Author: Trey Jackson

Major Tax and Fiscal Package Gains Momentum as House Passes Budget Resolution

Posted on by Trey Jackson

House Republicans’ effort to pass a massive tax and fiscal package received a jolt of momentum this week after a cliffhanger vote on the House floor Tuesday night. Passed by a narrow vote of 217-215, the House resolution would authorize $4.5 trillion in tax cuts, provided congressional committees can identify $2 trillion in spending reductions. 

House Budget Proposal

  • Under the deal negotiated with fiscal conservatives in the House, if congressional committees cannot agree on $2 trillion in savings, the size of the authorized tax cut will automatically adjust downwards.  If they can agree on more than $2 trillion in savings, the size of the authorized tax cuts would adjust higher. (House Committee Report, Feb. 18)
  • The House resolution also includes a controversial $4 trillion increase in the national borrowing limit, along with allocations of up to $200 billion for border security and $100 billion for defense funding. (Roll Call, Feb. 25; AP, Feb. 25))
  • Shortly before the vote, The Roundtable joined a broad business coalition urging Congress to pass the House budget resolution to prevent a looming tax hike on pass-through businesses.  (Letter, Feb. 24)

Next Steps

  • Both the House and Senate chambers must now align on a budget resolution before moving forward with a reconciliation bill detailing the spending cuts, tax reductions, and other measures.
  • Senate Republicans have expressed reservations about the House’s approach, particularly concerning the scale of spending cuts and the structure of tax extensions.
  • Senate leaders have already signaled they will push for changes to ensure the 2017 tax cuts become permanent, as the House plan may lack the fiscal room to do so while also accommodating President Trump’s proposed new tax breaks.
  • Senate Majority Leader John Thune emphasized the complexity of the task, stating, “It’s complicated. It’s hard. Nothing about this is going to be easy.” (The Hill, Feb. 27)

View from The White House

  • For weeks, the president has endorsed the House plan as the best way to achieve his top legislative priorities in one move, yet he has also signaled openness to the Senate’s alternative or a compromise blending both approaches.
  • “So the House has a bill and the Senate has a bill, and I’m looking at them both, and I’ll make decisions,” President Trump said at the White House on Tuesday. “I know the Senate’s doing very well, and the House is doing very well, but each one of them has things that I like, so we’ll see if we can come together.”

Revenue Offsets and Business SALT

  • Some lawmakers have raised “Business SALT” and potential restrictions on the deductibility of state and local property taxes as a possible revenue offset for the tax bill. 
  • Eliminating the business deduction for property taxes would be the equivalent of raising property tax bills on commercial real estate by roughly 40 percent. 
  • “Business taxes are fundamentally different from state and local individual income taxes.  State and local business taxes are an unavoidable expense, an inescapable cost of doing business,” observed Real Estate Roundtable President and CEO Jeffrey DeBoer last week.  (Roundtable Weekly, Feb. 21)
  • “Employers would owe federal tax on money that they do not have.  It would lead to insolvencies and foreclosures. It would cause self-inflicted injury to the U.S. economy, including unnecessary job losses, higher rents for families and individuals, and other inflationary pressures.  It is a recipe for a recession,” said DeBoer.
  • It remains an open question whether the House and Senate will use a “current policy” budget baseline that would not count the extension of the 2017 tax cuts as a revenue loss.  A current policy baseline could significantly reduce the pressure to identify spending reductions and revenue offsets. (PoliticoPro, Feb. 28)

Averting Government Shutdown

  • In addition to the tax and fiscal package, congressional leaders are under pressure to reach an agreement on current-year federal spending before a government shutdown on March 14.  A short-term stopgap bill will likely be necessary. (Axios, Feb. 27, CBS, Feb. 27)

Looking Ahead

The House budget resolution directs House committees to report their spending reductions and tax changes to the House Budget Committee no later than March 27, 2025.

RER to Congress: Oversee Federal Grants for Onerous Local Building Performance Laws

Posted on by Trey Jackson
Department of Energy building in Washington, DC

The Real Estate Roundtable sent a letter on Wednesday asking Congress to oversee nearly a quarter billion dollars in federal grants, used to back city and state efforts setting onerous energy and emissions regulations on buildings.

Congressional Hearing

  • The oversight and investigations arm of the U.S. House Energy and Commerce Committee held a hearing Wednesday examining Biden-era energy and environmental program funding.
  • BPS laws are like “EV mandates” for buildings. These state and local mandates aim to set “net zero” emissions targets for owners and tenants to stop using heaters, boilers, stoves and other appliances that run on natural gas — and “electrify” instead.
  • No U.S. agency has the authority to require private sector building electrification. The U.S. Department of Energy (DOE) should not make an “end run” around this limit on its authority by issuing grants for BPS jurisdictions to accomplish indirectly what federal regulators can’t do directly, RER explained.
  • RER’s letter requested reasonable “strings attached” to the DOE grants. BPS cities and states taking federal taxpayer dollars should be required to study fully the housing affordability, grid capacity, and market impacts of their “net zero” laws.
  • RER has released a comprehensive, peer-reviewed 20-point policy guide for fair BPS mandates. The letter urged Congress to investigate whether jurisdictions receiving federal grants are considering issues raised in RER’s guide to achieve balanced building emissions regulations. 

CRE Supports EPA ENERGY STAR

  • These programs give building owners and developers standardized tools to monetize and forecast “massive energy savings,” help reduce strain on the power grid, and attract global capital to U.S. real estate.
  • “At minimum, any state or locality that received federal grants to develop onerous BPS laws should not levy fines on buildings participating in federal partnership programs,” RER wrote.
  • RER’s position advances the priorities of its Sustainability Policy Advisory Committee (SPAC), chaired by Anthony Malkin (Chairman and CEO, Empire State Realty Trust, Inc.). SPAC leads the organization’s energy advocacy agenda with a message centered on saving money, delivering profits, enhancing grid reliability, and attracting global investments to U.S. real estate.
  • “Building energy, water, and waste performance drives savings, results, and delivers a healthier work environment,” said Malkin recently in a discussion with Paul Donofrio, Vice Chairman of Bank of America and Co-Chair of its Responsible Growth Council. (BofA Webinar, Feb. 18) 

RER will continue to work with the Trump administration to identify opportunities for cost savings while highlighting effective government programs that create American jobs, grow the economy, and optimize America’s energy independence.  

Lawmakers Push for NFIP Overhaul Amid Short-Term Reauthorization Plan

Posted on by Trey Jackson

Rising disaster risks—from California wildfires to coastal flooding—are pushing property insurance costs to crisis levels, forcing insurers to retreat from high-risk markets. At the same time, Congress is working to pass another short-term extension of the National Flood Insurance Program (NFIP) before the March 14 deadline, while acknowledging the urgent need for long-term reforms.

View from Congress

  • Congress has enacted over 32 short-term extensions of the NFIP.
  • Without comprehensive reforms, property owners and commercial real estate investors face increasing premiums, reduced coverage, and market uncertainty—issues that now threaten housing affordability and broader economic stability.
  • Sen. John Kennedy (R-LA), co-chair of the Senate Banking Committee’s NFIP working group, and House Financial Services Republicans warn that Congress must stop “kicking the can down the road” with temporary National Flood Insurance Program (NFIP) extensions. (PoliticoPro, Feb. 25)
  • Lawmakers from both parties have long called for an overhaul.
  • Sen. Kennedy and Sen. Kevin Cramer (R-ND), a member of the Senate Banking Securities, Insurance, and Investment Subcommittee, recently told POLITICO they are open to incorporating other disaster coverage into NFIP renewal. (Politico, Feb. 13)
  • Potential changes to the program could include exploring a national catastrophe insurance program, combining flood, wildfire, and hurricane coverage into a single, federally backed plan. (Politico, Feb. 13)
  • Meanwhile, Sen. Jack Reed (D-RI) noted that the Senate Banking Securities, Insurance, and Investment Subcommittee has been exploring NFIP reforms for years.

Roundtable Advocacy

  • The Roundtable has been a long-standing supporter of a long-term reauthorization of the NFIP with appropriate reforms. (Roundtable Weekly, Oct. 4)
  • Without a robust, long-term NFIP, property owners face escalating risks from future storms, leaving both homeowners and commercial real estate properties vulnerable.
  • A long-term reform and reauthorization of the NFIP is essential for residential markets, overall natural catastrophe insurance market capacity, and the broader economy.

BPC Report: The Growing Insurance Crisis

  • Key takeaways from the report: With insurer exits accelerating in high-risk markets, affordable housing developers are struggling—property insurance premiums for multifamily housing jumped 129% between 2018-2023, and disaster risk is intensifying—climate-driven disasters like wildfires, hurricanes, and flooding now account for 90% of property insurance claims.
  • The paper also presented potential opportunities for federal policymakers to help mitigate the impact of rising property insurance costs on housing affordability.
  • Some of BPC’s policy recommendations included: Expanding federal incentives for resilience upgrades, enhancing transparency and data-sharing on disaster risk, allowing insurers, developers, and lenders to make more informed decisions, and considering a federal catastrophe insurance backstop, similar to NFIP, to stabilize private insurance markets.

The Roundtable and its industry partners are actively engaging with policymakers and stakeholders to address commercial insurance gaps and rising costs while advocating for targeted policy solutions to ease the financial burden on housing providers nationwide.

Real Estate Challenges: Business SALT, Carried Interest Emerge as Focal Points of Tax and Budget Discussions

Posted on by Trey Jackson

As congressional Republicans weigh their budget options and consider competing plans from both the House and Senate, their search for revenue offsets has included proposals to restrict the deduction for state and local taxes (SALT) on businesses and raise the tax rate on carried interest. 

Business SALT

  • Prior to the markup of its budget resolution, the House Budget Committee floated a menu of potential revenue offsets for reconciliation legislation, including a proposal to “eliminate the business SALT deduction.” (New York Times, Jan. 28)

  • Depending on how broadly the business SALT limitation is designed, it could include repealing the deductibility of state and local property taxes paid by commercial real estate owners.  Hill discussions on business SALT have intensified in recent weeks.  (Bloomberg, Feb. 18)
     
  • “Eliminating the business deduction for property taxes would be the equivalent of raising business owners’ property tax bills by roughly 40 percent.  Employers would owe federal tax on money that they do not have.  It would lead to insolvencies and foreclosures. It would cause self-inflicted injury to the U.S. economy, including unnecessary job losses, higher rents for families and individuals, and other inflationary pressures.  It is a recipe for a recession,” said Jeffrey DeBoer, President and CEO of The Real Estate Roundtable.

  • The idea of limiting business SALT has support from several outside organizations and, according to Politico, was initially floated by members of the House Freedom Caucus.  (Politico, Jan. 15)

  • “Business taxes are fundamentally different from state and local individual income taxes.  State and local business taxes are an unavoidable expense, an inescapable cost of doing business,” noted DeBoer. “Property taxes alone are, on average, 40% of operating costs for real estate businesses.  In many cases, capping the deductibility of property taxes would require businesses to pay income tax when their actual income and cash flow is negative.”

  • The Roundtable is working, alongside its real estate trade association partners, to raise awareness among policymakers of the risk and harm that a cap on business SALT poses for the industry and the broader economy.  

Carried Interest

  • President Trump’s recent call on Congress to close the “carried interest tax deduction loophole” has put a national spotlight back on the issue of carried interest and its proper tax treatment.  (Financial Times, Feb. 6)  

  • Trump’s expression of support for raising taxes on carried interest led Senators Tammy Baldwin (D-WI), Elizabeth Warren (D-MA), Bernie Sanders (I-VT) and others to reintroduce legislation, the Carried Interest Fairness Act. The bill would recharacterize all carried interest as ordinary income. (Politico, Feb. 18)

  • Sen. Baldwin filed a nonbinding amendment on carried interest during the Senate budget resolution debate this week but did not offer it for a formal vote.  

  • Carried interest emerged as a political issue in 2007, but remains largely misunderstood to this day. In real estate, carried interest is not compensation for services. General partners receive fees, taxed at ordinary rates, for routine services like leasing and property management. Carried interest is granted for the value the general partner adds, such as business acumen, experience, and relationships. It is also recognition for the risks the general partner takes.   

  • In response to the new legislation, the Americans for Tax Reform—alongside a broad coalition of other taxpayer advocacy groups—penned a comment letter urging lawmakers to consider the negative ramifications of this policy.

  • In the letter, the organizations argue that the proposal would discourage investment and reduce growth, urging Congress to oppose the bill. “The current tax treatment of carried interest is an intentional, pro-growth feature of the tax code for more than 100 years that incentivizes risk-taking and entrepreneurship, benefiting investors, public pension funds and retirees.” (Americans for Tax Reform, Feb. 19)

  • The Tax Cuts and Jobs Act of 2017 extended the holding period required for carried interest income to qualify for long-term capital gains treatment from one year to three years.

  • The false narrative surrounding the carried interest issue is that it targets only a handful of hedge fund billionaires and Wall Street executives. The carried interest legislation is far broader and would apply to real estate partnerships of all sizes.

  • “Taxing carried interest at ordinary income rates would discourage the risk taking that drives job creation and economic growth. It would reduce economic mobility by increasing the tax burden on cash-poor entrepreneurs who want to retain an ownership interest in their business. It would have profound unintended consequences for housing affordability and main streets all across our country,” said DeBoer.

Looking Ahead

As tax negotiations develop, RER will continue to engage with congressional leaders on both sides of the aisle to inform policymakers about the real-world consequences of proposed changes to the deductibility of business SALT and tax treatment of carried interest.  

While the budget debate will move forward, it will likely be several weeks, if not months, before the tax-writing committees mark-up and vote on the actual details of their tax and revenue legislation.

Senate Advances Narrow Budget Resolution as President Trump Endorses House “One Bill” Strategy

Posted on by Trey Jackson

After an all-night session of voting on amendments, the Senate passed a narrow budget resolution focused on border security, defense spending, and expanded energy production. 

Senate Passes Budget Resolution

  • The Senate vote, 52-48, came two days after President Trump expressed his preference for the House strategy of moving forward with “one big beautiful bill” that would include all of his agenda, including an extension of the 2017 tax cuts. (Reuters, Feb. 21)

  • After its passage, Senate Budget Committee Chairman Lindsey Graham (R-SC) said the Senate resolution would allow the Judiciary and Homeland Security Committees to spend up to $175 billion to implement the President’s border security agenda, increase defense spending by $150 billion, and facilitate energy independence through new on and offshore lease sales and ending the methane emissions fee. (Politico, Feb. 20)

Amendments Defeated

  • Although the Senate budget resolution does not include an extension of the 2017 tax cuts, Senate Democrats used the open amendment process to challenge Republicans on tax policy, offering several amendments calling on Senators to reject tax cuts for millionaires and billionaires. These amendments were defeated on party-line votes. (AP, Feb. 21)

  • Senator Mark Warner (D-VA) offered an amendment to create a point of order against any final budget reconciliation bill that does not decrease the cost of housing for American families. It was also defeated on a party-line vote. (WSJ, Feb. 21)

  • Senators Tammy Baldwin (D-WI) and Sheldon Whitehouse (D-RI) filed, but did not offer, an amendment aimed at putting Senators on the record in favor or against recharacterizing carried interest as ordinary income.

House and Senate’s Competing Plans

  • The House and Senate appear to be on a collision course.  Last week, the Senate Budget Committee passed, on a party-line vote, a much more ambitious budget resolution that includes $4.5 trillion in tax cuts and up to $2 trillion in spending reductions. (Reuters, Feb. 21)

  • The House approach received a major lift on Wednesday when President Trump posted that the House resolution “implements my FULL American First Agenda … not just parts of it,” and that “[w]e need both Chambers to pass the House Budget to ‘kickstart’ the Reconciliation process.” (Barrons, Feb. 19)

  • The House budget could be on the House floor as early as next week. Passage would allow the two chambers to resolve their differences in a conference committee, vote on the compromise budget, and then move to the next stage—committee action on actual legislation. (AP, Feb. 21)

Looking Ahead

RER will pay close attention to budget discussions coming from both chambers and their implications on crucial real estate policy issues. We will continue to advocate for pro-growth budget considerations in areas such as State and Local Tax (SALT) and carried interest. 

Sentiment Index Reflects Market Stabilization Amidst Changing Economic Landscape

Posted on by Trey Jackson

The Real Estate Roundtable’s Q1 2025 Sentiment Index, which measures commercial real estate executives’ confidence and expectations about the industry environment, suggests a cautious optimism, fading expectations for additional interest rate cuts, rising insurance costs and larger policy shifts. 

Roundtable View

  • The Q1 Index reported an overall score of 68, reflecting a 5-point decline from the previous quarter, and the Future Index posted a score of 70 points—a decrease of 7 points from the previous quarter—indicating that optimism for the impact of potential rate cuts has subsided.

  • Roundtable President and CEO Jeffrey DeBoer said, “The commercial real estate industry remains in a transitional period. Although interest rate adjustments have provided some relief, the reality is that capital markets remain constrained, and investors are being more selective. While there are signs of market stability, there is lingering uncertainty over tariffs, expiring tax cuts, and regulatory reforms that could slow investment and economic growth.”

  • He added, “There must be a supportive public policy environment that understands and addresses the multifaceted challenges the industry faces. The Roundtable remains committed to working with policymakers and the administration to advocate and demonstrate the importance of maintaining policies that encourage capital formation, reward entrepreneurial risk-taking, and support jobs and communities.”

Topline Findings

  •  The Q1 2025 Real Estate Roundtable Sentiment Index registered an overall score of 68, a decrease of 5 points from the previous quarter. The Current Index registered 65, a 4-point decrease compared to Q4 2024. The Future Index posted a score of 70 points, a decrease of 7 points from the previous quarter, indicating optimism for the impact of potential rate cuts has subsided. 

  • Nevertheless, survey participants are cautiously optimistic that transaction activity and capital deployment will continue to normalize in 2025. Interest rates, insurance costs and the implications of the Trump administration are top of mind for many investors.

  • Evolving market trends continue to shape the real estate landscape. A majority (70%) of Q1 survey participants expect general market conditions to show improvement one year from now. Additionally, 61% of respondents said conditions are better now compared to this time last year. Only 2% of Q1 participants expect general market conditions to be somewhat worse in a year. A substantial volume of industrial and multifamily assets came online in 2024, though activity is expected to slow in 2025. Return-to-office mandates thus far are not moving the needle on office assets, of which class B and C continue to struggle.

  • A plurality of participants (45%) believe asset values have not meaningfully changed from where they were a year ago. However, respondents are overall optimistic, with most (56%) predicting that asset values will be higher one year from now. 

  • The real estate capital markets have seen steady improvement. 47% of respondents believe the availability of equity capital is better than it was a year ago, while 62% said the availability of debt capital has improved from last year. Looking forward, virtually all respondents believe that capital availability will be the same or better in one year (99% and 98% for equity and debt capital, respectively).

Data for the Q1 survey was gathered by Chicago-based Ferguson Partners on The Roundtable’s behalf. Read the full Q1 report. 

NEWS: Market Stabilization Expected Amid Changing Economic Landscape

Posted on by Trey Jackson

(WASHINGTON, D.C.) — The Real Estate Roundtable today released its Q1 2025 Sentiment Index, which registered an overall score of 68, reflecting a 5-point decline from the previous quarter. While industry leaders remain cautiously optimistic, fading expectations for additional interest rate cuts, rising insurance costs, and policy shifts under the new administration are shaping investment decisions. Despite ongoing challenges, survey respondents remain confident that transaction activity will pick up throughout 2025 as investors adjust to the new market realities.

Roundtable President and CEO Jeffrey DeBoer said, “The commercial real estate industry remains in a transitional period. Although interest rate adjustments have provided some relief, the reality is that capital markets remain constrained, and investors are being more selective. While there are signs of market stability, there is lingering uncertainty over tariffs, expiring tax cuts, and regulatory reforms that could slow investment and economic growth.”

He added, “There must be a supportive public policy environment that understands and addresses the multifaceted challenges the industry faces. The Roundtable remains committed to working with policymakers and the administration to advocate and demonstrate the importance of maintaining a policies that encourage capital formation, reward entrepreneurial risk-taking, and support jobs and communities.”

The Q1 Sentiment Index topline findings include:

  • The Q1 2025 Real Estate Roundtable Sentiment Index registered an overall score of 68, a decrease of 5 points from the previous quarter. The Current Index registered 65, a 4-point decrease compared to Q4 2024. The Future Index posted a score of 70 points, a decrease of 7 points from the previous quarter, indicating optimism for the impact of potential rate cuts has subsided. Nevertheless, survey participants are cautiously optimistic that transaction activity and capital deployment will continue to normalize in 2025. Interest rates, insurance costs, and the implications of the Trump administration are top of mind for many investors.
  • Evolving market trends continue to shape the real estate landscape. A majority (70%) of Q1 survey participants expect general market conditions to show improvement one year from now. Additionally, 61% of respondents said conditions are better now compared to this time last year. Only 2% of Q1 participants expect general market conditions to be somewhat worse in a year. A substantial volume of industrial and multifamily assets came online in 2024, though activity is expected to slow in 2025. Return-to-office mandates thus far are not moving the needle on office assets, of which class B and C continue to struggle.
  • A plurality of participants (45%) believe asset values have not meaningfully changed from where they were a year ago. However, respondents are overall optimistic, with most (56%) predicting that asset values will be higher one year from now.
  • The real estate capital markets have seen steady improvement. 47% of respondents believe the availability of equity capital is better than it was a year ago, while 62% said the availability of debt capital has improved from last year. Looking forward, virtually all respondents believe that capital availability will be the same or better in one year (99% and 98% for equity and debt capital, respectively).

Data for the Q1 survey was gathered by Chicago-based Ferguson Partners on The Roundtable’s behalf in January. See the full Q1 report.

The Real Estate Roundtable brings together leaders of the nation’s top publicly-held and privately-owned real estate ownership, development, lending and management firms with the leaders of major national real estate trade associations to jointly address key national policy issues relating to real estate and the overall economy.

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House GOP Unveils Fiscal Blueprint Calling for Trillions in Cuts to Taxes and Spending

Posted on by Trey Jackson

After weeks of discussions, the House GOP and Speaker Mike Johnson unveiled their long-term budget blueprint, which would allow congressional committees to move forward with trillions into tax cuts and spending reductions. However, negotiations to fund the government ahead of the March 14 deadline have stalled.

Committee Advances Budget Plan

  • The House Budget Committee voted late Thursday night 21-16 to advance their budget resolution, which authorizes up to $4.5 trillion in tax cuts and $2 trillion in spending cuts over the next decade. The fiscal blueprint also calls for $300 billion in new border and defense spending and a two-year extension of the debt ceiling. (Politico, Feb. 12)
  • While Speaker Mike Johnson hopes to bring the resolution to the floor later this month, there are a number of details to hammer out that could hinder its passage. Overcoming the GOP’s extremely narrow majority in the House (218-215) will be a challenge.
  • House Budget Republicans secured passage of their resolution along party lines after striking a deal with the Freedom Caucus to win over fiscal hardliners Reps. Ralph Norman (R-SC) and Chip Roy (R-TX). (Roll Call, Feb. 13)

  • An amendment from Vice Chair Lloyd Smucker (R-PA) cemented the agreement by linking the size of a future tax-cut package to spending reductions. Under the modified resolution, the amount of the tax cuts would be reduced if the legislation does not include the full $2 trillion in spending reductions.

Tax Negotiations

  • House Ways and Means Chair Jason Smith (R-MO) also faces a difficult road to extend key provisions in the 2017 Tax Cuts and Jobs Act (TCJA). The $4.5 trillion figure for tax cuts is not enough to permanently extend the TCJA and include President Trump’s other tax priorities. (Politico, Feb. 12)

  • How to come up with the spending cuts to fund a permanent TCJA extension and other priorities remains a fundamental question. The budget package is expected to include significant reductions in Medicaid, which provides health benefits to low-income families and individuals.  President Trump has expressed concern with those health care cuts. (Politico, Feb. 13)
  • Some estimates place the cost of the President’s additional tax priorities as high as $2 trillion. These include exempting tips, overtime pay, and Social Security benefits from tax. Tax-writers must also find a way to pay for any adjustments to the SALT limitation, which are widely understood as needed to secure Blue State Republican votes in the House. 
  • Tax-writers are expected to look for other tax offsets, raising concerns that they could target issues such as the deductibility of state and local property taxes paid by businesses.
  • Limits on the deductibility of property taxes would upend the federal income tax by denying a deduction for a basic cost of doing business. It would severely hurt property values, real estate markets, and the millions of Americans employed directly and indirectly by the real estate industry.
  • “Capping or eliminating the federal deduction for business property taxes would be a major policy misstep,” said Roundtable President and CEO Jeffrey DeBoer. “Property taxes are not optional—they are a fundamental cost of doing business.”
  • “This change would force businesses to pay federal tax on money they never actually receive, placing a heavy burden on real estate investment and development. The impact would be severe for property owners repositioning assets—such as converting office buildings into housing—where property taxes remain due even when rental income is disrupted. Losing this deduction would drive up operating costs, which would ultimately be passed to consumers through higher rents, and hindering economic growth at a time when we should be encouraging investment and revitalization,” said DeBoer.
  • House Republicans are also considering shorter extensions of the expiring tax cuts in a bid to fit them into the budget plan’s constraints.
  • However, in a letter released Thursday, Senate Republican leaders, including Majority Leader John Thune (R-SD), Finance Chair Mike Crapo (R-ID) and seven others, said they would not support a tax package that only provides temporary relief from tax hikes. They said that any extension of the provisions due to lapse at the end of this year “must” be permanent. (Politico, Feb. 13)
  • Meanwhile, congressional Democrats have attacked Republican’s tax and spending cuts as a “betrayal of the middle class,” though they have minimal power to stop the GOP’s budget plan if Republicans are able to align on a strategy. (Politico, Feb. 13)

Reconciliation

  • To avoid the Senate filibuster, the tax and spending cuts will require the House and Senate to pass identical budget resolutions as part of the reconciliation process—and the Senate is pursuing its own budget proposal. (Politico, Feb. 12)

  • On Wednesday, the Senate Budget Committee approved its own budget blueprint, which includes up to $345 billion in funding for border security, immigration enforcement and defense. However, the resolution punts on any sweeping tax and spending cuts. (Washington Times, Feb. 12)

  • Preferring a two-step strategy over the House Republican’s plan, Senate Budget Chair Lindsey Graham (R-SC) said, “To my colleagues in the House, I hope you can pass one, big beautiful bill.” “But we’ve got to move on this issue.” (Politico, Feb. 12)

  • The March 14 deadline to fund the government is fast approaching. House Appropriations Chair Tom Cole (R-OK) indicated that negotiations are ongoing, but with much activity and attention focused on budget resolutions, little progress has been made.
  • If congressional leaders are unable to extend government funding before the deadline, key programs like the National Flood Insurance Program (NFIP) could lapse. (Politico, Feb. 12)

Looking Ahead

While the Senate will be in session next week after President’s Day, the House is out of session until February 24. The Roundtable will continue to follow developments on tax and budget negotiations closely.

Tariffs: CRE Faces Cost Pressures

Posted on by Trey Jackson

President Trump signed a memorandum Thursday directing his advisers to calculate new global tariff levels, a move that could disrupt international trade norms and spark intense negotiations, in addition to his recently increased duty on steel and aluminum.

State of Play

  • The directive considers not just existing tariffs but also foreign taxes, subsidies, and exchange rate policies that Trump views as “unfair.” His goal is to balance trade relationships and push companies to shift manufacturing back to the U.S. (AP News, Feb. 13)
  • The reciprocal tariffs will not be immediately imposed, but will be customized for each foreign trading partner, based on five different areas: tariffs the nation imposes on U.S. products, unfair taxes imposed, cost to U.S. businesses and consumers from another country’s policies, exchange rates, and any other practices the trade representative’s office determines is unfair. (The Hill, Feb. 13)
  • The proposed 25% duty on steel and aluminum announced Monday, set to take effect March 12, 2025, has raised concerns about higher construction costs, supply chain disruptions, and broader economic impacts on commercial real estate. (Bloomberg, Feb. 10)
  • Trump’s trade adviser Peter Navarro said the measures would help U.S. steel and aluminum producers and shore up America’s economic and national security. (Reuters, Feb.11)

Commercial Real Estate Impact

  • Tariffs may present several challenges for commercial real estate, including increased construction costs, potential project delays, and heightened uncertainty among investors.
  • Higher tariffs on Chinese steel and aluminum will increase structural material costs, while tariffs on Canadian lumber will impact framing and finishing costs.
  • Additionally, any trade disruptions with Mexico could further strain budgets by limiting access to affordable cement, steel, and glass. (Capright, Feb.5)
  • Many commercial real estate projects depend on materials imported from Canada, including softwood lumber for framing and steel for structural components. With tariffs in place, developers are seeing their material costs surge, leading to increased project costs and delayed developments. (InvestinginCRE, Feb.7)
  • The National Association of Home Builders (NAHB) projects that these tariffs could raise the cost of imported construction materials by $3-4 billion, depending on the specific rates. This increase may affect builders’ ability to deliver new projects and could have implications for housing affordability. (NAHB | GlobeSt, Feb.11)
  • Tariffs are expected to raise construction costs, potentially by up to 10%. This increase could lead to higher project costs and may affect the feasibility of certain developments. (GlobeSt, Feb.12)
  • In an NAHB housing market index survey published last week, 64% of builders said they expected higher material costs to be an issue for them in 2025. (NationalMortgageNews, Feb.11)

Looking Ahead

  • Commerce Secretary nominee Howard Lutnick, and trade representative Jamieson Greer, will evaluate within 180 days whether “remedies” are needed for reciprocal trade relations in a country-by-country report.
  • The Office of Management and Budget nominee Russell Vought will submit a report on the fiscal impact of these measures within the same timeframe.
  • Lutnick said the measures could be ready as soon as April 2. (NYT, Feb. 13)

The Real Estate Roundtable will continue to engage with policymakers to reduce regulatory burdens and eliminate other obstacles that are impeding development and expand America’s housing infrastructure. We will continue to provide updates as the global trade situation evolves.

Scott Turner Confirmed as HUD Secretary, Eyes Major Housing Policy Shifts

Posted on by Trey Jackson

Scott Turner was confirmed Wednesday as Secretary of Housing and Urban Development (HUD) and outlined his top priorities, including privatizing Fannie Mae and Freddie Mac, streamlining HUD operations, reducing regulatory barriers to lower housing costs, and expanding opportunity zones to drive investment in underserved communities.

A HUD Overhaul

  • Privatizing Fannie and Freddie: Turner has identified the privatization of Fannie Mae and Freddie Mac, the government-sponsored entities that guarantee most U.S. mortgages, as a top priority. (WSJ, Feb. 5)
  • His department will collaborate with the Treasury Department and Congress on the process, though a clear timeline and level of commitment from the White House remain uncertain.
  • While privatization could encourage more market competition, skeptics warn of potential disruptions in the $12 trillion mortgage market, including the risk of higher borrowing costs.
  • Supply-side housing solutions: Turner has signaled a shift towards increasing housing supply to address affordability concerns, stating in his confirmation hearing that the U.S. “needs millions of homes” across all types of housing, including multifamily, single-family, and manufactured homes.
  • The administration is expected to ease regulations that developers say have inflated construction costs, potentially rolling back Biden-era policies and implementing new incentives for affordable housing development. (Bisnow, Feb.6)

Opportunity Zones Revival

  • Turner previously led the White House Opportunity and Revitalization Council (WHORC), and played a key role in driving the Opportunity Zones Initiative, and has committed to continuing this work. (AP News, Feb.5)
  • The Roundtable has long championed Opportunity Zones (OZs) as a transformative tool to stimulate economic growth and increase the supply of affordable housing in low-income areas. By creating tax incentives for investments in designated low-income census tracts, OZs have channeled investment into areas most in need.
  • RER has called on Congress to improve and extend the program, which is set to expire along with other key provisions of the TCJA at the end of this year.
  • Sen. John Barrasso, (R-WY) highlighted Turner’s work on opportunity zones, saying he had helped bring $50 billion to 8,700 distressed neighborhoods. “These investments helped to revitalize many forgotten communities,” Barrasso said on the floor before the confirmation vote. (Roll Call, Feb. 5)
  • Turner’s confirmation signals a significant shift in federal housing policy, emphasizing market-driven solutions, regulatory rollbacks, and public-private partnerships.

The Roundtable continues to encourage policymakers to enact measures that will expand America’s housing infrastructure.  We also remain engaged in potential reforms to the GSEs to ensure that they continue to meet America’s housing finance needs.