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President Trump Signs Debt Limit, Budget Caps Deal After Senate Passage; Congress In Recess Until Sept. 9.

Roundtable's DeBoer Comments on Energy Efficiency Bill at Senators Portman, Shaheen News Conference

Twenty-one Senate Republicans led by Ted Cruz (R-TX) this week urged Treasury Secretary Steven Mnuchin to use his regulatory authority to eliminate inflationary gains from the calculation of capital gains tax liability. ( Letter to Secretary Mnuchin , July 29) Capital gains tax is generally based on the difference between the sale price of a capital asset and its original cost, adjusted for certain factors such as depreciation. Capital gain liability includes an amount that reflects general price inflation, in addition to the true economic gain. Especially for long-held assets such as real estate, capital gain thus overstates a taxpayer's economic income.

The Senate Environment and Public Works Committee (EPW) unanimously approved a bill on Tuesday to authorize $287 billion over five years to repair and maintain the nation's surface transportation.

A Senate Banking Committee hearing on July 23 focused on a bipartisan bill that would protect lenders from federal liability when they provide accounts and other financial services to cannabis-related businesses (CRBs) deemed legal under state laws. The bill would also protect certain real estate transactions involving legitimate CRBs. (Senate Banking Committee, " Challenges for Cannabis and Banking: Outside Perspectives ") The hearing featured testimony by Sens. Cory Gardner (R-CO) and Jeff Merkley (D-OR), co-sponsors of the Secure And Fair Enforcement (SAFE) Banking Act. Their bill (S. 1200) would provide a safe harbor to financial institutions serving CRBs, protecting them from federal money laundering laws.

The Department of Homeland Security (DHS) on Wednesday published long-anticipated regulations governing key aspects of the EB-5 investment visa program. The new rule is scheduled to take effect on November 21, 2019 – assuming Congress reauthorizes EB-5 regional centers by September 30, and does not enact substantive reforms that supersede those program elements covered by DHS's action. For a detailed description of the rule, see "Greenberg Traurig Alert: Final EB-5 Regulations."

The U.S. House of Representatives yesterday passed the Bipartisan Budget Act of 2019 (H.R. 3877) that would suspend the national debt ceiling until July 31, 2021; raise federal spending over the next two years; and avoid the threat of automatic, across-the-board "sequestration" budget cuts. The bill now goes to the Senate, which is expected to vote next week. ( Section-by-Section summary of the bill, Budget Committee) The measure, which passed 284-149, caps recent negotiations between Democratic congressional leaders and the White House. Earlier this month, Treasury Secretary Steven Mnuchin wrote to House Speaker Nancy Pelosi (D-CA) warning that if the debt ceiling was not raised, the U.S. could run out of cash to pay its bills in early September, resulting in potential default on the nation's financial obligations. (Roundtable Weekly, July 12)

The Financial Accounting Standards Board (FASB) on Wednesday passed a proposal that would give more time to smaller lending institutions to adopt the Current Expected Credit Losses (CECL) accounting standard, which forces lenders to book losses on bad loans much faster. ( ABA Banking Journal , July 17) The delay would set January 2023 as the new deadline for small public lenders, private lenders and nonprofits (such as credit unions) to implement CECL. (Credit Union National Association, July 17)

A bipartisan bill reintroduced July 17 by Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH) includes provisions to advance energy efficiency standards for U.S. real estate by fostering market incentives, data-driven research, and open government procedures. Roundtable President and CEO Jeffrey D. DeBoer joined other industry and environmental group leaders at a press conference Wednesday in the Senate to support the Energy Savings and Industrial Competitiveness (ESIC) Act. (Video of DeBoer's statement and entire press event)

The U.S. Environmental Protection Agency (EPA) on July 15 released highly anticipated updates to its ENERGY STAR scoring model – a key federal label that rates and compares U.S. buildings' energy performance. The scoring update includes changes advocated by The Real Estate Roundtable and other real estate organizations. ENERGY STAR is a widely recognized, national label used as a market signal for well-managed property assets with smaller carbon footprints. The label impacts nearly 35,000 buildings and plants nationwide, representing more than 5 billion square feet of commercial space. ( ENERGY STAR "Facts and Stats ")

The U.S. Department of Commerce on July 8 found that government subsidies to Canadian exporters of fabricated structural steel (FSS) were not large enough to justify any new countervailing duties. In contrast, the agency found that unfair subsidies provided by the other two implicated countries warrant new duties in the range of 13% (Mexico) to 36% (China). ( Commerce Dept. Fact Sheet , July 8) Survey. FSS is a key material used in constructing the superstructure of major real estate and infrastructure projects, including high-rise developments, bridges, parking decks and ports. (Roundtable Weekly, March 8)

Roundtable submits recommended clarifications for final Opportunity Zones tax regulations, which are expected from the Treasury Department before the end of 2019.

New forecasts that the federal government may be unable to pay its bills by the first half of September have put pressure on policymakers to raise the nation's debt ceiling before Congress departs for summer recess – or face the prospect of a national default. If the debt limit is not increased to meet the nation's financial obligations, the government could miss payments to federal employees for salaries and pensions, debt service to foreign lenders, and potentially interest payments on the federal debt.

As The Real Estate Roundtable marks its 20th anniversary, its members have re-elected Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc.) as Chair, while approving its Board of Directors for the 2020 fiscal year (July 1, 2019 - June 30, 2020). The election results were announced by Roundtable President and CEO Jeffrey DeBoer during the organization's Annual Meeting earlier this month in Washington.

The Supreme Court of the United States (SCOTUS) issued a landmark property rights decision on June 21, ruling that the federal courts are open to decide landowners' claims for a Fifth Amendment "taking" of property by local regulatory agencies. In Knick v. Township of Scott , the nation's highest court reversed a 1985 precedent that had forced property owners to first bring takings lawsuits in state courts, which acted as "gatekeepers" to block the claims from ultimately getting to federal court.

The House Ways and Means Committee yesterday passed legislation to extend a host of expired and expiring tax credits through 2020 by a vote of 25-17. Among the bills advanced to the House floor for consideration is the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (H.R. 3301), which includes a deduction for energy efficient commercial buildings (Section 179D). (House Ways and Means, Markup of Tax Legislation). Committee Chairman Richard Neal (D-MA) said in his opening statement that extenders would provide "needed certainty for businesses making use of tax provisions that expired in 2017 and 2018, as well as some set to expire this year."

FY2020 Roundtable Board of Directors Effective July 1

The Real Estate Roundtable this week urged Commerce Department Secretary Wilbur Ross to reject calls from domestic producers of fabricated structural steel (FSS) to change the rules governing how trade subsidies or dumping are calculated – and to consider how potential tariffs on FSS from Canada and Mexico could have a significant impact on jobs and growth in U.S. real estate. ( Roundtable comment letter , June 27) The Commerce Department, in conjunction with the U.S. International Trade Commission (USITC), is conducting an antidumping and countervailing duty investigation into imported FSS from Canada, China and Mexico. (Commerce Department announcement, Feb. 26 and ITC initial report on FSS, March 2019)

President Donald Trump signed an executive order Tuesday creating a White House Council on Eliminating Regulatory Barriers to Affordable Housing. ( White House Executive Order , June 25). Secretary of Housing and Urban Development (HUD) Ben Carson will chair the council, which will engage State, local, and tribal leaders to identify and remove obstacles that impede economic growth and the development of new affordable housing. ( White House video of the signing, June 25)

A hearing on The Reauthorization of the Terrorism Risk Insurance Program before the Senate Banking Committee was held on June 18 as the Coalition to Insure Against Terrorism (CIAT)—including The Real Estate Roundtable—submitted comments urging Congress to pass a long-term reauthorization of the Terrorism Risk Insurance Act (TRIA).