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Category: Roundtable Weekly
Q2 Economic Sentiment: Commercial Real Estate Execs Confirm COVID-19 Market Downturn
Commercial real estate executives confirmed a downturn in Q2 market conditions due to job losses and business shutdowns related to COVID-19, according to The Real Estate Roundtable’s 2020 Q2 Economic Sentiment Index released today. The report also shows there is an expectation for an improvement in market conditions by next year, dependent upon the return of jobs and the ability to safely reopen businesses.
- “The commercial real estate industry, like all industries, experienced in the second quarter a sudden onset of economic disruption due to business lockdowns and stay-at-home shutdown orders put in place to combat the pandemic,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “The economic damage to commercial real estate has been particularly harmful for the retail and lodging sectors of the industry. Although our Q2 survey results show there is hope for improved conditions within the next year, there are significant concerns that other sectors of the industry could be dragged down if jobs don’t rebound and government assistance tapers off. The fear is that business and residential tenants may be suddenly unable to pay rent beyond the sectors already impacted and struggling to come back,” DeBoer added.
- The report’s Topline Findings include:
- The Real Estate Roundtable Q2 2020 Sentiment Index registered a score of 38, a decrease of 14 points from the first quarter of 2020. Many respondents confirm tenants are having increased difficulties paying their rent obligations as a result of massive job losses. Most survey participants expect the eventual reopening of businesses and resolution of rental obligations will lead to improved real estate market conditions.
- Many survey respondents have seen the industry quickly adapt to new social distancing environments by implementing technologies and online processes that provide some continuity for current operations. Market volatility is leading to uncertainty about how future retail real estate and multifamily demand will be affected.
- Job losses have led to widespread economic uncertainty. Lockdowns and stay-at-home orders have also impaired the ability of survey respondents to accurately value commercial real estate assets. As a result, transactions have slowed until a medical solution to the outbreak may allow reopening of properties, renewed business activity and underwriting of investments.
- The majority of survey participants indicated the availability of debt and equity are worse today than one year ago. Many respondents indicated they believe there is plenty of equity capital on the sidelines, but it is unwilling to invest in a market without price discovery. As for debt markets, debt funds have been largely absent from the market and only the most pristine assets are qualifying for new debt capital.
- The Roundtable’s Q2 Overall Sentiment Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.
- The Q2 Current Conditions Index dropped to 13 from Q1’s score of 55 – yet the Q2 Future Conditions Index increased 12 points to register 62 when compared to Q1’s score of 50.
- The 49-point disparity between the Q2 Current Index (13) and Future Index (62) is the most significant difference registered by The Roundtable’s Quarterly Economic Sentiment Survey in its 12-year history. The next highest disparity previously occurred in Q1 2009, when the difference between current and future indices registered 40 points during the financial crisis.
- DeBoer noted, “The unprecedented wave of job losses is disproportionally impacting women, minorities and veterans. Unemployment and business closures have added tremendous stress on people worried about taking care of their families and maintaining their housing. And it also has added to the worries of business owners, particularly in terms of meeting their payroll and rent obligations. The Roundtable continues to support the Federal government’s efforts to date including the CARES Act, the FED lending facilities and the expanded unemployment benefits. In addition to finding ways to improve and extend these programs, we now call on Congress to create a temporary assistance program specifically designed to help COVID impacted residential and commercial tenants meet their rent obligations.”
- He added, “Such a program would help people and businesses cope with the current economic downturn. It would help building owners maintain their workforce that is necessary to ensure that visitors to buildings are safe and healthy. It would ease pressure on financial institutions and local governments. The next COVID relief bill must include a rent assistance program for people and businesses.”
Data for the Q2 survey was gathered by Chicago-based FPL Associates on The Roundtable’s behalf. The Roundtable’s Q3 Sentiment Index will be released in early August.
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Commercial Real Estate Executives Report Balanced Real Estate Market Conditions Supported by Stable Economy
The Real Estate Roundtable’s 2020 Q1 Economic Sentiment Index released this week registered a three point increase over the 2019 fourth quarter index. Commercial real estate (CRE) industry executives continue to experience generally balanced market fundamentals across nearly all product types, with limited overbuilding and conservative overall industry debt. CRE executives also positively noted the continued macro-economic job growth and low interest rates. Election year politics and international tensions somewhat temper the overall optimistic sentiment causing some CRE executives to prepare for potential market disruptions later in 2020.
“As our Q1 index shows, we are beginning a new decade optimistic about continued overall economic growth,” said Roundtable President and CEO, Jeffrey D. DeBoer. “Commercial real estate markets remain fundamentally sound; supply and demand are in relative balance; debt and equity capital markets are functioning and disciplined; wages are rising; and, unemployment is low,” DeBoer added.
The Roundtable’s Q1 2020 Sentiment Index registered at 52 – a three point increase from the previous quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] This quarter’s Current-Conditions Index of 55 increased two points from the previous quarter, while this quarter’s Future-Conditions Index of 50 came in at five points higher compared to Q4 2019.
The report’s Topline Findings include:
- The Real Estate Roundtable Q1 2020 Sentiment Index registered a score of 52, a three point increase over the last quarter of 2019. Respondents feel the overall economy is stable and the commercial real estate market continues to be supported by strong market fundamentals. Many respondents have stopped attempting to predict an end to this cycle as they see no apparent economic hurdles to current market stability.
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Despite respondents finding comfort with the current market climate, many are anticipating two phases of the 2020 calendar year: pre-election and post-election. Many noted that election years are notoriously unpredictable and point to a large volume of transactions already underway as platforms attempt to execute before the summer.
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Asset values remain elevated across most property types and geographies. While certain respondents suggest that asset values have room to grow, others view current pricing as being at peak levels.
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Debt and equity capital are perceived as widely available in most markets. Many respondents noted the high level of discipline they are witnessing in the debt markets on behalf of lenders. This level of discipline suggests a healthy state in the capital markets, and is a contributing factor to the continuation of the current cycle.
DeBoer noted, “There is natural concern regarding the uncertainty of the coming presidential election. However, the commercial real estate industry’s leading executives are positive about today’s economy and optimistic about future market conditions. As the year progresses, The Roundtable will continue working with national policymakers to maintain and strengthen pro-growth policies to create jobs, expand housing opportunities, and benefit the overall economy.”
Data for the Q1 survey was gathered in January by Chicago-based FPL Associates on The Roundtable’s behalf. For the full survey report, visit http://www.rer.org/Q1-2020-Sentiment-Index/
White House Report: Over-Regulation Constrains Housing Supplies; Walker & Dunlop Report Considers Barriers, Solutions to Improve Housing Affordability
The Trump Administration yesterday issued its Council of Economic Advisers’ 2020 Annual Report, which warns that regulatory constraints on affordable housing development in key markets drive up costs, increase homelessness and pose a potential threat to U.S. economic growth. (White House, Feb. 20)
- The White House report also lists issues such as the opioid crisis as a drag on the historic economic expansion, while focusing on affordable housing constraints as a major impediment. (PoliticoPro, Feb.20)
- “We find that a key driver of the housing unaffordability problem is the overregulation of housing markets by State and local governments, which limits supply,” the report states. “By driving up home prices, overregulation adversely affects low-income Americans in particular, who spend the largest share of their income on housing.”
- To illustrate how rising housing unaffordability in U.S. real estate markets adversely affects economic growth, the report profiles 11 supply-constrained geographic areas. The report finds that deregulation in these areas would increase affordability enough to reduce homelessness by an estimated 31 percent on average.
- The report explains, “Such overly restrictive regulations include zoning and growth management controls, rent controls, building and rehabilitation codes, energy and water efficiency mandates, maximum-density allowances, historic preservation requirements, wetland or environmental regulations, manufactured-housing regulations and restrictions, parking requirements, permitting and review procedures, investment or reinvestment tax policies, labor requirements, and impact or developer fees.”
- The Trump Administration has focused on deregulation by establishing the White House Council on Eliminating Regulatory Barriers to Affordable Housing, while the Department of Housing and Urban Development (HUD) is encouraging State and local governments to focus on increasing housing supply in areas where supply is constrained. (Roundtable Weekly, June 28, 2019)
The Roundtable on Jan. 21 submitted a suite of policy suggestions to HUD aimed at improving access to affordable housing. The Roundtable’s comments offer specific policies intended to bring safe, decent, and affordable housing within reach of indigent and low-income households. The comments also urge HUD to focus on the scarcity of homes accessible to middle class families, and recommends policies to increase both purchase and rental options for teachers, first responders, and other contributors in America’s workforce. (Roundtable Weekly, Jan. 17)
Industry Focus
Walker & Dunlop’s this week published its Winter Multifamily Outlook – Focus on Affordable Housing that focuses on the economics driving the affordable housing crisis, a Q&A with Fannie-Freddie’s lead regulator Dr. Mark Calabria; and a report on how Opportunity Zones can be paired with HUD programs to provide new affordable housing.
- Affordable housing policy was also the topic of a panel discussion moderated by Walker & Dunlop Chairman & CEO Willy Walker during The Roundtable’s Jan. 28 State of the Industry Meeting in Washington. Participants included House Financial Services Committee Ranking Member Patrick McHenry (R-NC) and Federal Housing Finance Agency Director Mark Calabria – whose agency oversees the Government Sponsored Enterprises that own or guarantee $5.6 trillion in single and multifamily mortgages. (Roundtable Weekly, Jan. 31)
- In Walker and Dunlop’s previous Outlook Quarterly Report (Fall 2019) a policy Q&A with Roundtable President and CEO Jeffrey DeBoer addressed housing affordability and rent control. DeBoer states in the interview, “Although we focus on national issues, we do have concerns about the more local trend to enact rent control. These laws are destructive. They may help those people in the short term but those same people are hurt in the long run by giving them lower and lower quality housing. It ends up being very inequitable over time and hopefully the trend will not gain additional traction.”
- Additionally, National Multifamily Housing Council (NMHC) President Doug Bibby responded last week to a recent Wall Street Journal editorial on affordable housing – “Government rules drive developers to build luxury apartments.”
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Bibby states, “A full 32.1% of multifamily development costs are driven by government regulations—fees, standards, approval requirements, impact studies. … Places with the heaviest hand of government are hurting hardworking families trying to make ends meet the most. We should streamline regulations, give people more housing options and bring costs down.”
The national dialogue about affordable housing policy challenges and solutions, along with the evolving dynamics of the upcoming elections, will be discussed during The Roundtable’s Spring Meeting on March 31 in Washington.
Roundtable Submits Comments to House Climate Crisis Committee; House Democrats Unveil Green Energy Tax Draft
The Roundtable submitted energy and climate policy recommendations to the House Select Committee on the Climate Crisis on Thursday, while members of the House Ways and Means Committee unveiled a draft legislative package of more than 20 energy tax incentives – including incentives to promote commercial and residential building energy efficiency.
The Roundtable’s climate letter submitted Nov. 21 responds to a request for information from the Select Committee. This panel has no authority to write legislation but is authorized to study climate change and issue legislative policy recommendations (expected by March 31, 2020).
In its study and review of climate policy recommendations, the Select Committee has held a series of hearings featuring various stakeholders – including one focused on “Cleaner, Stronger Buildings.” (Roundtable Weekly, October 25, 2019) .
The Roundtable’s comments to the Select Committee highlighted the priorities advocated by its Sustainability Policy Advisory Committee (SPAC) to:
- Improve the model building energy codes process by enacting the Portman-Shaheen Energy Savings and Industrial Competitiveness (ESIC) Act. (Roundtable Weekly, September 27, 2019)
- Enhance EPA’s voluntary ENERGY STAR incentive programs for both commercial buildings and tenants.
- Improve the quality and reliability of the national data collected by the federal Commercial Building Energy Consumption Survey.
- Create meaningful accelerated depreciation periods to encourage investments in high performance equipment to retrofit existing commercial and multifamily buildings. (Roundtable Weekly, May 10, 2019)
- Foster public-private partnerships to finance safety and resiliency improvements to the electricity grid, the natural gas pipeline network, and other energy infrastructure assets.
Meanwhile, a discussion draft of the Growing Renewable Energy and Efficiency Now (GREEN) Act was released Nov. 19 by the chairman of the House Ways and Means Subcommittee on Select Revenue Measures – Rep. Mike Thompson (D-CA).
The GREEN Act would extend and revise a number of expired tax incentives, including provisions aimed at encouraging taxpayers to improve the energy efficiency of homes and commercial buildings. Specifically, the discussion draft includes:
- An updated and enhanced deduction for capital expenditures on energy-efficient commercial building property (section 179D)
- An expanded tax credit for the developers of new, energy-efficient homes (section 45L)
- A modified tax credit for energy-efficient improvements to existing homes (section 25C)
Under the bill, the revised tax incentives would be available through 2024. Following release of the draft legislation, House Ways and Means Committee Chairman Richie Neal (D-MA) stated, “The climate crisis requires bold action, and I’m pleased that we’re using the legislative tools at Ways and Means’ disposal to create green jobs, reduce carbon emissions, and help heal our planet.” We look forward to hearing from stakeholders to ensure this bill is effective in helping improve energy efficiency and eliminating carbon emissions.”
Prospects for passing the GREEN Act are unclear as it is a Democratic initiative that currently lacks Republican support.
Additionally, The Roundtable and coalition partners continue to lay the research and data foundation for a new tax incentive that would provide accelerated depreciation for high performance, HVAC, lighting, windows, and other equipment to retrofit existing commercial and multifamily buildings, known as “E-QUIP.” (See Roundtable Weekly, May 10, 2019). The coalition’s objective is for bipartisan introduction of an E-QUIP bill in early 2020.
The Roundtable’s Tax Policy Advisory Committee (TPAC) plans to analyze the proposed measures and respond to any eventual energy tax legislation that may be introduced in the New Year.
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TRIA Reauthorization Legislation: Seven-Year Extension Introduced in Senate; Vote on Similar House Bill Scheduled Next Week
A bipartisan, seven-year TRIA reauthorization bill – the Terrorism Risk Insurance Program Reauthorization Act of 2019 (S. 2877) – was introduced in the Senate yesterday by Thom Tillis (R-NC) along with 15 original cosponsors – including Senate Banking Committee Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH).
- The Senate bill is similar to a House measure that would reauthorize the Terrorism Risk Insurance Program through December 31, 2027. (Roundtable Weekly, Nov. 1).
- Both bills preserve taxpayer reforms included in the Terrorism Risk Insurance Program Reauthorization Act of 2015 and would also :
* Align the timing of mandatory recoupment from private insurers by the federal government in the event of an act of terrorism covered by the Terrorism Risk Insurance Program with the seven-year extension of the Program;
* Direct the Treasury Department in its biennial report on the Terrorism Risk Insurance Program and its effectiveness to include an evaluation of the availability and affordability of terrorism risk insurance, including specifically for places of worship; and
* Direct the Government Accountability Office to analyze and address, and report on, the vulnerabilities and potential costs of cyber terrorism, adequacy of coverage under the Program, and to make recommendations for future legislative changes to address evolving cyber terrorism risks.
- Roundtable Chair Debra Cafaro (Chairman and Chief Executive Offer, Ventas Inc.) said, “The Roundtable is encouraged to see such positive momentum on TRIA legislation in both chambers of Congress. We will continue to work with policymakers on both sides of the aisle to communicate how this essential long-term reauthorization contributes to economic growth; avoids disruption to real estate capital flows; and ensures businesses of all types nationwide can obtain terrorism insurance well before the program’s scheduled expiration at the end of 2020.”
- The Senate Banking Committee will markup the bill on Wednesday, Nov. 20. While amendments are expected to be offered, the committee is expected to approve the bill on a bi-partisan basis.
- In the House, Majority Leader Steny Hoyer today addressed legislation that will be considered next week in a leadership colloquy on the House floor. “Madam Speaker, we will consider several bills on suspension of the rules including H.R. 4634 – the Terrorism Risk Insurance Program Reauthorization Act – a very significant and very bipartisan bill,” Hoyer said.
- Bills considered under suspension of rules are subject a 40-minute limit on debate; a prohibition against floor amendments; and a two-thirds vote of those present and voting for passage.
The House Financial Services Committee on October 31 passed (57-0) the Terrorism Risk Insurance Program Reauthorization Act of 2019 (H.R. 4634). In addition to extending TRIA for seven years, H.R. 4634 would also require a study on the cyber terrorism market and expand an ongoing study to also determine the availability and affordability of TRIA coverage for places of worship. (Roundtable Weekly, Nov. 1).
The Roundtable expects H.R. 4634 will pass the House next week as S. 2877 advances beyond the Senate Banking Committee.
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Industry Leaders and Policymakers Address National Issues Affecting CRE, Including TRIA, Affordable Housing, Tax and Monetary Policy
This week’s Real Estate Roundtable Fall 2019 Meeting in Washington featured discussions with congressional lawmakers on national policy issues affecting economic growth, job creation, local communities and the commercial real estate industry. Roundtable members engaged policymakers and other speakers on a wide range of issues, including terrorism insurance; affordable housing; GSE reform; opportunity zones; FIRPTA repeal; infrastructure; energy and climate; and monetary policy.
Roundtable Chair Debra A. Cafaro (Chairman & CEO, Ventas, Inc.) launched the meeting by noting how the organization remains focused on its national policy agenda. Cafaro added that The Roundtable continues to move forward from its 20-year foundation with 17 industry association partners and membership-driven policy advisory committees. She emphasized, “We will continue to do the research necessary to make our case on issues with policymakers, and work across product types and entity classifications to advance strong, sustainable national policy for the industry.”
Speakers at The Roundtable’s Fall Meeting included:
- Dr. Ben Carson—Secretary, U.S. Department of Housing and Urban Development (HUD)—discussed the Administration’s efforts to reshape the role of the Government Sponsored Enterprises (GSEs) by capitalizing Fannie Mae and Freddie Mac before ending their government conservatorship. He also noted a Stanford University study on rent control legislation that found such actions decreased rental costs in the short-term, yet decreased the supply of affordable housing in the long-term.
- Sen. Jacky Rosen (D-NV)—Member, Senate Committees on Commerce, Science and Transportation; Homeland Security and Governmental Affairs; and member of the Problem Solvers Caucus while she served in the House of Representatives—noted the importance of public-private partnerships for infrastructure investments, economic growth and community improvements. She also lauded Opportunity Zones as an incentive to create more affordable housing in her state.
- Sen. Rick Scott (R-FL)—Member, Senate Committees on Budget; Commerce, Science and Transportation; Homeland Security and Governmental Affairs—addressed the importance of bipartisanship to achieve legislative goals. He discussed the efforts of policymakers to reach solutions on immigration issues such as DACA, border security and Visa reform.
- David Sampson—President and CEO, American Property Casualty Insurance Association—discussed the need to reauthorize the Terrorism Risk Insurance Act (TRIA) and current efforts in Congress to enact a “clean” multi-year extension as soon as possible. He added that cyberterrorism was an increasing risk to business interruption in the marketplace.
- Dana Peterson—Global Economist, Citgroup—spoke about how consumer spending trends, demographics and market conditions have led to the 11th year of economic expansion in the U.S. She also forecast continued growth as domestic companies lead the way in technology areas affecting Artificial Intelligence, 5G and blockchain.
- Charlie Cook—Political Analyst for The National Journal Group; Editor and Publisher of The Cook Political Report—spoke about the electoral landscape, the increase in “tribal” partisanship and how a sharp increase in voter engagement is expected in the upcoming presidential election.
Following the business meeting, informal dinners were held with congressional policymakers and Roundtable members to discuss policy issues in more detail.
Next on the Roundtable’s meeting calendar is the all-member State of the Industry Meeting on January 28, 2020, which will be held in conjunction with its policy advisory committee meetings in Washington, DC.
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Administration Officials Testify on GSE Reform, Housing Affordability; NMHC Releases Data on Ramifications of States’ Rent Control Legislation
The House Financial Services Committee held an Oct. 22 hearing – “The End of Affordable Housing? A Review of the Trump Administration’s Plans to Change Housing Finance in America” to review the Trump administration’s plans to change housing finance in the U.S. (Committee memorandum, Oct. 17)
- Witnesses included Treasury Secretary Steven Mnuchin; Dr. Ben Carson, Department of Housing and Urban Development (HUD) Secretary; and Dr. Mark Calabria, Federal Housing Finance Agency (FHFA) Director. Topics discussed included reforms to the Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac, Housing Affordability and Rent Control. (Video of the Oct. 22 hearing)
- Treasury and HUD unveiled plans last month to wind down the 11-year long federal conservatorships of Fannie and Freddie, which support the multi-trillion U.S. housing market by securitizing and guaranteeing residential mortgages. (Roundtable Weekly, Oct. 4 and (CQ, Oct. 22)
- The administration plans to reduce the size of Fannie and Freddie with an explicit government guarantee that would be open to private competitors who comply with underwriting standards from FHFA, the federal government’s GSE regulator.
- Committee Chairwoman Maxine Waters (D-CA) stated that the Trump Administration’s housing finance reform plan would be disastrous for the U.S. housing system. She said that the Administration’s plan would abolish affordable housing goals that help to support affordable home ownership and rental housing, replacing them with a mortgage fee that has not been explained in detail.
- Treasury Secretary Mnuchin testified, “I was surprised and disappointed by the title of this hearing. To be clear, Treasury does not propose – and indeed opposes – reducing or eliminating the government-sponsored enterprises’ longstanding support for affordable housing.”
- During Q&A, HUD Secretary Carson stated that opportunity zone tax incentives revitalize business in specific geographic areas, which then incentivizes the building of affordable housing.
- In response to question about rent control from Rep. Alexandria Ocasio-Cortez (D-NY), FHFA Director Calabria agreed there is a lack of affordable rental housing, especially in certain cities like New York – but added he did not think it should be the federal government’s responsibility to tell someone what price they have to rent their property.
- In a separate development, new data released this week by the National Multifamily Housing Council (NMHC) highlights the ramifications of California joining Oregon and New York in passing sweeping rent control legislation. (Roundtable Weekly, Oct. 11)
- The October NMHC Quarterly Survey shows 34% of multifamily firms who operate in rent control jurisdictions have reduced investments in those areas – a significant jump from the July survey, where 20% of firms indicated they were cutting back investment in rent controlled areas. (NMHC, Oct. 22)
- Roundtable President and CEO Jeffrey DeBoer addresses rent control in Walker and Dunlop’s recently released “Quarterly Multifamily Outlook Quarterly Report for Fall 2019.” DeBoer states, “Although we focus on national issues, we do have concerns about the more local trend to enact rent control. These laws are destructive. They may help those people in the short term but those same people are hurt in the long run by giving them lower and lower quality housing. It ends up being very inequitable over time and hopefully the trend will not gain additional traction.”
Regarding housing finance and GSE reform, The Roundtable and 27 industry organizations on March 1 submitted principles for reforming the GSEs. The letter emphasized that compelling evidence must show the private market is capable of an expanded role before efforts are made to reduce the GSEs’ current housing finance footprint. “Ultimately, we believe any reform, be it administrative or legislative, must seek to further two key objectives: 1) preserving what works in the current system, while 2) maintaining stability by avoiding unintended adverse consequences for borrowers, lenders, investors, or taxpayers.” (Roundtable Weekly, March 1)
GSE reform, housing affordability and recent state measures on rent control will be discussed during The Roundtable’s Fall Meeting on Oct. 30 in Washington.
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Ten-Year TRIA Reauthorization Bill Scheduled for Late-October Markup in House
House Financial Services Committee Chairwoman Maxine Waters (D-CA) formally introduced H.R. 4634 – the Terrorism Risk Insurance Program Reauthorization Act of 2019 – on October 16 and stated it will be part of an October 29-30 full committee markup. (Chairwoman Waters at podium, above). The announcement came before a joint House subcommittee hearing, which focused on the program and a possible fourth reauthorization of the Terrorism Risk Insurance Act (TRIA).
- “We want to reauthorize [the Terrorism Risk Insurance Act] just as it is,” Waters told CQ Roll Call. “We’ve got support from the Senate, that’s what the Senate wants to do. And you know it’s not easy for both sides to come together.” (CQ, Oct. 16)
- During the Wednesday news conference, Waters stated, “Nearly two decades after TRIA was enacted, TRIA has thankfully never been triggered, and the program is working as intended, effectively protecting our economy from the costs of a terrorist attack and providing security for many of our nation’s hospitals, stadiums, schools and small businesses.”
- She added, “Without a reauthorization, the program would expire at the end of 2020, but we could experience the harmful effects of a failure to reauthorize as soon as January of 2020. And so, I am pleased to put forth … a bill that provides a ten-year clean reauthorization of TRIA.” (Committee news release, Oct. 16)
- TRIA has been extended in 2005, 2007 and again in 2015 – following a 12-day lapse when Congress failed to complete their work on reauthorization at the end of 2014.
- A long-term, clean TRIA reauthorization is a top priority for The Real Estate Roundtable. Before the House hearing, the Coalition to Insure Against Terrorism, which includes The Roundtable, wrote to the subcommittees’ leadership in support of H.R. 4634. (CIAT letter, Oct. 16)
- The Roundtable and nearly 350 companies and organizations also urged Congress on September 17 to swiftly pass a long-term TRIA reauthorization. (Roundtable Weekly, Sept. 20)
- House Financial Services Committee Ranking Member Patrick McHenry (R-NC) stated during the Wednesday hearing that Congress should first update TRIA to address cyberterrorism risks. “We’ve had substantial changes internationally since the last reauthorization. I want to make sure we do the right thing when it comes to cyber threats, and I don’t believe what we have currently in law is sufficient for that,” said McHenry. (CQ, Oct. 16)
- In the Senate, TRIA reauthorization was a focus of a June Banking Committee hearing chaired by Sen. Mike Crapo (R-ID). (Roundtable Weekly, June 21)
- Roundtable President and CEO Jeffrey DeBoer noted during an October 1 podcast episode of “Through The Noise,”, “Businesses and facilities of all types need to see the terrorism risk insurance program extended. This need applies to hospitals, all commercial real estate buildings, educational facilities, sports facilities, NASCAR and theme parks, and really any place where commercial facilities host large numbers of people.”
- TRIA will be the focus of an October 30 discussion during The Roundtable’s Fall Meeting with American Property and Casualty Insurance Association President and CEO David Sampson.
Chairwoman Waters stated during the news conference that after the late October committee markup of H.R. 4634, “I am committed to bringing the bill to the floor soon afterward, and I will be exploring vehicles for the bill to be attached to.”
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Roundtable Joins SCOTUS Brief in “Dreamers” Case Emphasizing Need for Immigrant Workers to Fill Essential Real Estate Jobs
The Real Estate Roundtable on October 4 joined an amicus brief filed with the Supreme Court of the United States (SCOTUS), to emphasize the critical need for foreign-born workers to fill labor shortages in construction, hospitality, building maintenance, and other real estate sector jobs.
- The case, Department of Homeland Security v. Regents of the University of California, concerns the Deferred Action for Childhood Arrivals (DACA) program. DACA has allowed nearly 800,000 undocumented young adults brought to the U.S. as children – the “Dreamers” – to apply for work permits and protection from deportation.
- The Obama Administration established DACA in 2012. In 2017, the Trump Administration announced its own directive to end the program – thus priming the matter for SCOTUS’s review.
- The Roundtable’s amicus brief, led by the National Association of Home Builders, also includes the Essential Worker Immigration Coalition, representing members concerned with the shortages of lesser-skilled labor in the U.S. workforce. The brief states, “DACA-eligible immigrants are a crucial component” of real estate jobs, as 41% of them work in industries represented by the amici.
- The brief also explains that foreign-born workers generally are essential to fill labor shortages that constrain the productivity of the real estate workforce. Foreign-born labor accounts for:
- Close to 25% of construction workers, a percentage that has been rising since the Great Recession;
- An estimated 31% of hotel and lodging, and 22% of restaurant workers;
- As much as 25% of workers providing hands-on care to the elderly and people with disabilities; and
- Over 35% of building and grounds cleaning and maintenance occupations.
- The case has attracted numerous other briefs. One brief in support of DACA was filed by a consortium of 140 companies and 18 business associations representing a broad array of industries, including retail, tech, tourism and communications. (The Hill, Oct. 4)
- The consortium brief included participants such as the American Hotel & Lodging Association, Hilton Worldwide, Host Hotels and Resorts, Marriott International, the U.S. Chamber of Commerce, and numerous Silicon Valley firms. “By expanding the opportunities available to DACA recipients, this program has benefitted America’s companies, our Nation’s economy, and all Americans,” their brief says.
Other stakeholders filing briefs to support the DACA program include Apple, Microsoft and the government of Mexico. (CNBC’s Closing Bell, Oct. 2 and The Hill, Oct. 4). Oral argument is scheduled for Nov. 12 and a decision is expected by summer. (ScotusBlog, Sept. 10)
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