyzing whether the imports are being dumped in the U.S. market at less than fair value and whether the foreign producers are receiving unfair government subsidies. If Commerce makes an affirmative finding in either of these investigations, it will impose duties on the imports to offset the amount of dumping or unfair subsidization that is found to exist.
- In the June 27 letter, Roundtable President Jeffrey DeBoer states, "As these investigations proceed, it is critical that they are conducted in a fair and balanced manner with due allowance for the complexities of FSS markets." The letter requests that Commerce "reject calls from certain parties to change the rules for calculating subsidies or dumping, such as revising sales values for completed, erected projects." It also explains how a decision that leads to higher construction costs will have a negative effect on new development and construction activity in the United States.
- The letter reiterates The Roundtable's view that if the USITC investigation proves unlawful or inappropriate dumping or subsidies of FSS are causing injury to U.S. businesses, then action to counter those unfair trade measures is warranted.
- In 2017, imports of fabricated structural steel from Canada, China, and Mexico were valued, in the aggregate, at more than $1.9 billion. (Commerce Department Fact Sheet)
The preliminary ruling in the subsidies / countervailing duty case is due to be announced July 8 and the initial ruling in the dumping investigation is expected in September.
Roundtable Re-Elects Ventas’ Debra Cafaro as Chair; Installs Three New Members to Board
As The Real Estate Roundtable marks its 20th anniversary, its members have re-elected Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc.) as Chair, while approving its Board of Directors for the 2020 fiscal year (July 1, 2019 - June 30, 2020).
Roundtable President and CEO Jeffrey DeBoer and Roundtable Chair Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc .) during The Roundtable's June 2019 Annual Meeting.
- The election results were announced by Roundtable President and CEO Jeffrey DeBoer during the organization's Annual Meeting earlier this month in Washington.
- The 23-member FY2020 Board is elected from the membership and includes four elected leaders of national real estate trade organizations from The Roundtable's 17 partner associations. Three new Roundtable members join the FY2020 Board.
- Cafaro, whose three-year term as chair began July 1, 2018, said, "We welcome our three new industry leaders to the Board and express gratitude for the service of our three outgoing members, who contributed greatly to The Roundtable's success in the past year. With such deep expertise among our membership, we will develop practical solutions to the pressing policy challenges ahead that not only affect our industry, but provide a positive impact to communities throughout the nation."
- DeBoer stated, "As we move beyond our first two decades of advocacy work in Washington, The Real Estate Roundtable will continue to bring together the top leaders in commercial real estate with our partner real estate organizations. Our mutual goal remains consistent – provide policymakers with fact-based analysis that supports responsible economic growth policies, creates sustainable jobs and increases the quality of life for working Americans."
Joining The Roundtable's Board of Directors as of July 1 are:
- Scott O. Jones, Principal, Jacobs Inc. and Chair and Chief Elected Officer, 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)
Stepping down from The Roundtable Board as of July 1 are:
- Tom Baltimore, Jr., Chairman, President & CEO of Park Hotels & Resorts, and Immediate Past Chair of Nareit
- Steve Hason, Managing Director and Head of Americas Real Estate & Infrastructure with APG Asset Management US and Immediate Past Chair of PREA
- David Neithercut, former President & CEO of Equity Residential
The Roundtable's FY2019 Annual Report – Building Strong Public Policy: Now and For the Future – was also released during the June meeting.