News Type: Roundtable Weekly

Border Security Negotiators Optimistic; Democratic “Green New Deal” Resolution Includes Energy Efficiency Goals for Buildings

Posted on by Trey Jackson

Congressional negotiators reported progress on a border-security deal this week, as they aim to pass legislation by Feb. 15 to fund approximately 25% of the government.  Without a new funding measure, the government will face a second partial shutdown.  (Roundtable Weekly, Feb. 1)

Senate Appropriations Chairman Richard Shelby (R-AL) met with President Trump yesterday, stating: “[The president] said to me again he would like for us to wrap it up, to get a legislative solution. We’re negotiating on the substance, serious stuff now…”

  • Senate Appropriations Chairman Richard Shelby (R-AL) met with President Trump yesterday, stating: “[The president] said to me again he would like for us to wrap it up, to get a legislative solution.  We’re negotiating on the substance, serious stuff now. …This is the most positive I’ve been or I’ve seen in the talks since, oh gosh, maybe ever.”  (CQ and Roll Call, Feb. 7)
  • House Appropriations Chairwoman Nita Lowey (D-NY) said yesterday that negotiators are acting in “good faith” but may not be able to finish work by Friday.  Shelby added, “I think we’re looking at Monday right now.  But there’s a lot to do.” (BGov and Fortune, Feb. 7)
  • If the 17 members of the conference negotiation committee reach agreement by Monday, legislative text could reach the House floor by Thursday, Feb. 14 – followed by action in the Senate.

Infrastructure  

President Trump also briefly commented during the SOTU on the need for funding national infrastructure improvement projects. “I know that Congress is eager to pass an infrastructure bill. And I am eager to work with you on legislation to deliver new and important infrastructure investment, including investments in the cutting edge industries of the future. This is not an option, this is a necessity,” Trump said.  (Politico, Feb. 5) 

House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR)  on “The Cost of Doing Nothing: Why Investing in Our Nation’s Infrastructure Cannot Wait.”

  • House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR) responded to the SOTU, stating: “None of this can happen, however, if we continue to ignore the looming crisis facing the Highway Trust Fund. I will work to build bipartisan agreement around legislation, but I can’t do it alone. This will require massive effort from the White House, stakeholders, and supporters in Congress to get something real across the finish line.”  (DeFazio Statement, Feb. 5)
  • The need to repair aging roads, bridges, transit, airports and harbors throughout the country was the focus of Chairman DeFazio’s Infrastructure Committee hearing yesterday on “The Cost of Doing Nothing: Why Investing in Our Nation’s Infrastructure Cannot Wait.”  (Chairman DeFaizo’s Opening Remarks, Feb.7)

The Roundtable sent a comment letter to President Trump in Jan. 2018 offering specific suggestions on how innovative financing sources may be used to help pay-for infrastructure improvements – and how restructuring a lengthy permitting process and cutting unnecessary red tape will help control project costs and delays.  (Reference: The Roundtable’s 2019 Policy Agenda Infrastructure section). 

“Green New Deal” 

This week also saw the unveiling of a sweeping Democratic congressional resolution called the “Green New Deal” that aims to “achieve net-zero greenhouse gas emissions” in the next 10 years.  (Sen. Ed Markey new release, Feb. 7) 

Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) introduced  a sweeping Democratic congressional resolution called the ” Green New Deal ” that aims to “achieve net-zero greenhouse gas emissions” in the next 10 years.

  • Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) yesterday introduced the resolution. The measure is a non-binding, aspirational blueprint that includes a federal jobs guarantee, basic income and universal health care.  All the declared 2020 Democratic presidential candidates in the Senate are among the co-sponsors of the resolution.  (Wall Street Journal and CNBC, Feb. 8)
  • The proposal includes the goals of upgrading every existing building in the United States and requiring that new buildings should “achieve maximal energy efficiency, water efficiency, safety, affordability, comfort, and durability, including through electrification.”  (Fast Company, “AOC’s Green New Deal is a Wake-up Call for the Building Industry,” Feb. 7)
  • Federal data show that commercial building energy use has decreased dramatically since the late 1970s.  The Roundtable’s membership and Sustainability Policy Advisory Committee (SPAC) have worked closely with policymakers and federal agencies for years to achieve substantial reductions in CRE’s energy consumption and carbon footprint on a national scale.  (Reference: 2019 Policy Agenda’s Energy section)
  • The Roundtable and SPAC continue to advocate further steps in achieving greater energy efficiency in buildings.  The Roundtable currently is working with stakeholders on a proposal to reduce the after-tax cost of energy efficient systems and equipment, in light of the 2017 tax overhaul’s new framework for expensing building improvements.

Energy efficiency for commercial buildings, government funding and infrastructure and were among the topics discussed last week during The Roundtable’s State of the Industry Meeting, where Speaker of the House Nancy Pelosi (D-CA) was a featured speaker.  (Roundtable Weekly, Feb. 1)

Policymakers Agree on Government Funding Through Sept. 30; Second Partial Government Shutdown Avoided

Posted on by Trey Jackson

A $333 billion spending package passed by Congress yesterday and signed by President Trump today funds the government through Sept. 30 (end of FY2019),  avoiding a second government shutdown.  (Senate Appropriations Committee summary, Feb. 15)

  President Trump today declared a national emergency over illegal immigration at the border. White House officials said executive powers will be used to reprogram $6.6 billion in Pentagon and Treasury funds to build a border wall.

  • The legislative measure signed today includes funding for the Department of Homeland Security (DHS) and six other government agencies.  The debate over DHS funding for a wall along the southwestern border with Mexico led to a five-week partial government shutdown.  During the shutdown, the EB-5 Immigrant Investor Regional Center Program and federal cleanups at Superfund sites around the nation were suspended.  With today’s funding package, EB-5 has received another extension through Sept. 30. (Roundtable Weekly, Jan. 25).  
  • Policymakers this week agreed to appropriate $1.38 billion for 55 new miles of barriers along the Mexican border. President Trump originally requested $5.7 billion to construct 234 miles of barriers. (Wall Street Journal, Feb. 15). 
  • President Trump today also declared a national emergency over illegal immigration at the border.  White House officials said executive powers will be used to reprogram $6.6 billion in Pentagon and Treasury funds to build a border wall.  (The Hill, and New York Times, Feb. 15)
  • House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Charles Schumer (D-NY) responded they would use “every available remedy” to overturn the emergency declaration.  (Pelosi-Schumer joint statement, Feb. 15)
  • House Democrats plan to introduce legislation to block the president’s effort to reprogram funding for wall construction.  Legal challenges, which are also expected, could end up in the Supreme Court. (USA Today, Feb. 14 and AP, Feb. 15)

President Trump said he expected a legal battle over the emergency proclamation. “I expect to be sued. I shouldn’t be sued,” he said today. “We will possibly get a bad ruling. And then we’ll get another bad ruling. And then we’ll end up in the Supreme Court, and hopefully we’ll get a fair shake,” he added.  (Wall Street Journal, Feb. 15)

Roundtable Members and National Lawmakers Focus on Public Policies Beneficial to Economy, Job Creation and Communities

Posted on by Trey Jackson

This week’s Real Estate Roundtable Spring Meeting featured discussions with U.S. lawmakers on developing market-based public policies that benefit national economic growth, create sustainable jobs and meet the evolving housing needs of local communities.  The meeting focused on issues such as infrastructure; terrorism insurance; tax issues such as opportunity zones and FIRPTA repeal; and energy efficiency.

Roundtable Chair  Debra A. Cafaro (Chairman & CEO, Ventas, Inc.)

 

  • Roundtable Chair Debra A. Cafaro (Chairman & CEO, Ventas, Inc.) launched the meeting by noting the wide range of issues addressed in The Roundtable’s 2019 National Policy Agenda.  Cafaro also recognized the organization’s anniversary in the advocacy world, stating, “During these past 20 years, our mission has been to bring together the top leaders from commercial real estate sectors with the industry’s 17 leading trade associations to address key national policy issues relating to our industry and to the overall economy.”  She emphasized that the organization’s successful business model has always been based on “…analyzing national issues for their real world impact, and then advocating a nonpartisan, unified position based on solid research and facts.” 
  • [Cafaro this week was also appointed as chair of the board of directors of The Economic Club of Chicago for a two-year term beginning July 1. (Video of Cafaro’s Speech, April 10) ]

Meeting speakers at The Roundtable’s Spring Meeting included: 

  • Senator Michael Crapo (R-ID) —  chair, Senate Committee on Banking, Housing and Urban Affairs — spoke with Roundtable members about his committee’s policy agenda,  his recent efforts to reshape the role of the Government Sponsored Enterprises (GSEs) and the need to reauthorize the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA)

Chairman Michael Crapo (R-ID)— Senate Committee on Banking, Housing and Urban Affairs

  • Senator Cory Gardner (R-CO) — member, Senate Committees on Commerce, Science and Transportation; Energy and Natural Resources — discussed funding challenges for a national infrastructure improvement initiative, tax and other polices to encourage energy efficiency, and his recent reintroduction of the STATES Act to  resolve the federal-state conflict over cannabis laws. (U.S. News & World Report, April 4)
  • Reps. Josh Gottheimer (D-NJ) and  Tom Reed (R-NY) — House co-chairs of the Problem Solvers Caucus — discussed the efforts of their 46-member bloc of bipartisan policymakers who seek cooperative approaches to policy solutions.  No Labels Founder and CEO  Nancy Jacobson joined the discussion on efforts to find common ground in the 116th Congress.
  • Justin Muzinich — Deputy Secretary, U.S. Department of Treasury — discussed TRIPRA reauthorization, Treasury’s highly-anticipated 2nd round Opportunity Zone regulations, and other ongoing security, trade, and tax initiatives.
  • Terry McAuliffe — former Governor of Virginia (2014-2018) and co-chair of Hilary Clinton’s 2008 presidential campaign — spoke about public policy lessons learned from his state’s successful economic expansion.
  • Tim Sloan — former CEO and President, Wells Fargo & Company — discussed his leadership experience as the largest lender to the CRE industry in the nation and the pressing need to recognize cybersecurity as a major risk to the country and banking industry.

The Roundtable will convene next on June 11-12 for its all-member Annual Meeting and policy advisory committee meetings in Washington, DC.

Business Coalition Supports Legislation to Make New Pass-Through Deduction Permanent

Posted on by Trey Jackson

The Real Estate Roundtable and a coalition of more than 100 business organizations yesterday sent a letter to Senate and House tax writers supporting legislation that would permanently extend the new 20 percent deduction for qualified pass-through business income. (Coalition letter, April 11)

 

The  Real Estate Roundtable and a coalition of more than 100 business organizations yesterday sent a letter to Senate and House tax writers supporting legislation that would permanently extend the new 20 percent deduction for qualified pass-through business income. 
(Coalition letter, April 11) 

  • Sen. Steve Daines (R-MT) introduced the Main Street Tax Certainty Act yesterday (S. 1149) to make the deduction permanent.  The Senate bill mirrors legislation introduced in the House (H.R. 216) by Reps. Henry Cuellar (D-TX) and Jason Smith (R-MO).
  • The 20 percent deduction for pass-through business income  (under Internal Revenue Code section 199A) is one of the most important – and complex – elements of the 2017 tax overhaul law.  The deduction was designed to provide relief to the 30 million businesses in the United States that are not C corporations, and thus don’t benefit from the corporate tax cut.  It is currently scheduled to sunset at the end of 2025.
  • The coalition letter states that the House and Senate bills to make the deduction permanent will help ensure tax relief for the millions of employers organized as partnerships, S corporations, and sole proprietorships. “Repealing this sunset will benefit millions of pass-through businesses, leading to higher economic growth and more employment,” according to the letter.
  • The Treasury Department on Jan. 18 issued final regulations and new guidance on the 20 percent deduction.  Proposed regulations issued alongside the final rules ensure that investors who receive REIT dividends indirectly through an interest in a mutual fund are eligible for the pass-through deduction.  (Roundtable Weekly,  Jan. 25, 2019)
  • Yesterday, the IRS released a fact sheet (FS-2019-8) on the new section 199A deduction.  Among the topics addressed are the qualified business income component, qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. (IRS news release, April 11) 

The Section 199A deduction was a key topic of Roundtable President and CEO Jeffrey DeBoer’s testimony before the Senate Finance Committee in the fall of 2017, shortly before lawmakers released the first version of their tax overhaul. The Roundtable was closely involved in the legislative development of the provision.  (Roundtable Weekly, Sept. 22, 2017) 

Senate Confirms Mark Calabria as FHFA Director Overseeing Fannie Mae and Freddie Mac

Posted on by Trey Jackson

The Senate yesterday confirmed Mark Calabria, previous chief economist to Vice President Mike Pence, as director of the Federal Housing Finance Agency (FHFA) – the federal regulator overseeing Fannie Mae, Freddie Mac and the multi-trillion dollar Federal Home Loan Bank System. 

The Senate yesterday confirmed Mark Calabria, previous chief economist to Vice President Mike Pence, as director of the Federal Housing Finance Agency (FHFA) – the federal regulator overseeing Fannie Mae, Freddie Mac and the multi-trillion dollar Federal Home Loan Bank System.

  • Calabria will now have broad influence over reshaping the role of the Government Sponsored Enterprises (GSEs) brought under government conservatorship during the financial crisis. 
  • Senate Banking Committee Chairman Mike Crapo (R-ID) said on the Senate floor yesterday that Calabria “committed to working with me, and other members of this body, to reach a comprehensive solution on ending the conservatorship of Fannie and Freddie, once and for all.  He agrees with me, and many others, that action on housing finance reform is the prerogative of Congress, and that after over a decade of conservatorship, it is long overdue.”  (Politico, April 4) 
  • Sen. Crapo and President Trump last week launched separate efforts aimed at reforming the multi-trillion-dollar financial market for single-family and multifamily mortgages, including the GSEs’ Fannie Mae and Freddie Mac.  Chairman Crapo’s  recent housing reform outline proposes to return the GSEs to private control.  (Roundtable Weekly, Feb. 8) 
  • Sen. Crapo will be a featured speaker at next week’s Spring Roundtable Meeting in Washington. 
  • President Trump last week released a presidential memo directing “the Secretary of the Treasury and the Secretary of Housing and Urban Development to craft administrative and legislative options for housing finance reform.”  (Wall Street Journal, March 27) 
  • President Trump also aims to end the GSEs’ conservatorship, “promote competition in the housing finance market … create a system that encourages sustainable homeownership and protects taxpayers against bailouts.”  The memo supports the preservation of the 30-year fixed-rate mortgage. ( White House announcement, March 27) 
  • A coalition of 23 national real estate organizations, including The Real Estate Roundtable, sent a letter supporting Calabria’s confirmation this week to Senate leadership.  (Coalition confirmation support letter, April 1) 

The Real Estate Roundtable and 27 industry organizations last month submitted principles for reforming the GSEs. (Roundtable Weekly, March 1) 

Financial Accounting Standards Board (FASB) Rejects Bank Proposal on Loan Losses

Posted on by Trey Jackson

The Financial Accounting Standards Board (FASB) this week voted to reject a proposal by regional banks to soften the impact of a change that will force banks to book losses on bad loans much faster.  This rejection means that the Current Expected Credit Loss (CECL) accounting standard will proceed as planned at the beginning of 2020 for publicly traded U.S. banks and later for other financial institutions.  A business coalition that included The Real Estate Roundtable last month had urged further study amid concerns that CECL may soon begin to reduce aggregate bank lending.  (Coalition Letter, March 5)

  

The Financial Accounting Standards Board (FASB) this week voted to reject a proposal by regional banks to soften the impact of a change that will force banks to book losses on bad loans much faster.

  • The new CECL model will require certain financial institutions to estimate the expected loss over the life of a loan beginning in January 2020 – a significant change to the way banks calculate reserves on assets.  CECL may cut into earnings and regulatory capital by forcing some banks to boost their loan-loss reserves.  (Wall Street Journal, April 3) 
  • For real estate, there is concern is that banks may reduce lending volumes as they build up additional capital reserves to be in compliance with CECL.  (Roundtable Weekly, March 8) 
  • The regulatory change in how banks estimate loan and lease losses (ALLL) will require substantial changes in data analytics and financial methodologies.  Details on FASB’s April 3 Tentative Board Decision are available here. 
  • The March 5 coalition letter cited a 2018 KPMB survey showing companies are struggling to make certain accounting, modeling and data decisions to be in compliance with CECL.  (KPMG, “Financial institutions feeling the crunch in countdown to CECL implementation”)  
  • Rep. Blaine Luetkemeyer (R-MO) and Ranking Member Patrick McHenry (R-NC) recently wrote to Securities and Exchange Commission Chairman Jay Clayton expressing concerns about the coming CECL loan loss accounting approach and its effects on markets and investors.  Luetkemeyer and McHenry wrote that they are worried CECL implementation-which begins in 2020 for publicly traded banks-could have unanticipated effects on the financial and housing industries with questionable benefit.  
  • The CECL accounting rule change was issued by the Financial Accounting Standards Board (FASB) in June 2016 as a result of the 2008 financial crisis.  (FASB, Credit Losses) 
  • The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) will continue to address the potential impact of the new accounting standard and work with the CECL business coalition on CECL implementation issues. 

In addition to The Roundtable, the 8 signatories to the March 5 coalition letter were the U.S. Chamber of Commerce, American Bankers Association, Bank Policy Institute, Commercial Real Estate Finance Council, Mortgage Bankers Association, National Association of Realtors, Credit Union National Association and National Association of Federal Credit Unions. 

Bipartisan Senate Legislation Proposes Reporting Requirements for Opportunity Funds; Freddie Mac Releases Analysis of OZs

Posted on by Trey Jackson

Bipartisan Senate legislation introduced May 8 would direct the Treasury Department to collect data and issue annual reports on Opportunity Zone (OZ) tax incentives. Reporting requirements were included in the original Investing in Opportunity Act before Congress passed it as part of tax reform in December 2017.

The Opportunity Zones bill (S. 1344)—introduced by Sens. Cory Booker (D-N.J.), Tim Scott (R-S.C.), Todd Young (R-Ind.), and Maggie Hassan (D-N.H.)­—would require data on the number of opportunity funds created, their asset classes, their holdings, and their economic ripple effects in the designated OZs where they invest. (BGov, May 8)

  • Congress approved the creation of Opportunities Zones-economically distressed areas characterized by high poverty and subpar employment opportunities-and tax incentives to encourage redevelopment in these lower-income communities.
  • The program allows for capital gain related to a current sale or transaction to be deferred until December 31, 2026 – if investors place their capital gain into a fund that makes qualified investments in Opportunity Zones.  Individuals and entities can contribute to these Opportunity Funds.
  • The bill (S. 1344)—introduced by Sens. Cory Booker (D-N.J.), Tim Scott (R-S.C.), Todd Young (R-Ind.), and Maggie Hassan (D-N.H.)­—would require data on the number of opportunity funds created, their asset classes, their holdings, and their economic ripple effects in the designated OZs where they invest. (BGov, May 8)
  • “Already leaders in rural and urban communities across the country are beginning to use Opportunity Zones as a valuable new tool to drive high-impact investment into their communities,” Sen. Booker said. “This legislation will restore and strengthen transparency measures to ensure [the Opportunity Zones program] lives up to its original promise and delivers real impact to those who need it most.”  (Sen. Booker news release, May 8)
  • “Opportunity Zones have been a unifying message for both Republicans and Democrats,” Sen. Scott said. “It’s imperative that we create reporting requirements to allow us to accurately measure the success of the initiative…” 
  • The Treasury Department last month released a highly-anticipated, second set of Opportunity Zone (OZ) regulations that seek to provide certainty to potential OZ investors and drive economic development in economically distressed communities nationwide. (reference: 169-page Treasury regulations and IRS news release, April 17 / Roundtable Weekly, April 19) 
  • No action on S. 1344 is imminent, though Congress could consider tax legislation this summer or fall. 

Freddie Mac has released an analysis of its own financial data to show multifamily market characteristics in Opportunity Zones.  Notable among the reports many findings were the following: 

Freddie Mac has released an analysis of its own financial data to show multifamily market characteristics in Opportunity Zones.

  • Housing units in OZs tend to be relatively old-28.7% of the multifamily rental stock was built prior to 1960 (compared to a rate of less than 20% elsewhere).
  • The population density of OZs is low-about two-thirds of the national rate
  • Of the 117 opportunity funds identified by the National Council of State Housing Agencies as of April, 76% have an investment focus on multifamily residential development. 

The report concludes that census tracts designated by governors as OZs “overlap quite well with areas that Freddie Mac targets for affordable housing assistance.” 

The OZ program’s goals and incentives were the focus of a Jan. 29 discussion during The Real Estate Roundtable’s State of the Industry Meeting, which featured Sen. Scott and Roundtable member Geordy Johnson (CEO, Johnson Development Associates, Inc.). (Roundtable Weekly, Feb. 15)

Real Estate, Environmental Groups Recommend Accelerated Depreciation for Energy Efficient Building Equipment

Posted on by Trey Jackson

A broad coalition of real estate and environmental organizations urged congressional tax writers this week to establish an accelerated depreciation schedule for a new category of Energy Efficient Qualified Improvement Property installed in buildings – or “E-QUIP.”  (Coalition E-QUIP Letter, May 8)

  

A broad coalition of real estate and environmental organizations urged congressional tax writers this week to establish an accelerated depreciation schedule for a new category of Energy Efficient Qualified Improvement Property installed in buildings – or “E-QUIP.” (Coalition E-QUIP Letter, May 8)

  • The coalition, led by The Real Estate Roundtable, recommends “a uniform E-QUIP 10-year recovery period [to] promote productive business investment by spurring high performance upgrades in commercial and multifamily buildings. In turn, optimizing energy efficient building performance will help create well-paying jobs in the construction, design, and energy sectors; boost equipment manufacturing; enhance our country’s energy independence; and reduce the built environment’s carbon footprint.”    
  • Legislation supported by The Roundtable is currently pending to fix a technical error from the Tax Cut and Jobs Act regarding depreciation of interior building improvements, known as Qualified Improvement Property (“QIP”).  (Roundtable Weekly,  March 15 and QIP Policy Comment Letter, April 26)  However, even if Congress fixes the QIP mistake, it would not meaningfully encourage commercial and multifamily owners to invest in expensive high-performance building equipment.    
  • The new E-QUIP coalition thus proposes a beneficial 10-year cost recovery period for efficient HVAC, lights, roofs and other components that will save energy and reduce carbon emissions attributable to buildings, their tenants, and other occupants.  
  • Roundtable President and CEO Jeffrey DeBoer said, “The purpose of establishing a new E-QUIP category in the tax code is to stimulate productive, capital investment on a national level that modernizes our nation’s building infrastructure while helping to lower greenhouse gas emissions.  As Congress considers potential tax, infrastructure, and climate legislation, the E-QUIP proposal should have bipartisan appeal on a range of important policies prioritized by Republicans and Democrats.”
  • An elective 10-year, straight-line cost recovery period for E-QUIP expenditures for taxable income, as well as for earnings and profits purposes, is the core of the proposal.  Other elements recommended to Congressional tax writers for consideration in E-QUIP legislation are set forth in the real estate and environmental groups’ coalition letter.   

E-QUIP will be one of many policies affecting commercial real estate discussed during the June 11-12 Annual Roundtable Meeting in Washington DC.

Roundtable Urges Senate Committees to Address Federal-State Cannabis Policy Conflicts Constraining Banking, Real Estate Transactions

Posted on by Trey Jackson

The Real Estate Roundtable on April 30 wrote to the Senate Banking and Judiciary Committees urging hearings to consider the SAFE Banking Act (S. 1200) and the STATES Act (S. 1028) – measures that would provide clarity for banking firms and real estate providers to fully serve the needs of cannabis-related businesses deemed legal under state law.  (Roundtable Policy Letter, April 30)

Roundtable President and CEO Jeffrey DeBoer states in the April 30 letter, “Passage of the SAFE Banking Act is a strong first step to clarify a full range of proper business conduct in the rapidly evolving context of cannabis policy.”

  • The bipartisan Secure And Fair Enforcement (SAFE) Banking Act is led by co-sponsors Sens. Cory Gardner (R-CO) and Jeff Merkley (D-OR).  S. 1200 clarifies that banks would not face adverse action on a loan to a real estate owner solely because that owner leases property to legitimate, state-licensed, cannabis-related businesses (CRBs).  The measure would also protect sellers and lessors of real estate and other CRB “service providers” by clarifying that proceeds from state-approved marijuana-related transactions do not derive from unlawful activity, and thus do not provide a predicate for federal criminal money laundering.
  • Roundtable President and CEO Jeffrey DeBoer states in the letter, “Passage of the SAFE Banking Act is a strong first step to clarify a full range of proper business conduct in the rapidly evolving context of cannabis policy.”
  • DeBoer encouraged the committees to hold hearings on the SAFE Act to create a record for resolving and reconciling the conflict between business transactions that are deemed legal under state law, yet exposed to federal criminal liability.  If the SAFE Act is enacted, federally regulated banks would no longer face the threat of sanction simply by providing financial services to a legitimate state-authorized CRB.
  • The Roundtable letter also supports the swift enactment of the bipartisan Strengthening the Tenth Amendment Through Entrusting States  (STATES) Act, led by Sens. Cory Gardner (R-CO) and Elizabeth Warren (D-MA).  S. 1028 would ensure that each state has the right to determine for itself the best approach to cannabis within its borders.  (U.S. News & World Report, April 4 and  Roundtable Weekly, April 12)  
  • In the House, the STATES Act (H.R. 2093) was reintroduced on April 4 by Reps. Earl Blumenauer (D-OR) and David Joyce (D-OH).  Additionally, the SAFE Act (H.R. 1595) – co-sponsored by Reps. Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-OH) and Warren Davidson (R-OH) – was approved by the House Financial Services Committee on March 27 by a 45-15 vote. (Roundtable Weekly, April 26) 

Prospects for passing cannabis-related bills in the Senate remains uncertain.  Senate Banking Chairman Michael Crapo (R-ID) this week expressed doubt about the SAFE Act in Congress.  “As long as cannabis is illegal under federal law, it seems to me to be difficult for us to resolve this,” he said.  (Politico Pro, May 1)

President Trump and Democratic Leaders Aim for $2 Trillion Infrastructure Package; Roundtable Recommends Policies to House Transportation Committee

Posted on by Trey Jackson

President Donald Trump and Democratic congressional leaders on Tuesday agreed to pursue a $2 trillion infrastructure package and meet again in three weeks to discuss possible revenue sources.

The Roundtable on April 29 submitted  infrastructure policy recommendations to House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) and Ranking Member Sam Graves (R-MO).  

  • House Speaker Nancy Pelosi (D-CA) said after the White House meeting, “We did come to one agreement: that the agreement would be big and bold.”   Senate Minority Leader Chuck Schumer (D-NY) added,  “… now it’s up to the president and the White House to tell us how they pay for it.” (Associated Press, April 30)
  • Schumer stated in his Dec. 6, 2018 letter to the president there would be no deal on infrastructure without addressing climate change.  Schumer wrote that one of the policies that should be included in any infrastructure package should, “Provide permanent tax incentives for domestic production of clean electricity and storage, energy efficient homes and commercial buildings …” (Schumer’s letter to President Trump and  Washington Post op-ed).
  • House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) also attended the April 30 White House meeting.  DeFazio’s committee held a Member’s Day hearing on the next day to share their infrastructure priorities. “While I continue to press my colleagues on the Committee on Ways & Means, House Leadership, the Senate, and the White House on a path forward on funding, this Committee must do its legislative work,” DeFazio stated in his opening remarks.
  • The Roundtable on April 29 submitted infrastructure policy recommendations to DeFazio and Ranking Member Sam Graves (R-MO).  Roundtable President and CEO Jeffrey DeBoer states in the letter, “We offer policy suggestions within your Committee’s jurisdiction to improve programs to repair and modernize the transportation and other systems upon which the U.S. economy depends.  We also suggest targeted changes to the federal tax code, requiring coordination with the Ways and Means Committee, to help pay for our nation’s infrastructure deficit.”  (Roundtable Infrastructure Policies letter, April 29)
  • DeBoer emphasized the goal of the policies is to offer “a holistic approach to modernize our aging infrastructure [that] will create American jobs, boost economic growth, address climate threats, and improve the quality of life in all regions of the country.” 

    The Roundtable’s key suggestion to help pay for infrastructure is to repeal the Foreign Investment in Real Property Tax Act  (FIRPTA) of 1980. Bipartisan FIRPTA repeal legislation ( H.R. 2210 ) was introduced in the House on April 10. (Roundtable Weekly, April 12) 

The Roundtable’s key suggestion to help pay for infrastructure is to repeal the Foreign Investment in Real Property Tax Act  (FIRPTA) of 1980.  FIRPTA imposes a discriminatory layer of capital gains tax on foreign investment-a tax burden that does not apply to any other asset class.  Repealing FIRPTA would serve as a market-driven catalyst to finance improvements in our nation’s infrastructure.  Bipartisan FIRPTA repeal legislation (H.R. 2210) was introduced in the House on April 10. (Roundtable Weekly, April 12).

Other infrastructure policies detailed in The Roundtable’s April 29 letter include: 

  • A beneficial, 10-year cost recovery period for investments that improve energy efficiency performance in commercial and multifamily buildings;
  • Proposals supported by Democratic and Republican administrations alike to streamline the permit process for infrastructure projects;
  • An increase in the federal gas “user fee” in a responsible and sustainable manner;
  • Revising IRS “volume caps” and other limitations on tax-exempt bonds;
  • Improving the TIFIA loan program to encourage more public-private partnerships to finance infrastructure; and
  • Reasonable federal-state cost share rules for grants to support mass transit projects of regional and national significance (like the NY-NJ Gateway program).

The Roundtable’s DeBoer discussed the role of public-private partnerships to develop infrastructure projects on CNBC’s Squawk Box  in June 2017.  (Roundtable Weekly, June 9, 2017)  

Ways and Means Chairman Richard Neal (D-MA) has indicated he intends for his committee to consider an infrastructure bill soon.

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