Congress Passes Omnibus $1.3 Trillion Spending Bill Funding Government Through September; Two-Week Congressional Recess Begins
In a week of intense budget negotiations, a $1.3 trillion dollar “omnibus” spending bill (H.R. 1625) to fund the government through September 30 was introduced Wednesday night to avoid a government shutdown today. The 2,232-page measure passed both the House and Senate by comfortable margins, and President Trump signed it this afternoon. (Wall Street Journal, March 23)
As Congress leaves for a two-week recess, the omnibus goes into effect with many non-spending policy provisions and others affecting revenue.
As Congress leaves for a two-week recess, the omnibus goes into effect with many non-spending policy provisions and others affecting revenue. Of interest to real estate:
Tax technical corrections positively affecting Foreign Investment in Real Property Tax Act (FIRPTA) provisions; partnership audit reform rules; and an expansion of the low-income housing tax credit. (Joint Committee on Taxation, Technical Explanation Summary.)
The National Flood Insurance Program is decoupled from the omnibus and reauthorized through the end of July – as an incentive for policymakers to pass a longer renewal before their August recess.
The EB-5 immigration investment program is extended for six months until Sept. 30 – the 13th extension since Sept. 2015.
The Environmental Protection Agency’s Brownfields program is reauthorized as part of the BUILD Act, which includes an expansion of brownfield eligibility to non-profits; makes brownfield sites acquired prior 2002 eligible; and increases funds for cleanup up to $500K (or $650,000 w/waiver).
Funding for Infrastructure – although specific funding for a “Gateway” railway project between New York and New Jersey is not included, the omnibus includes billions from a variety of sources that could be utilized for such a project. (CNN, March 22)
Prior to congressional passage of the bill, it was reported that measures addressing the internet sales tax and joint employer issues were under consideration for inclusion, yet both did not make it in the final legislative text.
The repercussions of the omnibus will be discussed during the April 25 Spring Roundtable Policy Meeting in Washington, DC.
House Considers Changes to Senate-Passed Dodd-Frank Reform Bill That Includes Roundtable-Backed HVCRE Provision
The House of Representatives is considering adding changes to bipartisan Dodd-Frank reform legislation (S. 2155) passed last week by the Senate that includes a Roundtable-supported measure to reform the Basel III High Volatility Commercial Real Estate (HVCRE) Rule. (Roundtable Weekly, March 16)
House Republicans and Financial Services Committee Chairman Jeb Hensarling (R-TX) are motivated to push for more changes to the Senate bill in an effort to rollback more financial industry rules in the Dodd-Frank Act.
House Republicans, led by Financial Services Committee Chairman Jeb Hensarling, (R-TX) are motivated to push for more changes to the Senate bill in an effort to rollback more financial industry rules in the Dodd-Frank Act.
Proposals approved by the committee on Wednesday include a change to the Volcker Rule that would put the Federal Reserve in charge of enforcing the Dodd-Frank Act ban on proprietary trading – instead of the five agencies now assigned to the task. (BNA, March 21)
Substantive changes to the “Volcker Rule” and other provisions by the House would likely send an amended bill back to the Senate, which could threaten support by Senate moderates and require a legislative conference between the two chambers. (NREI, March 21)
The HVCRE measure included in the Senate-passed Economic Growth, Regulatory Relief, and Consumer Protection Act originally was introduced in the House as the Clarifying Commercial Real Estate Loans bill (H.R. 2148). An identical HVCRE measure was then included in the Senate bill (S. 2405) that passed March 14.
The Roundtable-supported HVCRE text would modify the current, overly broad Rule by providing bank lenders with more specific requirements for acquisition, development, or construction (ADC) loans. These reforms to HVCRE loan definitions would provide greater assurances for performing loan portfolios with low risk, bolster credit capacity and preserve economically responsible commercial real estate lending. (Roundtable Weekly, Jan. 12).
HVCRE reform has been a top policy priority of The Real Estate Roundtable and its industry coalition partners, who have submitted numerous policy comment letters to policymakers since 2015. The Roundtable's HVCRE Working Group has also played a key role in advancing these specific reforms. (Roundtable letter, March 2)
Fed Raises Interest Rates, Signals More Hikes, Boosts Economic Forecasts
In the Federal Reserve's first major decision under new Chairman Jerome Powell, the central bank on Wednesday raised the federal funds rate 25 basis points (to a range of 1.5 percent to 1.75 percent) and boosted its U.S. economic growth forecast for 2018 and 2019. (Federal Reserve Statement and Projections, March 21).
Federal Reserve Chairman Jerome Powell held his first news conference since becoming Chairman, echoing the Federal Open Market Committee's views on a strengthened economic outlook in recent months.
During a week when the Trump Administration slapped $50 billion in trade tariffs on China, followed by a 724 point plunge in the Dow Jones Index, the Fed also voted unanimously to approve a 25-basis-point increase in the primary credit rate to 2.25 percent, affecting what commercial banks and other depository institutions pay on loans from regional Federal Reserve Banks.
The Fed is expected to lift the rate two or three more times this year, and three times next year, citing a strengthening labor market and moderately rising economic activity, partnered with a consistent low unemployment rate, as reasons for further hikes. (Reuters and Federal Reserve Statement, March 21).
Chairman Powell held his first news conference since becoming Fed Chairman, echoing the Federal Open Market Committee's views on a strengthened economic outlook in recent months, “Fiscal policy has become more simulative, ongoing job gains are boosting incomes and confidence, foreign growth is on a firm trajectory, and overall financial conditions remain accommodative.” (The Washington Post, March 21)
Fed officials significantly changed their economic forecast from their previous projection done before the Tax Cuts Jobs and Act passed in December, with GDP for 2018 originally at 2.5 percent increased to 2.7 percent, and increased the 2019 expectation from 2.1 percent to 2.4 percent. (The Washington Post, March 21).
“The job market remains strong, the economy continues to expand, and inflation appears to be moving toward the FOMC’s 2 percent longer running goal,” said Powell. (Bloomberg, March 21)
The Federal Reserve will hold their next meeting in early May.