Category: News

GOP Senators Outline Infrastructure Plan; Biden Announces U.S. Emissions Goal at Global Summit

Posted on by Trey Jackson

Capito GOP Infra Package podium x475edit2

Senate Republicans on April 22 unveiled a five-year, $568 billion infrastructure proposal as a counteroffer to President Joe Biden’s eight-year, $2.2 trillion plan. (Republican infrastructure framework and press conference)

Contrasting Infrastructure Plans

  • The GOP plan, crafted by a group led by Senate Environment and Public Works Committee Ranking Member Shelley Moore Capito (R-WV), at podium in photo, adheres to a more narrow definition of infrastructure than the Democrats’ proposal. (CQ and CNBC, April 22)
  • The Republican proposal is focused on transportation, but also targets broadband and water projects. Details about how to fund the plan are vague, referencing unspecified user fees and spending unused money from prior COVID-19 relief bills. (Republican infrastructure framework and Politico Pro, April 22)
  • Funding for Biden’s multitrillion dollar “hard infrastructure” plan, by contrast, would rely on an increase in corporate taxes and further address electrical vehicles and “clean energy” assets.  The Administration is expected to unveil its “American Families Plan” next week – an extensive framework supporting “human infrastructure” investments that would be paid for, at least partially, through tax increases on wealthy individuals. (Roundtable Weekly, April 2)
  • Meanwhile, a group of 58 bipartisan lawmakers called the Problem Solvers Caucus on April 23 released a report that proposes several possible fee increases to pay for infrastructure spending.  The caucus report includes options to impose a vehicle-miles traveled tax from electric vehicles – and proposes indexing gas and diesel taxes to inflation, highway construction costs, fuel-economy standards, or some combination.  (Caucus report and Wall Street Journal, April 23)

Climate Goals

President Biden's Closing Remarks at Climate Change Virtual Summit

  • President Biden held a historic “virtual” climate summit yesterday and today with 40 world leaders to build global commitments to slash greenhouse gas emissions and ramp-up renewable energy development. (New York Times, April 22 and White House Fact Sheet, April 23)
  • Biden committed the U.S. to cut its emissions in half by 2030 (relative to a 2005 baseline) – a pledge that would “dramatically reshap[e] key sectors of the economy.” (Wall Street Journal, April 23). The Biden Administration considers its climate commitments a “core part of [its] $2.2 trillion infrastructure plan,” essential to embrace new technologies, and necessary for the U.S. to out-compete China. (POLITICO, April 22)
  •  An open letter signed by 400+ businesses and investors support Biden’s 2030 target, calling it “ambitious and attainable.” The CEOs for Bank of America and Citibank appeared at the summit, as the financial sector faces increasing pressure to “play its biggest role yet in greening the global economy.” (Axios, April 22)

Energy Tax Bill

Senator Roy Wyden (D-OR) comments on floor

  • Senate Finance Committee Chairman Ron Wyden (D-OR) on April 21 reintroduced legislation that would consolidate and refocus a range of existing energy tax incentives directed at buildings, clean electricity, transportation and conservation.
  • The Clean Energy for America Act would provide performance-based tax incentives for energy efficient homes and commercial buildings – with the value of the tax incentives increasing as more energy is conserved. (Text of the legislation, one-page summary of the bill and a section-by-section summary.)
  • Similar to the previous version of the legislation, the bill would also address Section 179D – the enhanced deduction for energy-efficient commercial buildings – by creating a sliding scale based on the percent of energy efficiency achieved above the most recent ASHRAE 90.1 standard.
  • A business coalition led by The Roundtable supports the E-QUIP Act (H.R. 2346), which proposes “accelerated depreciation” for high-performance equipment installed in commercial and multifamily building.  The coalition is urging policymakers to include this measure as part of any “green tax” package that may be folded into larger infrastructure spending legislation. (Roundtable Weekly, April 2)

The Senate Finance Committee will discuss energy tax policy and climate change at an April 27 hearing entitled “Climate Challenges: The Tax Code’s Role in Creating American Jobs, Achieving Energy Independence, and Providing Consumers with Affordable, Clean Energy.”

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Bipartisan Legislation to Build More Housing Near Transit Reintroduced

Posted on by Trey Jackson

San Diego

The bipartisan Build More Housing Near Transit Act of 2021 (H.R. 2483) – reintroduced on April 14 by Reps. Scott Peters (D-CA) and McMorris Rodgers (R-WA) – would encourage the construction of low and middle-income housing in transit-served, walkable locations. 

  • The United States is in the middle of a severe affordable housing shortage exacerbated by the economic toll of the COVID-19 pandemic. The National Low Income Housing Coalition estimates there is a shortage of 7 million affordable homes, and 10.4 million Americans spend more than half of their income on housing. 

Benefits of the Bill 

  • The Build More Housing Near Transit Act of 2021 would provide incentives for building housing developments that use less land, allow people to live closer to job opportunities and effectively reduce green house gas emissions by eliminating the need for cars.
  • The Roundtable-supported bill was initially introduced in the previous Congress, which passed the House as part of last year’s Moving Forward Act. (One-page summary, Up for Growth Action)
  • This year’s bill (H.R. 2483) would ensure the Federal Transit Administration (FTA) takes a holistic and quantitative approach to evaluating applicants seeking to build affordable housing projects near transit station areas. Specifically, the bill would make some minor, but essential, enhancements to the evaluation criteria for the FTA’s Fixed Guideway Capital Investment Grants Program, or Section 5309 grants, which fund projects like commuter rail, light rail, and bus rapid transit. 

Broad Support 

Housing Near Transit

  • The Real Estate Roundtable joined a broad coalition of housing, transportation and other organizations in an April 14 letter to the bill’s sponsors to express strong support for the legislation.
     
  • The coalition letter states, “ From encouraging more thoughtful planning, to supporting more inclusive housing policies, to enabling more efficient use of federal dollars, the Build More Housing Near Transit Act is a sound policy and the product of a collaborative process.”
  • One of the organizations includes Up for Growth Action, whose Executive Director Mike Kingsella said, “The Build More Housing Near Transit Act encourages localities to align land-use policies and affordable housing resources with federal transit investment, ensuring that transit-rich communities are accessible to more Americans.” (Rep. Peters news release, April 24) 

Original cosponsors of the legislation include Reps. Marilyn Strickland (D-WA), Derek Kilmer (D-WA), Lisa Blunt Rochester (D-DE), David Scott (D-GA), Ami Bera (D-CA), Alan Lowenthal (D-CA), and Tom Suozzi (D-NY). 

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Federal Reserve’s Robert Kaplan Discusses Economic Outlook with Roundtable; Real Estate Coalition Urges State and Local Officials to Distribute Federal Pandemic Relief Funds

Posted on by Trey Jackson

Kaplan Discussion

Federal Reserve Bank of Dallas President and CEO Robert S. Kaplan, top left in photo, on April 12 discussed a wide range of monetary and fiscal policy issues with Roundtable Chairman Emeritus Robert S. Taubman (Chairman & CEO, Taubman Centers, Inc.), top right, and Roundtable President and CEO Jeffrey DeBoer, center. (Watch the Kaplan video interview on The Roundtable’s YouTube Channel)

The Fed View

  • The remote discussion focused on the overall economy, inflation trends, affordable housing, commercial real estate, the banking industry and cryptocurrency. Among Mr. Kaplan’s key points:
    • The Dallas Fed forecast for the 2021 U.S. economy’s growth rate is 6.5 percent. 

    • The distribution of COVID-19 vaccines is outpacing the spread of the virus, positively affecting economic growth.  

    • A recovering economy follows improved health conditions, with expected increases in consumer mobility and spending.

    • A significant element driving the economic recovery is “Substantial fiscal policy, much more substantial as a percentage of GDP than we had during the Great Recession.” 
  • Kaplan acknowledged the challenge of balancing central bank monetary policies with fiscal policies enacted by lawmakers. “Anytime there’s fiscal actions or other changes, you have to keep recalibrating that balance. There’s no textbook for this because we haven’t been through a period where we were shut down and we’re now reopening … and there’s no precedent in recent years of fiscal policy that’s this size of GDP,” Kaplan said.  (Video of the discussion)
  • He commented about the yield on U.S. Treasuries, which rose to 1.77% last month. “As we recover, it wouldn’t surprise me for it to drift higher, the 10 year,” Kaplan said, adding, “There’s no shortage of capital” to buy Treasuries. (BGov, April 9)
  • Kaplan also addressed the economic trends monitored by the Dallas Fed, reopening progress and CRE debt exposure to banks.  

Pandemic Relief Funds & Distribution 

treasury-department-building_x475w

  • Significant fiscal policy enacted by Washington lawmakers last month authorized hundreds of billions in pandemic relief under the American Rescue Plan Act of 2021 to households, small businesses, and the hospitality industry suffering from the economic impact of COVID-19. (Roundtable Weekly, March 12, 2021)
     
  • The Wall Street Journal reported on April 13 that state and local authorities are overwhelmed with “how to allocate $25 billion in federal rental relief, leaving many tenants and landlords waiting weeks or months for their share.”
     
  • The Roundtable is part of a broad real estate coalition that wrote on April 15 to state, county and municipal officials, urging them to distribute the allocated federal funds as soon as possible. (Coalition letter)
     
  • The coalition letter emphasized the need for elected state and local leaders “to quickly and fully allocate available American Rescue Plan federal funds to provide assistance to renters, consumer-facing small businesses, and impacted industries such as retail, tourism, travel, and hospitality that are having trouble paying rents, mortgages or remaining viable enterprises due to the COVID-19 pandemic.”
     
  • The letter adds, “Such assistance would make a big difference in the lives of thousands upon thousands of COVID-19 affected renters and businesses in their cities, counties, and states – and would also provide stability to the buildings and communities in which they live.” 

The Treasury Department continues to implement pandemic recovery programs, including the State and Local Fiscal Recovery Fund, State Small Business Credit Initiative, and renter and homeowner assistance. Treasury Secretary Yellen  and White House Rescue Plan Coordinator Gene Sperling met yesterday with members of the National Governor’s Association Executive Committee to determine the most efficient and effective way to get federal resources to states. (Treasury Dept readout, April 15) 

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Administration Outlines FY 2022 Budget, Plans Executive Order on Climate-Related Risks for Public and Private Financial Assets

Posted on by Trey Jackson

Biden Budget April_9_2021

The Biden administration today released its $1.52 trillion discretionary spending request for the coming fiscal year, which starts Oct. 1, 2022. This initial budget request outlines President Biden’s priorities and agenda for the coming year, but does not include any plans for raising revenue or tax policy changes. (Full budget text and news release summary)

Tax Details in Spring

  • Today’s “skinny” budget will be followed in late spring by a formal budget with more detailed requests for mandatory spending and tax policy proposals.  (CQ, April 7)
  • The budget proposal would boost current funding levels for nondefense spending by 16 percent and limit increases in defense spending to 1.7 percent. (CQ, April 9)
  • Among the specific agencies affected, the Environmental Protection Agency budget would increase $2 billion, and the Housing and Urban Development Department would receive a $9 billion boost. (New York Times and USA Today, April 9 )

Budget & Climate

San Francisco landscape wildfire smoke

  • The administration’s is also expected to address risks to financial stability posed by climate change in its long-term budget planning. Bloomberg reported this week that Biden will soon issue an Executive Order to develop a plan on climate-related risks for public and private financial assets.
  • The Executive Order would come as policymakers and the private sector debate how the financial industry should prepare for environmental threats – and the information companies should provide to investors about those risks.
  • The strategy would be developed within 120 days of the Order by National Economic Council Director Brian Deese and National Climate Advisor Gina McCarthy, in coordination with Treasury Secretary Janet Yellen. (Bloomberg, April 8)

Secretary Yellen is currently working on a separate report on government-wide efforts to address climate-related financial risks with the Financial Stability Oversight Council, which includes the Federal Reserve and the Securities and Exchange Commission. (Politico, March 31)

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Congressional Progressives Propose Legislation to Tax Unrealized Gains at Death as Republican Bill Seeks Permanent Repeal of Federal Estate Tax

Posted on by Trey Jackson

Sen. Chris Van Hollen (D-MD)

Several progressive members of Congress, led by Senator Chris Van Hollen (D-MD), above, on March 29 proposed legislation that would tax appreciated and unrealized capital gains when property is transferred at death or by gift. Meanwhile, Senate Republicans on March 9 reintroduced legislation to repeal permanently the federal estate and gift tax, commonly known as the “death tax.” (Wall Street Journal, March 29 and Fox Business, March 11).

Stepped-Up Basis

Why It Matters

Philadelphia, PA skyline

  • Repealing stepped-up basis and treating death as a taxable event would be particularly burdensome for real estate owners because of the illiquid and indivisible nature of real assets relative to a holdings like a portfolio of publicly traded stock. 
  • The legislation could force owners to sell properties if no cash income is available to pay the tax.  The bill would also pull capital out of real estate markets at a time when it will be needed to help repurpose existing properties in the post-pandemic era. 

Estate Tax Repeal 

  • Senate Republicans on March 9 unveiled the Death Tax Repeal Act of 2021 (S. 617) to permanently repeal the federal estate tax. The legislation, introduced by Sens. John Thune (R-SD.) and John Kennedy (R-LA) would eliminate the federal tax levied on estates worth more than $11.7 million after the death of the owner. (Sen. Kennedy news release)
  • Reps Jason Smith (R-MO) and Sanford Bishop (D-GA) on March 10 introduced companion legislation in the House. (Rep. Smith news release)
  • The Real Estate Roundtable, as part of the Family Business Estate Tax Coalition (FBETC), this week wrote to Sen. Thune and the House co-sponsors in support of S. 617 and the permanent repeal of the estate tax. (Coalition letter, April 2) 
  • The letter states that the FBETC “… supported the temporary estate tax relief in the Tax Cuts and Jobs Act (TCJA), which doubled the exemption to approximately $11.7 million for tax year 2021 and indexed future increases for inflation through 2025. However, without further congressional action, the temporary increase in the exemption amount will expire… repeal is the best solution to protect all family-owned businesses from the estate tax.” 

Proposals to raise the tax burden on appreciated property at death could be considered in the next wave of domestic economic legislation.  President Biden is expected to roll out more tax proposals aimed at upper-income taxpayers over the next few weeks. 

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Only 17% of Global CEOs Plan to Reduce Office Footprint Post-COVID; Office Demand Activity Posts Significant Gains

Posted on by Trey Jackson

Chicago skyline with lake in background

A KPMG survey of global CEOs shows that only 17% are considering downsizing their office space in the post-pandemic period – a drop from 69% recorded last August. Approximately one-third of the 500 CEOs in 11 key markets interviewed also anticipate a return to normal business operations this year, while 45 percent expect normality to resume in 2022. (KPMG 2021 CEO Outlook Pulse Survey) 

Key Findings

  • “The COVID-19 vaccine rollout is providing leaders with a dose of optimism as they prepare for a new reality,” KPMG Global Chairman and CEO Bill Thomas said. The report shows that global CEOS are:

» Less likely to downsize their physical footprint compared to 6 months ago

» Encouraged to reopening workplaces by government action and vaccination rates

» Apprehensive about a fully remote workforce

» Concerned increasingly about cyber security as remote working has increased

» Overwhelmingly looking to increase focus on ESG issues

 Office Demand Improving:

  • Additionally, the survey shows only 21% of businesses are looking to hire employees who work predominantly remotely – a significant reduction from 73% in 2020. The KPMG interviews with CEOs were conducted in February and March of this year. (Workplace Insight, March 24 and GlobeSt, March 25)

  • The outlook for office demand is on the upswing, supported by recent data by the national VTS Office Demand Index (VODI) that shows both in-person and virtual tenant tours posted large gains in January and February.
  • The VTS report shows that recent office demand activity is 38% lower compared to pre-pandemic levels – after having plummeted over 85% from February to May 2020. Additionally, all seven core office markets covered by VODI saw an increase in demand for office space in February 2021 compared to October 2020.
  • “While we saw some growth in demand in the back half of 2020, the exponential increase in the first two months of 2021, (combined) with the announcement from the Biden Administration that all Americans will be eligible for the vaccine by May 1, 2021, is providing confidence that a meaningful recovery is on the horizon,” VTS CEO Nick Romito said. (GlobeSt, March 25)

Noteworthy:

  • Microsoft will allow 57,000 employees back to its headquarters in suburban Seattle on March 28, although workers can choose whether to continue working remotely or a hybrid approach combining home and office. (AP, March 22)

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Roundtable Analysis and Summary of The American Rescue Plan

Posted on by Trey Jackson

March 6, 2021 – Senate Democrats passed an amended, $1.9 trillion pandemic relief package, The American Rescue Plan – that has now been sent back to the House for final passage before current unemployment benefits expire March 14. 

See The Roundtable’s document — “Summary and Analysis of Key Economic Provisions in The American Rescue Plan.”

February 27, 2021 – The American Rescue Plan Act of 2021 (H.R. 1319) was passed by the House of Representatives is a $195 trillion COVID-19 relief package that provides $638 billion in tax cuts, offset by $45 billion in tax increases, and represents over 2% of GDP in 2021.

 

White House Requests Information from Businesses on Their COVID-19 Efforts

Posted on by Trey Jackson

The Biden Administration is calling on the private sector to share their unique contributions in combatting the pandemic. In the coming weeks, The White House plans to elevate these examples to show how businesses across the country are doing their part to fight the coronavirus. (New York Times and White House Press Briefing, Feb. 26)

  • For more information, email publicprivatepartnerships@who.eop.gov and provide the name of your organization, location, and 3-5 bullets about your efforts toward defeating the virus. (Download White House document Join Us to Help Defeat COVID-19  for more details).
  • Examples of how commercial real estate owners are offering to open their buildings for COVID-19 testing are provided in a Feb. 24 Bloomberg report (subscription only).
  • The Bloomberg article focuses on the efforts of several companies exploring how to open coronavirus testing centers for the public good. “SL Green Realty Corp. and Rudin Management Co. have expressed interest in offering tests at their buildings. And Vornado Realty Trust and Boston Properties Inc. are among companies that agreed to let the state set up testing centers in select buildings,” according to the article.
  • Companies such as Related Cos. and RXR Realty are noted for having added on-site testing at their properties for returning clients. Roundtable Member and RXR Chairman and Chief Executive Officer Scott Rechler told Blooomberg, “You think to yourself, as a real estate owner and operator, we need to provide testing to help our tenants.”

Roundtable President and CEO Jeffrey DeBoer noted the continuing efforts of Roundtable members in fighting the pandemic. “Commercial real estate owners of buildings small and large have been active in combatting COVID-19 on behalf of their employees, tenants and investors since the early days of the outbreak,” DeBoer said. “These focused efforts will continue to help Americans in towns and cities throughout the nation until the pandemic is defeated and a sense of normalcy returns to the workplace.” 

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2021 National Policy Agenda

Posted on by Trey Jackson

2021 Policy Agenda (entire agenda)

Intro

Tax Policy 

Capital & Credit

Energy & Climate

Infrastructure & Housing

Homeland Security

 

Senate Advances Biden Cabinet Confirmations; Janet Yellen Confirmed as Treasury Secretary

Posted on by Trey Jackson

Janet Yellen - Shutterstock

Cabinet nominations for the Biden Administration are advancing in a closely divided Senate. On Jan. 25, former Fed Chair Janet Yellen, above, was confirmed (84-15) by the full chamber as the first female U.S. Treasury Secretary after the Senate Finance Committee unanimously approved her nomination last week. (Roundtable Weekly, Jan. 22)

  • Members of the Finance Committee asked Dr. Yellen about the potential for tax increases under the new Administration.  She responded in writing, “President Biden has proposed an array of reforms that would ensure the wealthiest taxpayers and corporations pay their fair share. These and other proposals will be further developed as part of the budget process.”
  • In addition to the former Fed Chair’s testimony, her responses to written questions for the record are available here.
  • Secretary Yellen is expected to play an important role in negotiations with Congress over COVID-19 relief, support President Biden’s efforts to encourage clean energy jobs, and work closely with current Fed Chair Jerome Powell on bolstering an economic recovery. (The Hill, Jan. 29 and NBC News, Jan. 25)
  • Yellen also said she will establish a new “hub” at Treasury that will examine financial system risks arising from climate change and on related tax policy incentives. (Politico, Jan. 25)
  • Other Biden cabinet nominations of interest to commercial real estate include:

Secretary of Transportation — Pete Buttigieg
The former mayor of South Bend, IN was approved by the Senate Commerce Committee on Jan. 27 and the full Senate has scheduled a vote on his nomination on Feb. 2. Buttigieg made urban development and economic revitalization cornerstones of his mayoral service. (Reuters, Jan. 27)

Administrator of the Environmental Protection Agency (EPA)– Michael Regan
The Senate Committee on Environment and Public Works will hold a confirmation hearing on Biden’s nomination of Regan to be EPA administrator on Feb. 3. (Bloomberg Law, July 27)  He currently leads North Carolina’s Department of Environmental Quality, and if confirmed will have a major role on shaping the Biden Administration’s reponse to the climate crisis.

Secretary of Energy – Jennifer Granholm
Former Michigan Gov. Jennifer Granholm had her confirmation hearing on Jan. 27 before the Senate Energy Committee. As governor, she supported policies for electric cars, energy efficiency, and renewable energy deployment.

Secretary of Commerce – Gina Raimondo
The Senate Commerce Committee held a Jan. 26 confirmation hearing to consider Rhode Island Governor Gina Raimondo for Commerce Secretary. Gov. Raimondo spoke at The Roundtable’s 2020 State of the Industry Meeting about her efforts to build more affordable housing, along with her support for Opportunity Zone tax incentives. (Roundtable Weekly, Jan. 31, 2020)

Secretary of Homeland Security – Alejandro Mayorkas
The Senate will vote on the nomination of Alejandro Mayorkas to lead DHS on Feb. 1, after he was approved by the chamber’s Homeland Security and Governmental Affairs Committee on Jan. 26.  A former Obama Administration official, if confirmed he will help shape the Biden Administration’s policies on matters such as immigration and cybersecurity. (The Hill, Jan. 28)

Secretary of Housing and Urban Development – Marcia Fudge
The Senate Banking Committee on Jan. 28 held a hearing on the nomination of Marcia Fudge to lead HUD.  Rep. Fudge (D-OH) is former chairwoman of the Congressional Black Caucus. During her nomination hearing, she told the committee that $25 billion in rental assistance approved by Congress at year-end was “not enough.” (NPR, Jan. 28)

A full listing of other cabinet nominees and senior roles in the Biden Administration is provided by The Wall Street Journal.

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