Roundtable Founding Member and TPAC Chairman Frank G. Creamer, Jr. Passes

Frank G. Creamer, Jr.

Frank G. Creamer, Jr., a founding member of The Real Estate Roundtable and long-serving chairman of its Tax Policy Advisory Committee (TPAC), passed away on May 17. (Obituary)

Industry Mentor

  • “Frank Creamer offered his deep expertise and knowledge to so many in the industry during his 25 years of involvement with RER,” said Jeffrey DeBoer, Roundtable President and CEO. “In his long-time role as TPAC Chairman, Frank was a tremendous mentor and reliable guide who cared deeply about The Roundtable, its role in the industry, and its members. His dedication was exemplary, and he will be remembered as the consummate gentleman he most certainly was, who always had time for others. We will sorely miss Frank and extend our heartfelt condolences to his family and friends.”
  • Mr. Creamer held various executive positions during his career in the global commercial real estate lending business, rising to oversee all real estate banking at Citibank. After his tenure at Citibank, he became a principal and owner of his company, FGC Advisors, LLC, a real estate advisory firm.

A memorial service is scheduled for June 5 in Center Moriches, NY followed by a June 6 funeral Mass at St. John the Evangelist Roman Catholic Church. In lieu of flowers, a donation in his memory can be made to the Tunnels to Towers Foundation. (See obituary for details)

CRE Executives Express Tempered Optimism Despite High Interest Rates and Tight Liquidity

(WASHINGTON, D.C.) — Commercial real estate executives expressed tempered optimism about property markets in The Real Estate Roundtable’s Q2 2024 Sentiment Index as high interest rates and liquidity challenges linger. The Q2 Sentiment Index registered the same overall score of 61 from the previous quarter as uncertainty persists about future asset values and availability of capital.

The Roundtable’s Current Sentiment Index registered 55, a 2-point increase over Q1 2024. The Future Index posted a score of 66 points, a decrease of 4 points from the previous quarter. Any score over 50 is viewed as positive. ­­­­The Overall Index this quarter of 61—a measure of senior executives’ confidence and expectations about the commercial real estate market environment—is scored on a scale of 1 to 100 by averaging the scores of the Current and Future Indices.­­­­

The Q2 Sentiment Index topline findings also include:

  • Evolving market trends continue to shape the real estate landscape. A majority (66%) of Q2 survey participants expect general market conditions to show improvement one year from now. Additionally, 45% of respondents said conditions are better now compared to this time last year. Only 11% of Q2 participants expect general market conditions to be somewhat worse in a year, a slight increase from 6% in Q1.

  • Class B office properties are facing ongoing challenges, attributed to an ongoing “flight to quality.” Industrial and multifamily sectors show tempered growth, yet their underlying fundamentals remain robust. Retail sectors are healthy, propelled by consumer spending, while interest in data centers continues to ascend.

  • A significant 75% of Q2 survey participants expressed optimism that asset values will be higher (44%) or the same (31%) one year from now, indicating some semblance of expected stability.

  • The real estate capital markets landscape remains challenging. For the current quarter, 65% believe the availability of equity capital will improve in one year, while 64% said the availability of debt capital will improve in one year. The 36% of participants who said the availability of debt capital would be worse in one year is an increase from 24% in Q1 who voiced the same expectation.

  • Regarding sentiment on the availability of equity capital, 65% of survey respondents expect conditions to improve, compared to 26% who stated that availability of equity capital was better a year ago.

Some sample responses from participants in the Sentiment Index’s Q2 survey include:

“Real estate fundamentals are shaping up to be very strong in one to two years. Companies that have a long-term perspective and can be patient will benefit from strong employment growth, demographic shifts, and stable occupancies.”

“The mom-and-pop investors who own class B office are hurting the most. The institutional investors are diversified, so they are faring better.”

“Stability in asset values isn’t just about reaching pre-2022 levels; it’s about establishing a new norm based on sustainable growth.”

Data for the Q2 survey was gathered by Chicago-based Ferguson Partners on The Roundtable’s behalf in April. See the full Q2 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.

New Federal Rules Issued Regarding Real Estate Construction, Clean Energy Projects

Housing Construction WorkerThe Biden administration issued two new rules this week impacting real estate construction and investments in clean energy projects. 

  • Davis-Bacon: The U.S. Labor Department on Tuesday issued a final rule to overhaul Davis-Bacon standards that determine prevailing wages for workers on construction projects covered by a federal contract or financially assisted by federal grants, loans, guarantees or insurance.
    • Construction association AGC issued a statement expressing “preliminary” concerns that “this rulemaking critically missed an opportunity” to inject “more accurate data” in processes to establish prevailing wage rates in local markets across the nation.
    • Laborers and mechanics constructing transportation, energy, water, toxic site clean-ups, and other infrastructure financially supported by the bipartisan Infrastructure Investment and Jobs Act (IIJA) must meet the new Davis-Bacon requirements. (IIJA project map)
    • Inflation Reduction Act (IRA) projects receiving clean energy tax incentives are not required to meet Davis-Bacon rules, but they can qualify for increased credits and deductions if workers are paid prevailing wages. (RER’s IRA fact sheets) 
    Solar installation workers

  • “Bonus” Tax Credits: The Treasury Department and IRS on Thursday released final rules explaining how IRA “bonus credits” can be awarded to solar, wind, and associated storage projects in low-income communities. (The Hill, August 10)
    • Qualifying projects in census tracts eligible for new market tax credits (NMTCs) can receive a 10% solar credit boost, while those supported by low-income housing tax credits or Section 8 rental assistance can receive a 20% solar credit increase. (RER’s IRA “bonus rate” chart)
    • The “bonus” incentives – over “base” rate tax credit amounts – are competitive. Bonuses will be awarded through an application process run by the U.S. Department of Energy scheduled to open this fall.

The Roundtable submitted comments in June when the IRS proposed the “bonus credit” program. (Roundtable Weekly, June 30). It will update its summary of IRA-related agency guidance following analysis of the newly issued rule.

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Rising Interest Rates, Tighter Liquidity, Hybrid Work, and Cost Cutting Reflected in Roundtable’s Q4 Sentiment Index

Q4 Sentiment Index chart

The Real Estate Roundtable’s Q4 Economic Sentiment Index dropped to an overall score of 39, five points lower than the previous quarter. Commercial real estate executives cited a reduction in available equity and debt capital, changes in post-pandemic office use, general business cost cutting, and employee layoffs among the contributing factors causing market uncertainty and a decrease in transactions. (News Release and Entire Q4 Report, Nov. 18)

Roundtable ViewJeffrey DeBoer Real Estate Roundtable

  • Roundtable President and CEO Jeffrey DeBoer, above, said, “Industry executives report that asset valuation difficulties, coupled with the tightened availability and cost of capital, have caused a slowdown in commercial real estate investment and overall transactions. This situation, magnified by steep inflation and interest rate hikes, is leading to investor hesitancy. Additionally, while some businesses are instituting greater return-to-the-workplace policies, many are not, partially due to employee reluctance. Ultimately, greater clarity on businesses’ future post-pandemic workspace demands is needed to provide a more reliable window into asset valuations, particularly in the office sector.”
  • “As an industry, we’re working with tenants to provide attractive building safety and use amenities—and where possible, converting underutilized property types to other uses, including housing. We continue to urge policymakers and business leaders to push for the safe return of workers to their shared, physical workspace. A back-to-the-workplace movement would increase overall economic productivity and competitiveness, help preserve urban small businesses, and lower the threat to the property tax base of municipalities throughout the nation,” DeBoer added.
  • The Roundtable’s Economic Sentiment Index—a measure of senior executives’ confidence and expectations about the commercial real estate market environment—is scored on a scale of 1 to 100 by averaging the scores of Current and Future Economic Sentiment Indices. Any score over 50 is viewed as positive.
  • Although the Q4 Overall Index registered an Overall score of 39, the Current Index registered 29—a nine-point drop from Q3 2022—and the Future Index posted a score of 48 points, a dip of three points from the previous quarter. (Download Q4 report, Nov. 18)

Market Perspectives

RXR's Scott Rechler on CNBC's Squawk on the Street

  • The return of office workers to buildings in New York, Boston, Atlanta, San Francisco and other cities is languishing well below pre-pandemic levels as hybrid work, layoffs and higher interest rates act as drags on the office market, according to a Nov. 17 New York Times article. Despite the headwinds, office owners believe demand will eventually return.
  • Roundtable Chairman Emeritus (2015-2018) William Rudin (Co-Chairman & CEO, Rudin Management Company, Inc.) noted in the article that occupancy was much higher at buildings occupied by financial companies, many of which have required employees to return to the workplace.
  • The impact of layoffs, macroeconomic trends, and office demand were discussed this week by Roundtable Board Member Scott Rechler (Chairman CEO, RXR), above, in a CNBC Squawk on the Street interview. Rechler, a member of the New York Fed, said he expects the next 12 to 18 months will be “choppy” as the Federal Reserve continues to fight inflation, but that a strong economy will emerge with significant growth potential.

Economic conditions and commercial real estate markets will be discussed during The Roundtable’s Jan. 24-25 State of the Industry in Washington.

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Inflation, National Policy Agenda, and CRE Market Conditions Focus of Roundtable Annual Meeting

2022 Real Estate Roundtable Annual Meeting Audience

The Roundtable’s 2022 Annual Meeting in Washington, DC this week focused on key policy issues affecting the commercial real estate industry—including inflation and interest rates; prospects for a scaled-back Build Back Better (BBB) Act; proposed climate risk disclosure rules; and a new industry Equity, Diversity, and Inclusion initiative.

Policy Focus

DeBoer and Manchin at 2022 Roundtable Annual Meeting

  • Roundtable President and CEO Jeffrey D. DeBoer, left, launched the June 16 business meeting with an overview of The Roundtable’s Policy Agenda and newly released 2022 Annual Report, Building a More Resilient and Dynamic Future. Annual Meeting guests included:
    • Sen. Joe Manchin (D-WV)
      Sen. Manchin, above right, discussed the benefits of a bipartisan approach to legislation and the role of inflation in considering any additional spending bills this year.
    • Sen. John Thune (R-SD)
      Sen. Thune spoke about supply chain issues, aid for Ukraine, the Fed and monetary policy, and the upcoming elections.
    • Rep. Abigail Spanberger (D-VA)
      Rep. Spanberger addressed efforts to produce common-sense gun policy, lower inflationary costs for families and policymaking in the House during the upcoming lame duck session.
    • Jim VandeHeiAxios and Politico co-founder and CEO discussed the current political environment, potential challengers to President Biden, the upcoming congressional elections, and the advantages of delivering news and analysis about today’s policy landscape in an efficient, “smart brevity” style.
    • Jonathan KarlABC New’s Chief Washington Correspondent spoke about the current political environment and the midterm elections.

Supplier Diversity & CRE

Rock Irvin, Chief Commercial Officer, SupplierGATEWAY (left) and Adenuga Solaru Chief Executive Officer (right)

  • The Annual Meeting also included an initiative of The Roundtable’s Equity, Diversity, and Inclusion (ED&I) Committee, chaired by Jeff T. Blau (Chief Executive Officer and a partner of Related Companies).
  • A proposed two-year pilot program was discussed with SupplierGATEWAY—a firm that assists companies interested in hiring Minority- and Women-Business Enterprises (MWBEs) as contractors, service providers, JV partners, and other “vendors” in their “supply chains.” (Photo: SupplierGATEWAY’s Rock Irvin, left, Chief Commercial Officer, with Adenuga Solaru, Chief Executive Officer)
  • The proposed online SupplierGATEWAY portal would support CRE firms interested in accessing a broad and centralized MWBE vendor database, posting hiring opportunities for those contractors, and utilizing tools to assist with corporate ESG reports.
  • SupplierGATEWAY’s executives demonstrated a CRE-specific “prototype” of their MWBE management portal that could be available by the fall for companies who may subscribe to the service. 
  • For more information regarding The Roundtable’s supplier diversity initiative, contact Roundtable Senior Vice President and Counsel, Duane Desiderio (ddesiderio@rer.org).

CRE Markets & Policy Advisory Committees

TPAC Meeting at Annual 2022 Meeting

  • The Roundtable’s Policy Advisory Committee leadership discussed their policy issue activities during the business meeting and referred to a Policy Issues Toolkit for background information on how key issues impact commercial real estate (see Executive Summary). Each committee met in conjunction with the Annual Meeting to address the following:  
    • The Sustainability Policy Advisory Committee (SPAC) focused on a recent Securities and Exchange Commission (SEC) proposed rule that would require registered companies to report on climate-related financial risks. The Roundtable submitted a comment letter to the SEC last week on the proposed rules. (Roundtable Weekly, June 10 and Roundtable comments | SPAC Agenda).
       
    • The Research and Real Estate Capital Policy Advisory Committees (RECPAC) met jointly with Rep. Rep. French Hill (R-AR) to discuss the congressional legislative agenda and capital markets from his perspective as a member of the House Financial Services Committee and Ranking Member of its Subcommittee on Housing, Community Development and Insurance. (Joint RECPAC-Research Agenda)
    • The Tax Policy Advisory Committee (TPAC) drilled down on a Senate proposal to tax unrealized gains associated with appreciated assets, partnership tax rules, like-kind exchanges, Opportunity Zone incentives, and energy-efficiency tax provisions. (TPAC Agenda)
    • The Homeland Security Task Force (HSTF) and Risk Management Working Group (RMWG) met jointly to discuss current threat issues, with presentations by Kevin Vorndran, Deputy Assistant Director, Counterterrorism Division, FBI and Nitin Natarajan, Deputy Director of the Cybersecurity and Infrastructure Security Agency (CISA). (Joint HSTF-RMWG Agenda)

Next on The Roundtable’s calendar is the Sept. 20-21 Fall Meeting (Roundtable-level members only).

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Roundtable-Supported Fed Liquidity Facility Bolstered CRE Finance During Pandemic

Fed Building DC

A report published this week by the Dallas Fed concludes that the Federal Reserve’s Term Asset-Backed Loan Facility (TALF) played a key role in bolstering commercial real estate finance during the pandemic. The Federal Reserve added outstanding CMBS as eligible collateral for lending through the TALF in 2020 after urgent requests from business coalitions that included The Real Estate Roundtable. (Roundtable Weekly, April 17, 2020 and Joint Trades letter, March 24, 2020) 

TALF & CRE

  • The report by three authors with the Federal Reserve Bank of Dallas’ Research Department states the value of CRE assets at the onset of the pandemic in Feb. 2020 – particularly office towers, retail centers and hotels – suddenly became uncertain. The TALF’s subsequent support of asset-backed securities successfully anchored CMBS prices and helped to steady CRE finance during a tumultuous economic environment.
  • The TALF, previously used during the 2008 financial crisis, was relaunched by the Fed on March 23, 2020 in response to the Covid-19 crisis.
  • A business coalition that included The Roundtable on March 24, 2020 urged the Federal Reserve, Treasury, and Federal Housing Finance Agency to immediately expand the TALF to include non-agency CMBS – including legacy private-label conduit and single-asset single borrower (SASB) assets. The coalition stated the inclusion of private-label assets would stabilize asset prices and shore up the balance sheets of market participants. (Joint Industry letter)
  • On April 9, the Federal Reserve announced the range of TALF-eligible collateral would expand to include triple-A rated tranches of both outstanding (legacy) CMBS, commercial mortgage loans and newly issued collateralized loan obligations. However, the updated term sheet excluded single-asset single borrower (SASB) CMBS and commercial real estate collateralized loan obligations (CRE CLOs). (Federal Reserve news release and Term Sheet)
  • Six real estate industry organizations, including The Roundtable, wrote again to federal regulators on April 14, 2020 about the urgent need to include a wider range of investment grade commercial real estate debt instruments in the Fed’s TALF.
  • The 2020 letter stated, “Commercial and multifamily real estate assets that were perfectly healthy just weeks ago now face massive stress and a wave of payment and covenant defaults.”

  • The Fed on May 12, 2020 broadened the range of leveraged loans that could be used as collateral for the TALF to include new Triple-A rated collateralized loan obligations (CLOs) with leveraged loans. (Fed news release and Term Sheet)

TALF Lessons 

Federal Reserve Building up close

The report published this week concludes the TALF proved especially important in supporting commercial real estate finance. “The TALF program structure provided needed liquidity to investors at the height of the pandemic, but it incentivized borrowers to exit as normal market conditions returned, allowing the program to quickly unwind,” the article states. 

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Biden Administration to Redirect Federal Rental Assistance Funds to States, Localities Experiencing Greater Demand

Treasury Department webpage for Emergency Rental Assistance

The Treasury Department plans to redirect millions in federal emergency rental assistance from states and localities with a large amount of unused funds to other geographic areas with a backlog of aid requests. (Wall Street Journal and Treasury Department new release, Nov. 29)

  • Administration officials said the initial reallocation, set to be unveiled early this month, could exceed $800 million. Jurisdictions with large amounts of unused funds (such as Montana and North Dakota) may see redistributions to more populous states (such as New York and Texas) over the coming week and months. Funds may also be redirected within a state depending on the needs of individual cities or other geographic areas. (The Hill, Nov. 29)
  • Treasury data released this week shows that approximately $2.8 billion in emergency rental assistance was distributed in October by state and local governments to keep tenants housed – the same amount distributed the previous month.
  • Forty-one states had spent less than 65 percent of their federal rental assistance funds as of Oct. 31.  Twenty-five of those states spent less than 30 percent of their allocations – and face additional Treasury requirements to avoid clawbacks.
  • Gene Sperling, who leads the implementation of President Joe Biden’s $1.9 trillion coronavirus rescue package, said, “Treasury is using the reallocation process to spur weak performers to up their game and to get more funds into the hands of those who can help the most vulnerable the fastest.” (PBS NewsHour, Nov. 29)

Roundtable President and CEO Jeffrey DeBoer discussed the need to distribute federal rental assistance to property owners and tenants during a September ConnectCRE webinar, which  included National Multifamily Housing Council Chair David Schwartz (Chairman and CEO, Waterton) and NMHC President Doug Bibby. (Connect, Sept. 23) 

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The Roundtable’s Homeland Security Task Force Virtual Exercise
Rescheduled from Dec. 9, 2021 to Jan. 20, 2022

The Real Estate Roundtable’s Homeland Security Task Force (HSTF) and Real Estate Information Sharing and Analysis Center (RE-ISAC) has rescheduled its Virtual Exercise from Dec. 9, 2021 to Jan. 20, 2022. The exercise will involve discussion groups addressing winter weather preparedness and hostile events (e.g. communication plans and continuity.) For more information, please contact Roundtable Senior Vice President Chip Rodgers.

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Commercial Real Estate Executives Report Steady Q4 Market Fundamentals

Commercial real estate leaders report positive market fundamentals across asset classes, according to The Real Estate Roundtable’s Q4 2021 Economic Sentiment Index. Industry leaders describe steady supply, demand and financial conditions for multifamily, industrial, life science and other assets while expressing some caution about the strength of office and hotel assets. Leaders also noted conditions vary by geography and local governmental policies.

Topline Findings

Jeffrey DeBoer, Real Estate Roundtable President and CEO

  • The Roundtable’s Overall Q4 2021 Sentiment Index registered a score of 73, which reflects continued optimism about general market conditions despite a slight dip of five points from the previous quarter. The Economic Sentiment Overall Index is scored on a scale of 1 to 100 by averaging the scores of Current and Future Indices. Any score over 50 is viewed as positive. 

  • Roundtable President and CEO Jeffrey DeBoer (above) said, “Our Q4 Sentiment Index score is a 29-point increase over the same time period last year. This is a solid indication of significant progress in the overall economy as more businesses continue to reopen under cautious, local COVID-19 protocols.” 
  • He added, “CRE leaders are encouraged by the safe (albeit slow) return of employees to their work places, robust retail consumer appetites, and the gradual return of domestic and international travelers to hotels, resorts and other hospitality assets. The commercial real estate industry continues to play an active role in accommodating new business and individual preferences that will help the economy adjust post-COVID.” 
  • “Industry leaders are concerned with accelerating inflation, supply chain obstacles and still unclear questions regarding future office space desires,” DeBoer noted. 
  • The Roundtable’s quarterly economic survey also shows that 85 percent of respondents believe that general market conditions today are “much better or somewhat better” versus one year ago – and that 61 percent anticipate conditions will continue to improve one year from now. 
  • The report’s Topline Findings include:
     
    • The Q4 2021 Real Estate Roundtable Sentiment Index registered a score of 73, a decrease of five points from the third quarter of 2021 and a 29-point increase over Q4 2020. Despite the slight downtick from Q3, participants largely expressed optimism regarding the current fundamentals of the commercial real estate market.
    • That said, perceptions vary by property type and geography, with industrial, multifamily, life sciences and data centers most in favor. Delayed return-to-office policies and questions about office space demands have resulted in a degree of uncertainty. 
    • Asset values have trended upward across asset classes compared to the previous quarter.
    • Participants cited a continued availability of debt and equity capital. International investors remain highly interested in opportunities within the United States.

Infrastructure & CRE

Chicago skyline upward

  • DeBoer also noted, “The recent passage of the $1.2 trillion bipartisan infrastructure bill by Congress will help the commercial real estate industry to ramp up its existing suite of climate-friendly practices by reimagining, building and retrofitting America’s built environment.” 
  • He added, “The Roundtable is also encouraged that the bill emphasized the expanded use of public-private partnerships to reach infrastructure goals – as well as measures that will streamline the federal permitting process and improve key federal energy data that support EPA building labels.” 

Data for the Q4 survey was gathered in October by Chicago-based Ferguson Partners on The Roundtable’s behalf.  See the full Q4 report

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Real Estate Industry Weighs in Against Potential Partnership Tax Changes as House Lawmakers Prepare Next Steps for Infrastructure, Tax Bills

Senator Roy Wyden (D-OR) comments on floor

The Real Estate Roundtable and 22 other national real estate organizations wrote today to Senate Finance Committee Chairman Ron Wyden expressing significant concerns regarding his draft legislation to overhaul partnership tax rules. The letter was sent after congressional leaders and Treasury Secretary Janet Yellen yesterday announced they had agreed on a framework for moving forward with human infrastructure legislation, which includes a list of tax issues for discussion and potential inclusion in a final reconciliation bill. Additionally, the House Budget Committee announced it would “mark up” the combined $3.5 trillion reconciliation bill tomorrow. (Coalition letter, Sept. 24 and BGov, Sept. 23) 

Why It Matters 

  • On September 10, Chairman Wyden proposed a far-reaching restructuring of partnership taxation that would raise at least $172 billion over 10 years. Chairman Wyden or others could put forward the partnership proposals as revenue provisions for the reconciliation bill.
  • Real Estate Roundtable President and CEO Jeffrey DeBoer stated, “Partnerships are used to bring parties together to create and grow businesses that propel job creation, new investment, and productive economic activity. Partnerships contribute immensely to the culture of dynamic entrepreneurship and risk-taking that is missing in many parts of the world where business activity is dominated by large, public corporations. In this current environment, Congress should be working on ways to encourage and strengthen partnerships, not cut their knees out from under them.” (Roundtable Weekly, Sept. 10)
  • Nearly half of the four million partnerships in the United States are real estate partnerships. These pass-through businesses are a key driver of jobs, investment, and local tax revenue.
  • Provisions in the draft bill would alter the tax rules that apply when a partnership is formed and property is contributed, creating new barriers to business formation. Other provisions would changes the rules when a partnership borrows to finance its growth and expansion, as well as when a partnership distributes profits and gains to the owners. 
  • Many of the provisions in Wyden’s draft would apply retroactively to economic arrangements entered into years, and sometimes decades, earlier. A proposal requiring that partners share all debt in accordance with partnership profits could overturn decades of tax law with respect to nonrecourse borrowing by a partnership.
  • The coalition of 24 real estate organizations stated, “With millions of Americans still unemployed and others who have yet to return to the labor force, we encourage you to focus instead on reforms that will strengthen and expand partnerships’ ability to create jobs and economic opportunities.” (Coalition letter, Sept. 24)

Infrastructure / Reconciliation Developments 

Capitol Building evening 475w

  • A vote on the bipartisan infrastructure legislation is expected on Monday, Sept. 27 or Tuesday, Sept. 28, but that could change depending on Democratic leaders’ ability to ensure sufficient votes for passage.
  • The House Budget Committee’s scheduled mark-up the $3.5 trillion reconciliation bill on Saturday afternoon, Sept. 25 will proceed as Democrats race to reach consensus with moderates who object to the bill’s overall price. (PoliticoPro, Sept. 23)
  • The framework deal between House and Senate Leaders reportedly includes an understanding between Senate Finance Committee Chairman Ron Wyden (D-OR) and House Ways and Means Committee Chairman Richard Neal (D-MA) about revenue-raising proposals that could be used to pay for the massive proposal. (The Hill, Sept. 23)
  • Senate Majority Leader Chuck Schumer (D-NY) described the agreement as a “menu of options that will pay for any final negotiated agreement” as Pelosi called it “an agreement on how we can consider, go forward in a way to pay for this.” 

Roundtable Resources 

RER PC logo x500w white background

Infrastructure bills and tax policy issues in play that may impact commercial real estate will be the focus of discussions during The Roundtable’s Fall Meeting on Oct. 5 in Washington, DC (Roundtable-level members only).

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House Democrats Pass Bill to Extend FY22 Government Funding and Suspend Debt Ceiling; Senate Republicans Plan to Oppose

U.S. Capitol from side with clouds

House Democrats on Sept. 21 passed a short-term funding bill that would keep federal agencies open until Dec. 3 while suspending the debt limit through December 2022. The bill, passed on a party-line vote (220-211) faces bleak chances of Senate approval, where 60 votes are needed to avoid a filibuster in the evenly divided upper chamber. Republicans object to linking the debt ceiling to FY22 government funding. 

Shutdown, Default Loom 

  • The short-term bill to extend funding for government operations at current levels, known as a Continuing Resolution (CR), would avoid a partial government shutdown on Oct. 1. Funding for programs affecting national flood insurance and surface transportation are also scheduled to expire Sept. 30.
  • Senate Minority Leader Mitch McConnell (R-KY) stated Democrats need to separate the CR from legislation that would suspend or increase the debt limit, which the GOP will not support. (Louisville Courier-Journal, Sept. 23)
  • Meanwhile, Treasury Secretary Janet Yellen issued a stark warning to policymakers that they must raise or suspend the debt ceiling as soon as possible – or the federal government will default on its financial obligations sometime in October. (Wall Street Journal, Sept. 19 and Reuters, Sept. 22)
     
  • Yellen stated, “Doing so would likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency. Default could trigger a spike in interest rates, a steep drop in stock prices and other financial turmoil. Our current economic recovery would reverse into recession, with billions of dollars of growth and millions of jobs lost.” 
  • Treasury has been spending down its reserves since Aug. 1, when the current two-year debt ceiling suspension ended. Yellen warned that hitting the debt ceiling would result in a halt of social security payments to nearly 50 million seniors for a time. Additionally, troops could go unpaid and millions of families who rely on the monthly child tax credit could see delays. (Axios, Sept. 23) 
  • A coalition of 13 real estate trade organizations, including The Roundtable, last week urged congressional leaders to raise the statutory debt limit as soon as possible. The letter stated, “Given the more than $8.6 trillion in mortgage debt backed by the federal government through Fannie Mae, Freddie Mac, Ginnie Mae and other federal agencies, the housing and real estate markets are particularly susceptible to any instability stemming from concern about the U.S. meeting its financial obligations.” (Coalition letter, Sept. 16)  

Policymakers face the debt ceiling and FY22 government funding deadlines next week as Democrats struggle to advance sprawling legislative bills on infrastructure (see Infrastructure story above). 

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