Roundtable Weekly
Policymakers Float Measures for Next COVID-19 Relief Package; Senators Propose Changes to Paycheck Protection Program’s “75/25 Rule”; Democrats Introduce $100 Billion Emergency Rental Assistance Bill
May 9, 2020

U.S. Capitol Dome

House Democrats are developing another massive coronavirus aid package as they consider when to return to Washington for a vote – while Republicans have signaled they prefer to pause any negotiations on future pandemic aid until the effectiveness of current programs can be evaluated.  (Wall Street Journal, May 7) 

  • House Speaker Nancy Pelosi (D-CA) has stated her goals for the next round of pandemic relief, which include $800 billion in funding for state and local governments, in addition to unemployment support, direct payouts, Covid-19 testing and more.  (Bloomberg, April 30 – AP, May 5 – Bloomberg TV,  May 7)

  • Senate Minority Leader Charles Schumer (D-N.Y.) told MSNBC yesterday, “We need Franklin Rooseveltian-type action and we hope to take that in the House and Senate in a very big and bold way.”

  • White House National Economic Council Director Larry Kudlow today said, "We've kind of paused as far as formal negotiations go. Let's have a look at what the latest round produces. You need a month or so to evaluate that.”  (Roll Call, May 8)

  • Kudlow’s remarks follow Senate Majority Leader Mitch McConnell’s (R-KY) statement earlier this week that Congress should "take a pause” before passing more pandemic relief legislation.  (The Hill, May 5)

  • Kudlow added, "The president, as you know, has put out a number of his own policy ideas, payroll tax cuts being one of them, and … COVID-19 liability restrictions for businesses."  Kudlow also highlighted proposals to promote restaurant and travel spending, as well as allowing businesses to quickly write off their expenses as they reopen.  (CQ, May 8) 

Roundtable Pandemic Policy Communications Outreach 

  • Jeffrey DeBoer, President and CEO of The Real Estate Roundtable, on May 6 participated in the Urban Lab Podcast to discuss the pandemic’s ongoing impact on CRE, The Roundtable's recommendations for reforming the PPP, the merits of a Pandemic Risk Insurance Act similar to TRIA, the “rent obligation chain,” and the organization’s broader engagement with policymakers.  Dr. Sam Chandan, Silverstein Chair of the NYU SPS Schack Institute and Fellow at the NYU Urban Lab, hosted the podcast. (Interview with DeBoer, May 6)

  • DeBoer also participated in a Bisnow webinar last week to discuss the government’s legislative and regulatory responses to the economic impact of the coronavirus pandemic.  (Bisnow recap, May 4 and Roundtable Weekly, May 1)

  • The Roundtable’s Senior Vice Presidents on May 5 participated in “The Policy Response to COVID-19: Implications for Real Estate” – hosted by the Pension Real Estate Association (PREA).  The supporting slides for the PREA webinar offer extensive details to various issues related to the PPP, tax changes and actions by the Federal Reserve. (Download slides

Small Business Aid and Rent Assistance 

  • Loan demand for the Paycheck Protection Program (PPP) was expected to quickly diminish the program’s supplemental funding that became available April 27.  Yet, more than 40 percent of the aid remains unused according to data released by the Small Business Administration yesterday. (Wall Street Journal, Demand for Small-Business Loans Cools, May 8) 
  • Lenders and participants say that reasons for the slowdown in demand include the reluctance of small businesses to sign up for a program whose loan forgiveness terms remain unclear.  To obtain forgiveness of a loan, agency rules implementing the PPP require small businesses to spend 75% of funds on payroll (and no more than 25% of PPP proceeds or forgiveness can be devoted to rent, mortgage interest, utility bills, and other debt obligations).

  • The Roundtable’s 8-Point Plan to Reform the PPP recommends that SBA and Treasury should not apply the 75/25 rule as a categorical “one size fits all” standard that limits PPP assistance, in all cases, to no more than 25% for business rent and other ordinary expenses.

  • This week, a broad bipartisan group of Senators led by John Cornyn (R-TX) proposed changing the 75-25 rule to a 50-50 rule – where up to 50% of PPP loan proceeds can be used by qualifying small businesses to pay rent, mortgage and utilities.  (Cornyn letter, May 5)

  • Sen. Cornyn and 20 other Senators urged Secretary of the Treasury Steven Mnuchin and Small Business Administration Administrator Jovita Carranza to “exercise the power of your respective offices to ensure all business sectors are able to spend at least 50 percent of the loan proceeds on the statutorily allowed non-payroll expenses.”

  • Senate Finance Committee member Cornyn on May 5 also introduced The Small Business Expense Protection Act of 2020, which would modify the CARES Act to allow business owners to claim tax deductions for ordinary business expenses, regardless of whether they were paid with a forgiven PPP loan.

  • Additionally, legislation introduced today would create a $100 billion emergency residential rental assistance fund. The Emergency Rental Assistance and Rental Market Stabilization Act of 2020 was introduced by Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, and Senator Sherrod Brown (D-OH), Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs. (House Financial Services Committee news release and bill summary.)

  • Earlier this week, The Roundtable’s Jeffrey DeBoer was quoted in about the need for a program to help both residential and business tenants with temporary, emergency rental assistance. DeBoer said, “While the focus on employment has been necessary and effective, there is presently no COVID-19 response program with the primary goal of assisting American families and businesses in meeting their obligations to pay rent, mortgages, and other ordinary debts and expenses.” (GlobeSt, May 5)

  • DeBoer added, “No landlord wants to evict a tenant, and most are working proactively with their tenants to make payment plans and reduce tensions. Without rental income, such actions disproportionately impact smaller landlords and pummel a city’s property tax collections by sending buildings into foreclosure. Ultimately, it would affect municipal workers who will lose their jobs—including teachers, police and firefighters.”

  • The "rent obligation chain" and its crucial role to support the economy and the CRE sector was also illustrated in a March 24 Wall Street Journal article, “Businesses Can’t Pay Rent. That’s a Threat to the $3 Trillion Commercial Mortgage Market.” 

The pandemic’s ongoing impact on CRE and Washington’s policy responses will be a major focus of The Roundtable’s first virtual Annual Meeting, which will be held remotely on June 11-12. 

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