News Type: Roundtable Weekly

DHS Issues New EB-5 Regulations

Posted on by Trey Jackson

The Department of Homeland Security (DHS) on Wednesday published long-anticipated regulations governing key aspects of the EB-5 investment visa program. 

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 regulation includes:

  • Increases in Investment Amounts: 
    Investment amounts will increase to $900,000 for economic development projects in Targeted Employment Areas (“TEAs”), and to $1.8 million for non-TEA projects (from current levels of $500,000 and $1 million, respectively, which have not changed since the early 1990s).  The new amounts will adjust for inflation every five years back to 1990 dollars, with the first anticipated adjustment anticipated on October 1, 2024. 
  • TEA Definitions: 
    States no longer have a role in designating TEAs – those geographies that attract EB-5 capital at the lower investment threshold.  The new rules define “High Unemployment Area” TEAs –typically in urban locations – as the census tract where the project is located, plus any “directly adjacent” tracts to the project’s tract.  The weighted average unemployment rate across these tracts must be 150% of the national average unemployment rate. 
    • “Rural Areas” (with one exception) are not limited to high unemployment characteristics for TEA qualification.  As with current law, generally any area outside the boundaries of a U.S. Census Bureau Metropolitan Statistical Area (“MSA”) is a “Rural TEA.”  However, an entire town or city outside an MSA – with a population of 20,000 or more people – qualifies for TEA status only if that municipality has an unemployment rate 150% of the national average.
    • A number of stakeholders urged DHS to consider a “commuting pattern” approach for urban environments to qualify as a TEA.  DHS said it “appreciated” comments providing substantial evidence that workers who live in economically distressed neighborhoods typically commute to downtown job centers where core urban development is located.  In the end, however, DHS dismissed a “commuting pattern” option for TEAs because the agency found it “too operationally burdensome” and “posed challenges” that the agency could not figure out.
    • DHS also considered – and rejected – TEA delineations tied to census tract designations with a track record of success in other analogous economic development programs, like the established New Market Tax Credit (“NMTC”) program.

    • DHS’s new EB-5 rule does not comprehensively reform the program as urged by rural and urban stakeholders. (EB-5 coalition letter and  Roundtable Weekly, May 17, 2019) 

       

      Moreover, DHS failed to address the suggestion of rural and urban stakeholders to consider a recent Trump Administration Executive Order and assess the relationship between EB-5’s economically distressed TEA census tracts and “Opportunity Zone” census tracts, designated by the U.S. Treasury in the spring of 2018. (Roundtable Weekly, March 8, 2019).

     
  • Grandfathering and Transition Rules: 
    As noted above, the rule is scheduled to take effect on November 21, 2019 – assuming Congressional EB-5 reauthorization by September 30 and no legislative reforms on matters within the rule’s purview.
    • Investors who have already filed I-526 petitions, or who file by November 21, are subject to current program investment levels of $500,000 or $1 million.  They will not be required to post more money to meet DHS’s new amounts.  The rule states: “Petitions filed before the effective date will be adjudicated under the regulations in place at the time of filing.”  
    • Projects that do not complete intended EB-5 capital raises by November 21 will subscribe investors at different amounts.  For example, a project that currently qualifies as a TEA can attract investors at $500,000 until November 21.  Thereafter, if that project loses TEA status as per the new rule, it must attract investors at the $1.8 million level.  DHS rejected the concept for “project grandfathering,” stating such an approach “would grant existing projects in affluent urban areas that have been marketed as TEAs an unfair competitive advantage against new projects in such areas, which will need to attract investors at the higher minimum investment amount.”       

DHS’s rule does not achieve comprehensive reform of the “regional center” program – an objective that a broad coalition of rural and urban groups have urged Congress to achieve by the program’s legislative sunset date on September 30, 2019.  For example, the new regulation does not address EB-5 “integrity measures” that stakeholders have long requested to deter instances of fraud and maximize national security safeguards.  (Roundtable Weekly, May 17, 2019.)

House Passes Bipartisan Bill to Suspend Debt Ceiling, Increase Budget Caps 2 Years and End Sequestration; Senate to Vote on Package Next Week

Posted on by Trey Jackson

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 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 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 deal increases discretionary spending limits $324 billion over two years, replacing the prospect of strict sequestration caps imposed under the Budget Control Act of 2011.  The bill passed by the House permanently ends sequestration, which would impose a 10 percent cut on all programs if budget targets are not met.  (CQ, July 25) 
  • The fiscal package passed by the House would increase the budget cap for FY’20 defense programs by three percent, to $738 billion.  Funding for domestic programs would increase four percent, topping off at $632 billion. (Politico, July 25) 
  • The deal also lifts the debt limit through July 2021, meaning policymakers would not have to address the controversial issue during the 2020 election year. 
  • President Trump encouraged GOP lawmakers to endorse the legislation, tweeting yesterday, “House Republicans should support the TWO YEAR BUDGET AGREEMENT which greatly helps our Military and our Vets. I am totally with you!”  
  • Senate Majority Leader Mitch McConnell, (R-KY) this week stated he expects the Senate to pass the House bill next week and send it to President Trump for his signature. (Washington Post, July 25).  He added, “I make no apologies for this two-year caps deal. I think it’s the best we could have done in a time of divided government. The alternatives were much worse.” (Politico, July 23).   
  • When Congress returns from summer recess on September 9, policymakers will face a tight deadline to set federal appropriations for individual agencies and departments for FY’20.  Current FY’19 funding runs out on September 30, as does legislative authority for the National Flood Insurance and EB-5 investment programs.  
  • If Congress and President Trump cannot agree on how to allocate the $1.37 trillion in discretionary money allotted for the new fiscal year beginning October 1, a stopgap funding measure (or “Continuing Resolution”) may be required.  
  • Last December and January, the lack of a government spending deal over security measures on the southern border led to a 35-day partial government shut down. (Roundtable Weekly, Feb. 1) 

The House recessed today for six weeks; the Senate is scheduled to leave August 2.  

CECL Accounting Standard Implementation Delayed for Certain Lenders

Posted on by Trey Jackson

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)

FASB Chairman Russell Golden stated, “Additional time would give the stakeholders more ability to learn from larger lenders, more ability to have resource providers available, and more ability to look at best practices for disclosures and controls.”  
  • 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) 
  • CECL would still take effect for publicly traded U.S. banks beginning in January 2020.  The regulatory change in how banks estimate losses in their allowance for loan and lease losses (ALLL) will require substantial changes in data analytics and financial methodologies. 
  • FASB Chairman Russell Golden stated, “Additional time would give the stakeholders more ability to learn from larger lenders, more ability to have resource providers available, and more ability to look at best practices for disclosures and controls.” (Wall Street Journal, July 17) 
  • FASB is expected to release the proposed accounting standard changes in August, subject to a 30-day comment period.  
  • For real estate, there is concern that banks may reduce lending volumes as they build up additional capital reserves to be in compliance with CECL.   A business coalition that included The Real Estate Roundtable wrote to the U.S. Securities and Exchange Commission (SEC) and FASB in March, urging further study amid concerns that CECL may soon begin to reduce aggregate bank lending.  (Coalition Letter, March 5 and Roundtable Weekly, March 8) 
  • Congressional legislation to delay CECL’s implementation was introduced in the Senate on May 21 by Sen. Thom Tillis (R-N.C.) and in the House on June 10, led by Rep. Vicente Gonzalez (D-TX). (S&P Global Intelligence, June 11) 
  • This week, FASB posted a Q&A document addressing various CECL implementation issues, including how to make a “reasonable and supportable” forecast of expected loan losses.  FASB also plans a series of CECL educational workshops throughout the country.  (FASB Advisory, July 17) 
  • The CECL accounting rule change was issued in June 2016 by FASB 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 implementation issues. 

 

Senators Portman, Shaheen, Reintroduce Energy Efficiency Bill

Posted on by Trey Jackson

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, left, with Sens. Rob Portman (R-OH) and Susan Collins (R-ME) at a press conference to support the Energy Savings and Industrial Competitiveness (ESIC) Act.
  (  Video of DeBoer’s statement and  the entire press event)

– enlarge photo above  –  
  • 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 ESIC Act is a revived version of comprehensive energy efficiency legislation introduced in prior sessions of Congress. (Bill summaryand  text.)  
  • The Real Estate Roundtable has long endorsed the ESIC Act.  The bill contains no mandatory federal building or climate-related regulations.  It aims to improve energy efficiency across U.S. buildings by:  
    • Importing new economic, cost, and small business impact considerations into the process by which the U.S. Department of Energy (“DOE”) proposes revisions to “model” building energy codes, that state and local bodies may ultimately adopt; 
    • Providing stakeholders with opportunities to comment on code revisions suggested by DOE – to correct the currently closed process by which federal code proposals are developed without industry input;  
    • Clarifying standards for real estate appraisers and banks to consider energy efficiency capital investments when determining an asset’s market value; and
    • Creating a voluntary program that can lead to lower interest rates and greater qualifications for buyers seeking mortgages on new energy efficient homes.

            

  • The Portman-Shaheen bill also includes new Section 103 , strongly supported by The Roundtable.  This provision would require coordination by federal agencies to gather and report higher quality data on energy consumed by U.S. buildings, through the nationwide Commercial Building Energy Consumption Survey (CBECS).   Data from CBECS provides the underpinning for EPA’s ENERGY STAR scores.  (See Roundtable Weekly  energy policy story above)
  • In a July 18 Senate news release , 15 business and energy efficiency sector leaders expressed support for the latest Portman-Shaheen bill – including DeBoer and Henry H. Chamberlain, President and CEO, Building Owners and Managers Association (BOMA) International.
  • DeBoer stated in the Senate news release, “The [ESIC Act] is exactly the kind of smart, forward-looking policy that will help building owners respond to our modern, evolving economy.  The needs of business tenants have changed dramatically since the turn of the century to power the data centers, IT, and communications systems upon which our workforce depends.  Building owners are meeting their tenants’ 24/7 energy demands while constructing and managing their assets more efficiently – and reducing their carbon footprints.”
  • During the July 17 news conference, Sen. Portman added that the bill would save consumers $13 billion a year – the equivalent in emissions savings of taking 11 million cars off the road within 15 years. (Video of press event, July 17)

In a positive sign, a swath of energy efficiency bills are moving through both the Senate and House, indicating that energy policy could pass in a divided Congress.  ( The Washington Examiner , July 18) 

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EPA Releases Updated ENERGY STAR Scoring Model for Office, Retail, and Other Properties

Posted on by Trey Jackson

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. 

EPA on July 17 released a 23-page presentation –  Update on the ENERGY STAR Office Model for U.S. Properties .
  • 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 “)   
  • In a significant improvement affecting office and other property types, EPA will reintroduce a heating degree day (HDD) adjustment into the scoring process.  Including HDD in ENERGY STAR equations will result in more equitable ratings for properties in all climates.  As a result, some office buildings in colder climates will see score increases – and buildings in warmer locations will not see score decreases.  (Analysis and Key Findings from EPA’s Review of the ENERGY STAR Score Model for Office Properties, July 15) 
  • Last August, EPA announced the first updates to its ENERGY STAR office rating model in over a decade.  Initial analyses by The Roundtable’s Sustainability Policy Advisory Committee (SPAC) indicated that EPA’s equations at that time produced arbitrary scoring results.  In particular, a SPAC working group initially identified and then advocated for the result ultimately announced by EPA this week – to include the HDD scoring adjustment.  
  • Since last September, EPA has suspended certifications for office, warehouse and other property types during a “study period” to assess its scoring models with stakeholder groups.  (Roundtable Weekly, Sept. 14) 
  • The Real Estate Roundtable sent a summary of   recommended changes to EPA on Nov. 26, urging revisions to the scoring model so that buildings of all sizes located in varying climate zones across the country are rated fairly.  (Roundtable Weekly, Nov. 30)

    The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is led by its Chairman, Anthony E. Malkin (Empire State Realty Trust), left, and Vice Chair Daniel Egan (Vornado Realty Trust)

     – enlarge photo –
  • “The Roundtable’s constructive engagement with the EPA over the last 10 months has resulted in a better outcome on an issue with massive national implications for our industry,” said Anthony E. Malkin, Chairman and CEO of Empire State Realty Trust, and Chairman of The Roundtable’s Sustainability Policy Advisory Committee (SPAC).  “We commend EPA for acting on our feedback and their transparency and candor, which led to an improved set of ENERGY STAR scoring models.  In particular, the agency took the corrective action to account fully for climate variations so that all types of commercial buildings – no matter where they are located, in hot or cold temperature zones – are on a level playing field as owners respond to investor, tenant, and other market demands to attain ENERGY STAR ratings for their assets.”
  • On July 17, EPA released a 23-page presentation –  Update on the ENERGY STAR Office Model for U.S. Properties.     
  • On July 22, updated office property scores will be live in EPA’s Portfolio Manager, an online tool used to measure and track energy and water consumption, as well as greenhouse gas emissions.  EPA advises stakeholders to download their current scores before July 21, as Portfolio Manager will be unavailable that day to allow for the release of the updated score model.  
  • On July 31, EPA will reinstate ENERGY STAR certification for office buildings, after its suspension since last September. (EPA’s ENERGY STAR resources)

Malkin also noted, “The Roundtable’s work with EPA is far from finished. We are in the midst of active engagement to ensure that federal-level building energy data, on which ENERGY STAR is based, is robust and reliable; that EPA continues its recognition programs for tenants to label high-performance leased spaces; and that the EPA provides critically important federal guidance to help synchronize emerging state and local mandates that address buildings and climate change.  The ENERGY STAR whole-building rating program is now back on track, providing The Roundtable with the policy foundation we need to pursue other important objectives on SPAC’s agenda.”  

Commerce Dept. Issues Preliminary Determinations in Fabricated Structural Steel Trade Dispute

Posted on by Trey Jackson

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.

Fabrocated structural steel 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.
  • 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) 
  • A countervailable subsidy is financial assistance from a foreign government that benefits the production of goods by foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods.  Canada’s FSS subsidies were determined to be at de minimis levels of less than 1 percent and therefore do not warrant tariffs. (GlobeNewsWire, July 9) 
  • As a result of its preliminary decision, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of fabricated structural steel from China and Mexico.  (The Straits Times, July 9) 
  • In 2018, FSS imports to the United States were valued at $897.5 million from China; $622.4 million from Mexico; and $722.5 million from Canada, according to the Commerce Dept. 
  • The Roundtable wrote to the U.S. International Trade Commission about the FSS issue in March and Commerce Secretary Wilbur Ross in June, urging a cautious approach to the investigation and emphasizing the potential economic harm that new tariffs could cause.  
  • Separately, the quasi-judicial FSS investigation will determine whether exporters in the three countries have engaged in unfair dumping, which could also lead to new duties.  Dumping occurs when an exporter sells a product in the United States at a price that is below “normal value,” such as the price at which the foreign producer sells the merchandise in its own domestic market.    

Preliminary determinations on dumping are expected on September 5, and final determinations on the countervailing subsidies are expected on November 18.  

 

Roundtable Proposes Modifications to Treasury’s Opportunity Zone Rules

Posted on by Trey Jackson

The Real Estate Roundtable on July 1 submitted recommended clarifications for final Opportunity Zones tax regulations, which are expected from the Treasury Department before the end of 2019.  (Roundtable comment letter , July 1) 

The Real Estate Roundtable on July 1 submitted recommended clarifications for final Opportunity Zones tax regulations. 
  • This month’s Roundtable 12-page comment letter to Treasury and the IRS encourages the government officials to include 10 key clarifications in their final regulations. (The Roundtable submitted prior letters on OZ tax incentives in June 2018 and December 2018.) 

    The recommendations would: 

  1. clarify that gross section 1231 gain (gain that relates to property used in a trade or business) is eligible for investment in an Opportunity Fund; 
  2. further facilitate the use of “aggregator funds” for multi-asset Opportunity Funds; 
  3. allow existing owners to retain a carried or profits interest when selling property to related Opportunity Fund; 
  4. clarify that the working capital safe harbor applies during the construction of qualifying property; 
  5. encourage investment in languishing Opportunity Zone properties by treating investment in vacant property favorably; 
  6. promote ambitious and transformative projects by allowing assets to be aggregated together under the substantial improvement test; 
  7. ensure that property that straddles inside and outside of an Opportunity Zone qualifies; 
  8. treat property that will be demolished as “unimproved land” for Opportunity Zone purposes; 
  9. confirm that investors qualify for the tax benefits when an Opportunity Zone business sells an asset after 10 years; and 
  10. make certain additional clarifications related to Opportunity Zones and REITS.  

  • Cushman & Wakefield’s new publication –  ” In the Opportunity Zone: Location. Timing. Capital ” – reports that capital inflows into OZs could increase by $100 billion.  

    Roundtable President and CEO Jeffrey DeBoer states in the letter, “Partnering with local leaders and entrepreneurs, real estate-focused opportunity funds will spur long-term, patient investment that drives productive economic activity.  Real estate projects financed through opportunity funds will generate well-paying jobs, improved infrastructure, and a built environment that helps attract and retain new businesses and employers. Regulatory clarifications along the lines described above will help ensure that the Opportunity Zone incentives fulfill their ambitious objectives.”  

  • Cushman & Wakefield’s new publication – “In the Opportunity Zone: Location. Timing. Capital” – reports that capital inflows into OZs could increase by $100 billion.  The company is tracking 138 large CRE funds targeting more than $44B in equity that intend to invest in multiple product types.  The report also states Opportunity Zone prices are rising 14% for redevelopment projects and 20% for land sites. (Commercial Property Executive, July 8) 

Additionally, Forbes and the Sorensen Impact Center at the University of Utah have launched a nation-wide competition to feature the top leaders, investors and entrepreneurs who are pioneering creative approaches to equitably revitalize distressed OZ communities throughout the nation.  Applications and nominations for the Forbes OZ 20 close Aug. 31.  (Forbes, July 11) 

 

Policymakers Under Pressure to Raise Debt Ceiling Before Summer Congressional Recess

Posted on by Trey Jackson

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.

The House of Representatives is scheduled to leave for a six-week recess on July 26 and the Senate one week later; both are set to return on Sept. 9.
  • 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.  
  • Today, Treasury Secretary Steven Mnuchin wrote to House Speaker Nancy Pelosi (D-CA), stating: “Based on updated projections, there is a scenario in which we run out of cash in early September, before Congress reconvenes. As such, I request that Congress increase the debt ceiling before Congress leaves for summer recess.”  (CNBC, and Politico, July 12)  The House of Representatives is scheduled to leave for a six-week recess on July 26 and the Senate one week later; both are set to return on Sept. 9. 
  • Pelosi and Mnuchin have been in discussions this week regarding the debt ceiling.  She said yesterday that Congress should combine a debt ceiling raise with a budget deal that sets federal spending limits for two-years, and that she is “personally convinced that we should act on the (budget) caps and the debt ceiling … prior to recess.”   (Politico, July 12)  
  • Both Pelosi and Senate Majority Leader Mitch McConnell (R-KY) have expressed interest in combining an increase in the debt ceiling with a two-year budget deal.  (The Hill, July 12)  Congressional leaders are eager to avoid a series of automatic spending cuts known as “sequestration,” which will take place without a new deal on budget caps. 
  • On July 9, McConnell said, “I don’t think there’s any chance we will allow the country to default.  As to the timing, we’re going to stay in close communication with the secretary of the Treasury about when that actually must be done, and we’ll no doubt do it on a bipartisan basis.”  (Bloomberg, July 12)  

  •  According to the Bipartisan Policy Center (BPC) projections, the nation’s $22 trillion debt limit could be exceeded in the first half of September, based on new data and analysis.
    – enlarge graphic – 

      Federal Reserve Chairman Jerome Powell testified yesterday before the Senate Banking Committee that the global economy could suffer “unthinkable” damage if the White House and Congress fail to raise the debt ceiling. (The Hill, July 11)

    • Aside from reaching agreements regarding the debt ceiling and budget caps, Congress must further come to a deal on federal agency appropriations for FY’20 – to avoid a government shutdown before current FY’19 dollars run out on September 30. Last December and January, the lack of a government spending deal led to a 35-day partial government shut down. (Roundtable Weekly, Feb. 1) 
    • According to a Treasury report released yesterday, this fiscal year’s tax receipts to date have not offset higher federal spending – even though this month marks a historic 10-year record for U.S. economic expansion.  (Wall Street Journal, July 11) 
    • The Treasury figures show the federal deficit grew to $747 billion over the past nine months, 23% more when compared to the same time period last year.  The report also projects the deficit to exceed $1 trillion by Sept. 30, the end of the government’s fiscal year.  (Monthly Treasury Statement and Associated Press, July 11) 

    This week, the Bipartisan Policy Center (BPC) projected the nation’s $22 trillion debt limit could be exceeded in the first half of September, based on new data and analysis.  The BPC also reported that federal revenues for Fiscal Year 2019 have been sluggish, with overall revenue growth running at less than three percent. (BPC news release, July 8 and BPC Debt Limit Analysis).

     

     

     

    Roundtable Re-Elects Ventas’ Debra Cafaro as Chair; Installs Three New Members to Board

    Posted on by Trey Jackson

    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).

    Roundtable President and CEO Jeffrey DeBoer and Roundtable Chair  Debra A. Cafaro (Chairman and Chief Executive Officer,  Ventas, Inc .)  during The Roundtable’s June 2019 Annual Meeting.
    • The election results were announced by Roundtable President and CEO Jeffrey DeBoer during the organization’s Annual Meeting earlier this month in Washington. 
    • The 23-member FY2020 Board is elected from the membership and includes four elected leaders of national real estate trade organizations from The Roundtable’s 17 partner associations.  Three new Roundtable members join the FY2020 Board.
    • Cafaro, whose three-year term as chair began July 1, 2018, said, “We welcome our three new industry leaders to the Board and express gratitude for the service of our three outgoing members, who contributed greatly to The Roundtable’s success in the past year.  With such deep expertise among our membership, we will develop practical solutions to the pressing policy challenges ahead that not only affect our industry, but provide a positive impact to communities throughout the nation.”
    • DeBoer stated, “As we move beyond our first two decades of advocacy work in Washington, The Real Estate Roundtable will continue to bring together the top leaders in commercial real estate with our partner real estate organizations.  Our mutual goal remains consistent – provide policymakers with fact-based analysis that supports responsible economic growth policies, creates sustainable jobs and increases the quality of life for working Americans.”

    Joining The Roundtable’s Board of Directors as of July 1 are:

    • Scott O. Jones, Principal, Jacobs Inc. and Chair and Chief Elected Officer, Building Owners and Managers Association (BOMA), International
    • Amy Rose, President & CEO, Rose Associates
    • Robert Spottswood, President of Spottswood Companies and Chair of the American Resort Development Association (ARDA)

    See the complete list of the FY2020 Roundtable’s Board of Directors here.

    Stepping down from The Roundtable Board as of July 1 are:

    • Tom Baltimore, Jr., Chairman, President & CEO of Park Hotels & Resorts, and Immediate Past Chair of Nareit
    • Steve Hason, Managing Director and Head of Americas Real Estate & Infrastructure with APG Asset Management US and Immediate Past Chair of PREA
    • David Neithercut, former President & CEO of Equity Residential

    The Roundtable’s FY2019 Annual Report – Building Strong Public Policy: Now and For the Future – was also released during the June meeting.

    SCOTUS: Federal Courts Now Open to Property Takings Claims Against Local Governments

    Posted on by Trey Jackson

    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. 

    T he Supreme Court of the United States 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 5-4 ruling in Knick holds that suits arising under the Takings Clause can be brought as an initial matter in U.S. trial courts, and then appealed as of right in U.S. circuit courts – just like any other alleged grievance to vindicate protections in the Constitution’s Bill of Rights.  Such matters are no longer relegated to state judges for resolution.  Federal courts are now proper venues to test the constitutionality of aggressive land-use decisions by local regulators, and can decide whether landowners are owed “just compensation” for a property taking.  (SCOTUSblog Opinion Analysis, June 22.) 
    • Chief Justice Roberts’s majority opinion corrected the litigation dilemma for property owners trapped between the state and federal judiciaries.  “The takings plaintiff thus finds himself in a Catch-22:  He cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court,” Roberts wrote. “The federal claim dies aborning.”
    • Roberts added, “Takings claims against local governments should be handled the same as other claims under the Bill of Rights.  We now conclude that the state litigation requirement imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of our takings jurisprudence, and must be overruled.” 
    • In an amicus brief supporting the property owners, AARP advocated the “state court first” rule imposed “costly and needless litigation burdens” which “pose a threat to the economic security of older Americans of modest means especially, given their higher vulnerability to property tax foreclosure and lack of resources.”  (Forbes, June 22).     

    The attorney representing the property owners before SCOTUS remarked that Knick “reject[s] barriers that unfairly deny property owners their day in court [and] sends a message that property rights are just as sacred as all other rights.”  (Pacific Legal Foundation, June 21.)