News Type: Roundtable Weekly

EB-5 Reform Bill Introduced in Senate; DHS Regulations Scheduled to Take Effect November 21

Posted on by Trey Jackson

U.S. Capitol

A comprehensive legislative overhaul of the EB-5 investment program was introduced in the Senate on Tuesday – as both the program’s expiration and the effective date for new agency regulations are expected on November 21.

  • The Immigrant Investor Program Reform Act (S. 2778), sponsored by Senators Mike Rounds (R-SD), Judiciary Committee Chairman Lindsey Graham (R-SC), and John Cornyn (R-TX), would extend the EB-5 regional center program until September 30, 2025.  The bill includes a comprehensive suite of long overdue measures to deter fraud and optimize national security protections, in the context of inbound foreign investment capital that helps finance U.S. economic development and spur American job growth. 
  • Key elements of S. 2778  include provisions to: 
    • Establish an EB-5 Integrity Fund to provide rigorous program oversight, to be funded by regional center participants;
    • Provide DHS with improved investigative tools to ensure that an investor’s funds are derived from legitimate and lawful sources;
    • Clarify DHS’s authority to deny or revoke immigrant investor petitions for reasons including fraud, misrepresentation, or national security concerns;
    • Allow bona fide sovereign wealth funds to co-invest in projects supported by EB-5 capital;
    • Provide visa “set asides” to help direct EB-5 capital to projects in rural areas and census tracts designated by the U.S. Treasury as “opportunity zones”; and
    • Establish new investment levels to $1 million for projects in rural and opportunity zone Targeted Employment Areas (TEAs); and to $1.1 million for non-TEA projects.

     

  • Compromise reform principles set forth by a coalition of rural and urban stakeholders in May reflect a number of provisions in the new bill.  (Roundtable Weekly, May 17, 2019)
  • The rural and urban business interests recommending EB-5 modernization have consistently urged holistic reforms from Congress, as opposed to piecemeal regulatory changes by the Department of Homeland Security (DHS).  (Roundtable Weekly, March 8, 2019)  The imminent agency regulations – scheduled to take effect on November 21, unless they are superseded by Congress – do not accomplish important objectives set forth in the Rounds-Graham-Cornyn bill, such as the fraud deterrence provisions, national security enhancements, and visa set asides for investors in rural and distressed urban area projects.  (Roundtable Weekly, July 26, 2019) 

November 21 is also the date that the underlying legislative authorization of the program expires, as connected to the current continuing resolution (CR) that keeps the federal government running.  For the past five years, Congress has consistently extended the EB-5 regional center program concurrently with spending measures that continue federal operations.  The timing of the DHS rules’ effectiveness and the program’s expiration on November 21, along with S. 2778’s introduction, are expected to spur new rounds of legislative negotiation for long-term EB-5 reform in the coming weeks.

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Seven-Year TRIA Reauthorization Advanced by House Financial Services Committee

Posted on by Trey Jackson

House Financial Services Committee Chairwoman Maxine Waters (D-CA)

The House Financial Services Committee yesterday unanimously (57-0) passed the Terrorism Risk Insurance Program Reauthorization Act of 2019 (H.R. 4634) – a “clean” seven-year extension of the Terrorism Risk Insurance Act (TRIA), which is a top policy priority of The Real Estate Roundtable. 

  • The bipartisan House compromise bill also requires two studies: a U.S. Government Accountability Office (GAO) study on the cyber terrorism market and a biennial Treasury reporting on the ‘availability and affordability’ of TRIA coverage for places of worship.
  • Committee Chairwoman Maxine Waters (D-CA), above, in her opening committee markup statement noted, “This bipartisan bill provides a simple long-term reauthorization of the Terrorism Risk Insurance Program. 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. I am very pleased that I have reached a bipartisan compromise with Ranking Member [Patrick] McHenry [R-NC] on this issue for a seven-year reauthorization of this very important program.” (Committee Markup documents and video, Oct 29)
  • The Coalition to Insure Against Terrorrism (CIAT), which includes The Real Estate Roundtable, wrote to the committee’s leadership on Tuesday in support of H.R. 4634.  (CIAT letter, Oct. 29)
  • TRIA, originally passed in 2002, 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.
  • TRIA was the focus of a discussion during The Roundtable’s Oct. 30 Fall Meeting with American Property and Casualty Insurance Association President and CEO David Sampson.  The discussion emphasized that a long-term, clean TRIA reauthorization by Congress is needed as soon as possible to avoid market dislocation and provide certainty to commercial real estate policy holders who are actively renewing their coverage. 
  • 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.”

The next step toward TRIA reauthorization is a floor vote in the House, which may occur before year-end. 

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Panel Draws Attention to How IRS Guidance is Impeding Jobs, Foreign Investment in U.S. Real Estate and Infrastructure

Posted on by Trey Jackson

FIRPTA panel -- The Future of Real Estate Policy

Leading industry experts convened on Oct. 30 at the National Press Club in Washington for an in-depth discussion on IRS Notice 2007-55, which levies discriminatory tax penalties on foreign investment in U.S. real estate and infrastructure.  The panel detailed how the Notice subjects foreign owners of domestically controlled real estate investment trusts (REITs) to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) when the REIT liquidates, thereby suppressing capital investment and job creation in the real estate industry.

  • The 2007 tax guidance from the IRS overturned long-standing practice that treated liquidating distributions and redemptions of REITs as sales of stock.  Under Notice 2007-55, these transactions are now treated as taxable distributions and subject to a burdensome capital gains tax – affecting only foreign shareholders.  In the 12 years since Treasury issued the Notice, there have been no clarifying regulations, which has created uncertainty among potential investors and deterred foreign investment in U.S.-based real estate and infrastructure.
  • Panelists at the event, sponsored by Unibail-Rodamco-Westfield, included Ryan McCormick, Senior Vice President and Counsel for The Real Estate Roundtable (far right in photo above); John Jones, Vice President of Government Relations for Nareit; Kevin Klein, Director of Tax Policy for the Organization of International Investment (OFII); Darin Mellott, Director of Research, Americas at CBRE; and David Polster, Tax Partner at Skadden Arps.
  • McCormick emphasized that FIRPTA is a tax burden that does not apply to any other asset class and noted that FIRPTA hurts the ability of the United States to attract outside capital for infrastructure improvements.  Treasury could act on its own to remove much of the FIRPTA burden simply by withdrawing the IRS guidance. “Anything the Administration can be doing now to drive our economy forward and create jobs, they should,” said McCormick.
  • Outright repeal of the outdated FIRPTA law is The Roundtable’s ultimate policy goal.  In April 2019, Representatives John Larson (D-CT) and Kenny Marchant (R-TX) introduced the Invest in America Act (H.R. 2210), a bill to repeal FIRPTA altogether.  The Roundtable and 19 national trade organizations – representing every aspect of constructing, developing, financing, owning, and managing real estate and infrastructure in the United States – wrote to Ways and Means Committee Members and other key House lawmakers urging them to support the legislation.  (Comment Letter, March 28)
  • Both Republican and Democratic lawmakers agree on the negative impact that the Notice continues to exert on infrastructure investments.  In 2017, 32 bipartisan members of the House Ways and Means Committee wrote to Treasury Secretary Steven Mnuchin urging him to repeal the Notice.  The lawmakers pointed to billions of dollars’ worth of investment that flowed to small and mid-sized communities when 2015 legislation eased some of the tax burden for foreign investors.

A report by the Rosen Consulting Group (RCG) estimated that FIRPTA repeal would generate an initial increase of between $65 billion and $125 billion in international investment in U.S. commercial real estate. This new level of activity would lead to the creation of 147,000 to 284,000 jobs throughout the economy and increase taxpayers’ income by $8 billion to $16 billion.  (Unlocking Foreign Investment in U.S. Commercial Real Estate, July 2017) 

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Industry Leaders and Policymakers Address National Issues Affecting CRE, Including TRIA, Affordable Housing, Tax and Monetary Policy

Posted on by Trey Jackson

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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House Hearing Focuses on Reducing Carbon Emissions from Buildings

Posted on by Trey Jackson

House Select Committee on the Climate Crisis Chair Kathy Castor (D-FL)

An Oct. 17 hearing before the House Select Committee on the Climate Crisis, “Solving the Climate Crisis: Cleaner, Stronger Buildings,” focused on reducing carbon pollution and improving resilience in residential and commercial buildings across the nation as a method of countering the effects of climate change.  (Hearing video and witness statements)

  • The Select Committee is chartered to study and make recommendations to reduce greenhouse gas emissions and develop solutions to combat climate change.  It lacks authority to introduce legislation, but is scheduled to publish a set of recommendations for bill-writers by March 31, 2020.
  • Committee Chair Kathy Castor (D-FL), above, stated at the hearing that “[a]n ambitious national plan for cleaner, stronger buildings requires national leadership. And Congress needs to offer smart incentives, to set a direction for the numerous federal, state, and local officials involved in the buildings sector.”
  • Committee Ranking Member Garret Graves (R-LA) emphasized that reauthorization of the flood insurance program and other Committee recommendations must “advance[ ] the goal of resiliency, [housing] affordability, and energy efficiency conservation. [W]e can achieve multiple goals.”
  • The Real Estate Roundtable has long been a leading advocate for energy efficiency in buildings, spearheading significant policy developments in this arena.  For example, the Sustainability Policy Advisory Committee (SPAC) was critical to the creation of EPA’s ENERGY STAR for buildings program in 1998, and its evolution to ENERGY STAR for Tenants in 2015.
  • Recently, SPAC’s assistance to EPA resulted in improved and updated models for federal ratings regarding building energy efficiency performance.  (Roundtable Weekly, July 19).  Current SPAC initiatives include efforts to refine the next version of ENERGY STAR for Tenants (to be unveiled in 2020 and cover retail as well as office leased spaces), and coordinate with the agency on key data it collects regarding the carbon footprint of the nation’s electricity grid.
  • On the legislative front, The Roundtable has long supported the Energy Savings and Industrial Competitiveness (ESIC) Act (S. 2137), co-sponsored by Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH).  (Roundtable support letter for S. 2137) The Senate Energy Committee advanced the ESIC Act last month. (Roundtable Weekly, Sept. 27).
  • The ESIC Act “is exactly the kind of smart, forward-looking policy that will help building owners respond to our modern, evolving economy” Roundtable President and CEO Jeffrey DeBoer stated in a Senate news release upon the bill’s introduction this summer.  (Roundtable Weekly, July 19) (Video of DeBoer’s statement)
  • Also in the Senate, Delaware Democrat Chris Coons and Indiana Republican Mike Braun have formed a climate caucus aimed at creating bipartisan consensus on ways to reduce carbon dioxide emissions.  The purpose of the Senate Climate Solutions Caucus is outlined by the two Senators in an Oct. 23 opinion piece in The Hill. 

The Roundtable will provide comments to the House Select Committee on the Climate Crisis, summarizing our energy efficiency advocacy agenda.  The committee’s questions for stakeholders are posted at https://climatecrisis.house.gov/inforequest, with submissions due by November 22.

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Administration Officials Testify on GSE Reform, Housing Affordability; NMHC Releases Data on Ramifications of States’ Rent Control Legislation

Posted on by Trey Jackson

Mnuchin, Carson, Calabria at HFSC Oct hearing

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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House Passes Beneficial Ownership Bill; Senate Version Faces Uncertain Future

Posted on by Trey Jackson

 

FINCEN logo

The U.S. House of Representatives on Oct. 22 passed the Corporate Transparency Act of 2019 (H.R. 2513), which would require corporations and limited liability companies (LLCs) to report their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).  The bill – introduced by Reps. Carolyn Maloney (D-NY) and Peter King (R-NY) – would shift the FinCEN reporting requirements from banks to the business community, requiring every business with fewer than 20 employees to register their beneficial owners with FinCEN.

  • A coalition that includes The Real Estate Roundtable sent a letter June 10 to the committee’s leadership opposing the Maloney-King bill.  “This legislation would impose burdensome, duplicative reporting burdens on approximately 4.9 million small businesses in the United States and threatens the privacy of law abiding, legitimate small business owners,” the letter states.
  • The coalition emphasized that it supports the overall goal of preventing wrongdoers from exploiting United States corporations and LLCs for criminal gain.  Yet the coalition letter detailed significant problems with H.R. 2513. (Roundtable Weekly, June 15)
  • In the Senate, the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act was introduced in June by Sens. Mark Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL) and Mike Rounds (R-SD).  (Homeland Preparedness News, June 12)
  • Additionally, a Senate bill addressing beneficial ownership is entitled the True Incorporation Transparency for Law Enforcement (TITLE) Act (S. 1889).  A coalition that includes The Real Estate Roundtable on Oct. 16 sent a letter to Senate Judiciary Committee leaders strongly opposing the bill.  The letter states, “This legislation would impose duplicative and problematic reporting burdens on millions of small businesses in the United States and would threaten the privacy of law-abiding small business owners.”  (Policy Comment Letter, Oct. 16)
  • The Senate versions have different provisions, have not yet been the focus of a committee hearing, and prospects for a floor vote are uncertain. (BGov, Oct. 22)
  • The White House budget office commented this week that the House measure “represents important progress” but said it must be improved as it moves through the legislative process.  Among the steps recommended by the Administration are “protecting small businesses from unduly burdensome disclosure requirements, and providing for adequate access controls with respect to the information gathered under this bill’s new disclosure regime.”
  • The statement concludes, “The Administration looks forward to continuing to engage in a bipartisan fashion with the House and Senate to address these important issues.”

The Roundtable plans to work with policymakers to stake out a balanced position on the beneficial ownership issue that would inhibit illicit money laundering activity, yet not place unnecessary costs and legal burdens on the real estate industry. 

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Ten-Year TRIA Reauthorization Bill Scheduled for Late-October Markup in House

Posted on by Trey Jackson

TRIA Reauthorization Bill News Conference - Oct. 19, 2019

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

Posted on by Trey Jackson

U.S. Supreme Court with Flag

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 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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Volcker Rule Changes Finalized, Easing Banking Restrictions

Posted on by Trey Jackson

Federal Reserve Building DC

Reforms to the Volcker Rule, which aimed to restrict proprietary trading practices at banks, received final approval Oct. 8 by the Federal Reserve and four other regulatory agencies. (AP, Oct. 8)

  • The final Rule – expected to enhance liquidity to commercial mortgage-backed securities (CMBS) markets – takes effect on January 1, 2020 with a compliance date of January 1, 2021.  (Federal Reserve, Oct. 8)
  • Under the revised Rule, firms that do not have significant trading activities will have simplified and streamlined compliance requirements, while firms with significant trading activity will have more stringent compliance requirements. Community banks generally are exempt from the Volcker rule by statute. The revisions continue to prohibit proprietary trading, while providing greater clarity and certainty for activities allowed under the law.
  • The final Rule represents the most significant revision to date of the original 2013 Volcker Rule regulations.  The Roundtable has long advocated revisions to the Volcker rule, raising concerns about how it could “negatively impact liquidity and capital formation in commercial real estate.”
  • Real Estate Roundtable President and CEO Jeffrey DeBoer commented on the Volker Rule changes. “This positive action will benefit liquidity and the commercial mortgage backed securities market, potentially increasing investment in job-creating construction activities,” DeBoer said. (Roundtable Weekly, June 1, 2018)
  • The revisions are expected to make it easier for ‘banking entities’ to hold and trade CMBS and could enhance market liquidity.  Commercial banks and CMBS are two of the top sources of private debt for commercial and multifamily real estate.  

The changes were jointly developed by the Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

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