Roundtable Weekly - May 3, 2019

FIRPTA - Infrastructure

President Trump and Democratic Leaders Aim for $2 Trillion Infrastructure Package; Roundtable Recommends Policies to House Transportation Committee

President Donald Trump and Democratic congressional leaders on Tuesday agreed to pursue a $2 trillion infrastructure package and meet again in three weeks to discuss possible revenue sources.

The Roundtable on April 29 submitted  infrastructure policy recommendations to House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) and Ranking Member Sam Graves (R-MO).  

  • House Speaker Nancy Pelosi (D-CA) said after the White House meeting, "We did come to one agreement: that the agreement would be big and bold."   Senate Minority Leader Chuck Schumer (D-NY) added,  "… now it's up to the president and the White House to tell us how they pay for it." (Associated Press, April 30)
  • Schumer stated in his Dec. 6, 2018 letter to the president there would be no deal on infrastructure without addressing climate change.  Schumer wrote that one of the policies that should be included in any infrastructure package should, "Provide permanent tax incentives for domestic production of clean electricity and storage, energy efficient homes and commercial buildings …" (Schumer's letter to President Trump and  Washington Post op-ed).
  • House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) also attended the April 30 White House meeting.  DeFazio's committee held a Member's Day hearing on the next day to share their infrastructure priorities. "While I continue to press my colleagues on the Committee on Ways & Means, House Leadership, the Senate, and the White House on a path forward on funding, this Committee must do its legislative work," DeFazio stated in his opening remarks.
  • The Roundtable on April 29 submitted infrastructure policy recommendations to DeFazio and Ranking Member Sam Graves (R-MO).  Roundtable President and CEO Jeffrey DeBoer states in the letter, "We offer policy suggestions within your Committee's jurisdiction to improve programs to repair and modernize the transportation and other systems upon which the U.S. economy depends.  We also suggest targeted changes to the federal tax code, requiring coordination with the Ways and Means Committee, to help pay for our nation's infrastructure deficit."  (Roundtable Infrastructure Policies letter, April 29)
  • DeBoer emphasized the goal of the policies is to offer "a holistic approach to modernize our aging infrastructure [that] will create American jobs, boost economic growth, address climate threats, and improve the quality of life in all regions of the country." 

    The Roundtable's key suggestion to help pay for infrastructure is to repeal the Foreign Investment in Real Property Tax Act  (FIRPTA) of 1980. Bipartisan FIRPTA repeal legislation ( H.R. 2210 ) was introduced in the House on April 10. (Roundtable Weekly, April 12) 

The Roundtable's key suggestion to help pay for infrastructure is to repeal the Foreign Investment in Real Property Tax Act  (FIRPTA) of 1980.  FIRPTA imposes a discriminatory layer of capital gains tax on foreign investment-a tax burden that does not apply to any other asset class.  Repealing FIRPTA would serve as a market-driven catalyst to finance improvements in our nation's infrastructure.  Bipartisan FIRPTA repeal legislation (H.R. 2210) was introduced in the House on April 10. (Roundtable Weekly, April 12).

Other infrastructure policies detailed in The Roundtable's April 29 letter include: 

  • A beneficial, 10-year cost recovery period for investments that improve energy efficiency performance in commercial and multifamily buildings;
  • Proposals supported by Democratic and Republican administrations alike to streamline the permit process for infrastructure projects;
  • An increase in the federal gas "user fee" in a responsible and sustainable manner;
  • Revising IRS "volume caps" and other limitations on tax-exempt bonds;
  • Improving the TIFIA loan program to encourage more public-private partnerships to finance infrastructure; and
  • Reasonable federal-state cost share rules for grants to support mass transit projects of regional and national significance (like the NY-NJ Gateway program).

The Roundtable's DeBoer discussed the role of public-private partnerships to develop infrastructure projects on CNBC's Squawk Box  in June 2017.  (Roundtable Weekly, June 9, 2017)  

Ways and Means Chairman Richard Neal (D-MA) has indicated he intends for his committee to consider an infrastructure bill soon.

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Cannabis - Capital and Credit

Roundtable Urges Senate Committees to Address Federal-State Cannabis Policy Conflicts Constraining Banking, Real Estate Transactions

The Real Estate Roundtable on April 30 wrote to the Senate Banking and Judiciary Committees urging hearings to consider the SAFE Banking Act (S. 1200) and the STATES Act (S. 1028) – measures that would provide clarity for banking firms and real estate providers to fully serve the needs of cannabis-related businesses deemed legal under state law.  (Roundtable Policy Letter, April 30)

Roundtable President and CEO Jeffrey DeBoer states in the April 30 letter, "Passage of the SAFE Banking Act is a strong first step to clarify a full range of proper business conduct in the rapidly evolving context of cannabis policy."

  • The bipartisan Secure And Fair Enforcement (SAFE) Banking Act is led by co-sponsors Sens. Cory Gardner (R-CO) and Jeff Merkley (D-OR).  S. 1200 clarifies that banks would not face adverse action on a loan to a real estate owner solely because that owner leases property to legitimate, state-licensed, cannabis-related businesses (CRBs).  The measure would also protect sellers and lessors of real estate and other CRB "service providers" by clarifying that proceeds from state-approved marijuana-related transactions do not derive from unlawful activity, and thus do not provide a predicate for federal criminal money laundering.
  • Roundtable President and CEO Jeffrey DeBoer states in the letter, "Passage of the SAFE Banking Act is a strong first step to clarify a full range of proper business conduct in the rapidly evolving context of cannabis policy."
  • DeBoer encouraged the committees to hold hearings on the SAFE Act to create a record for resolving and reconciling the conflict between business transactions that are deemed legal under state law, yet exposed to federal criminal liability.  If the SAFE Act is enacted, federally regulated banks would no longer face the threat of sanction simply by providing financial services to a legitimate state-authorized CRB.
  • The Roundtable letter also supports the swift enactment of the bipartisan Strengthening the Tenth Amendment Through Entrusting States  (STATES) Act, led by Sens. Cory Gardner (R-CO) and Elizabeth Warren (D-MA).  S. 1028 would ensure that each state has the right to determine for itself the best approach to cannabis within its borders.  (U.S. News & World Report, April 4 and  Roundtable Weekly, April 12)  
  • In the House, the STATES Act (H.R. 2093) was reintroduced on April 4 by Reps. Earl Blumenauer (D-OR) and David Joyce (D-OH).  Additionally, the SAFE Act (H.R. 1595) – co-sponsored by Reps. Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-OH) and Warren Davidson (R-OH) – was approved by the House Financial Services Committee on March 27 by a 45-15 vote. (Roundtable Weekly, April 26) 

Prospects for passing cannabis-related bills in the Senate remains uncertain.  Senate Banking Chairman Michael Crapo (R-ID) this week expressed doubt about the SAFE Act in Congress.  "As long as cannabis is illegal under federal law, it seems to me to be difficult for us to resolve this," he said.  (Politico Pro, May 1)

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