Senate Advances Pandemic Relief Package as President Biden Pushes Infrastructure Plan
Roundtable’s Q1 Sentiment Index Shows CRE Execs Optimistic About Market Conditions
House Democrats Introduce Sweeping Climate Legislation Including Building Codes, Benchmarking and SEC Reporting Provisions
New Bills Would Help Offset COVID-Prevention Workplace Expenses and Permanently Extend 20% Pass-Through Deduction; Industry Seeks Cost Recovery Transition Relief for Rental Housing
Federal Judge Rules CDC’s Tenant Eviction Ban is Unconstitutional; Justice Department Vows Appeal
Roundtable Weekly
March 5, 2021
Senate Advances Pandemic Relief Package as President Biden Pushes Infrastructure Plan

White House with Washington monument in background

Senate Democrats this week advanced an amended, $1.9 trillion pandemic relief package that is expected to pass on a party-line vote – then sent back to the House for final passage before current unemployment benefits expire March 14. (Politico, March 4 and, actions on H.R. 1319 

  • President Biden, who has championed the COVID-19 legislation, agreed to changes in the package such as restrictions on the use of $350 billion in state and local funding to solidify Democratic support in the 50-50 Senate. (BGov, March 4 and text of the amended Senate bill)

  • CQ reported that financial allocations changes for states and local governments require federal assistance be used for specific purposes, including: 

    • Aid to households, small businesses or nonprofits, or aid to "impacted" industries like tourism, hospitality and travel;

    • Funding government services that reduced due to the pandemic-related hit to tax revenue;

    • "Necessary investments" in water, sewer, or broadband infrastructure. 

  • Senate Majority Leader Chuck Schumer (D-NY) said yesterday, "No matter how long it takes, the Senate is going to stay in session to finish the bill, this week.” (Politico, March 4).

  • Meanwhile, the White House push for a massive infrastructure bill was discussed on March 4 in a meeting with President Biden, Transportation Secretary Pete Buttigieg and a bipartisan group of House members led by Rep. Peter A. DeFazio (D-OR), chairman of the House Transportation Committee.  (Bloomberg, March 4)

  • Biden remarked at the start of the meeting, “We’re going to talk about infrastructure and American competitiveness and what we’re going to do to make sure that we once again lead the world across the board on infrastructure. It not only creates jobs but it makes us a helluva lot more competitive around the world.”  (White House, March 4)

  • The White House infrastructure plan is expected to emphasize climate change, but legislation has not been unveiled nor has its cost or methods to pay for the initiative. (Wall Street Journal, March 4)

  • The critical need for investing in modern and sustainable infrastructure was also the focus of a Feb. 11 White House meeting between Biden, Vice President Kamala Harris, Buttigieg and a bipartisan group of senators from the Environment and Public Works Committee. (Roundtable Weekly, Feb. 12)

  • In a December 16, 2020 letter, The Roundtable and 12 national real estate organizations provided detailed recommendationsto then President-elect Biden and Vice President-elect Harris that included infrastructure funding and modernization as engines to drive recovery and job growth from the economic fallout of the COVID-19 pandemic.

The Roundtable is part of Build by the 4th coalition led by U.S. Chamber of Commerce, which encourages the Biden Administration and the new Congress to pass a comprehensive infrastructure deal by Independence Day 2021. 

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Roundtable’s Q1 Sentiment Index Shows CRE Execs Optimistic About Market Conditions

Q1-2021-Sentiment Index Graph - HomePage

Commercial real estate industry leaders continue to acknowledge the effects of the COVID-19 pandemic on various asset classes, while expressing increased optimism about market conditions for the remainder of 2021, according to The Real Estate Roundtable’s Q1 2021 Economic Sentiment Index. The March 3 Index also reports on growth potential for the industrial and multifamily sectors, while hospitality and retail continue to face challenges due to government restrictions and health guidelines.

  • Real Estate Roundtable President and CEO Jeffrey DeBoer stated, "Our Q1 index indicates that despite the extremely challenging past 12 months, industry leaders are optimistic that market conditions are trending in positive way. General supply and demand market balance, functioning capital markets, and low leverage – combined with increased vaccination efforts – have sparked the strong uptick in optimism. Of course all of this is threatened if vaccinations stall overall, or if national policymakers impose new tax or regulatory burdens on the industry.”
  • DeBoer also noted the positive role that real estate has played in combatting the pandemic. “Throughout the pandemic, real estate owners, managers, investors and lenders each have focused on mitigating the impact of the crisis on their residential and business tenants. The industry has restructured leases with tenants under stress, advocated for federal rental and other assistance, helped educate tenants on how to access relief, provided significant reforms to health-related building operational protocols, and issued detailed guidance to ensure safe and effective ways to re-enter buildings,” he said.
  • The Roundtable’s Q1 2021 Sentiment Index registered at 59 – a fifteen-point increase from the previous quarter.  [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.]. This quarter’s Current Conditions Index of 44 increased 17 points from the previous quarter, while this quarter’s Future Conditions Index of 74, is an increase of 13 points compared to last quarter. The last time the Future Conditions Index registered at 74 was Q3 2010.

    The report’s Topline Findings include: 
  • The Q1 2021 Real Estate Roundtable Sentiment Index registered a score of 59, an increase of 15 points from the fourth quarter of 2020. Respondents continued to express optimism about future conditions; however, the outlook is highly dependent upon asset class and portfolio mix.

  • The industrial and multifamily sectors were cited as having been the most resilient to the global pandemic, and best positioned to emerge successful in a post-pandemic environment. Retail and hospitality sectors continue to face challenges stemming from public health measures and government restrictions.

  • Low transaction volume has resulted in limited visibility into asset valuations over the past year. Among the trades that have occurred, industrial assets have seen their values increase, mirroring the market overall, while multifamily properties are trading at a slight discount to their pre-COVID values.

  • Capital flows within the real estate market are following the sector-specific impacts of the pandemic. Most respondents cited accessible capital markets for high quality assets, particularly in the industrial and multifamily spaces. However, out-of-favor property types and strategies with leasing and/or development exposure are finding it more difficult to secure institutional equity and financing. 

Data for the Q1 survey was gathered by Chicago-based FPL Associates on The Roundtable’s behalf.  For the full Q1 report, visit here and full news release.

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House Democrats Introduce Sweeping Climate Legislation Including Building Codes, Benchmarking and SEC Reporting Provisions

Capitol with evening sky
House Democrats on March 2 introduced a sprawling bill aimed at achieving net-zero greenhouse gas emissions by 2050 with provisions regarding building construction, operations, and ESG reporting. (Politico, March 3 and CQ News, Reuters, March 2)

  • The 981-page Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act– 981-page measure is sponsored by House Energy & Commerce Committee Chairman Frank Pallone (D-NJ); Climate Change Subcommittee Chairman Paul Tonko (D-NY) and Energy Subcommittee Chairman Bobby Rush (D-IL), (BGov, March 3)

  • The House Committee noted provisions that would impact commercial and residential real estate. “The CLEAN Future Act improves the efficiency of new and existing buildings, as well as the equipment and appliances that operate within them. It establishes national energy savings targets for continued improvement of model building energy codes, leading to a requirement of zero-energy-ready buildings by 2030.” (Energy & Commerce Committee news release, March 2)

  • The CLEAN Future Act also proposes mandatory federal-level energy and water “benchmarking” requirements for buildings over 50,000 square feet. These provisions mimic dozens of existing state and local requirements that currently require building owners to track their assets’ energy and water usage and disclose this information to the public.

  • CLEAN Future Act reference:
  • The bill also directs the Securities and Exchange Commission (SEC) to require public companies to disclose in annual reports information about their “direct” and “indirect” GHG emissions, and corporate governance procedures to identify and manage climate-related risks. (Akin Gump Strauss Hauer & Feld LLP, March 3)

  • Acting SEC Chair Allison Herren Lee recently issued a Climate Change Statement explaining, “[n]ow more than ever, investors are considering climate-related issues when making their investment decisions” and that it is the SEC’s “responsibility to ensure that they have access to material information when planning for their financial future.” (SEC statement, Feb. 24  and Gibson Dunn, March 1) 

While the measure will likely face substantial challenges to attract 60 votes in the evenly divided Senate, The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is conducting a detailed analysis of the CLEAN Future Act’s impacts on the real estate sector. 

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New Bills Would Help Offset COVID-Prevention Workplace Expenses and Permanently Extend 20% Pass-Through Deduction; Industry Seeks Cost Recovery Transition Relief for Rental Housing

Downtown Houston, Texas

Two recently introduced legislative proposals supported by The Real Estate Roundtable would address issues important to commercial real estate. The Healthy Workplaces Tax Credit Act  would provide a new tax credit for business owners’ expenses associated with reducing the risk of COVID-19 in the workplace. The Main Street Tax Certainty Act would permanently extend the 20% pass-through business income deduction enacted in 2017.  Separately, a coalition of real estate organizations, including The Roundtable, urged Treasury this week to provide guidance allowing property owners to fully benefit from legislation enacted in December that clarified the cost recovery period for rental housing.

Healthy Workplaces Tax Credit

  • On March 2, Sens. Rob Portman (R-OH) and Kyrsten Sinema (D-AZ) introduced the bipartisan Healthy Workplaces Tax Credit Act. (See one-page summary)

  • The bill includes several measures that would help businesses reopen safely, while ensuring employee and customer confidence, by providing:

    • a refundable tax credit against payroll taxes for 50 percent of the costs incurred by the business for COVID-19 testing, PPE, disinfecting, extra cleaning, reconfiguring workspaces, and employee education and training until the end of the year; and

    • an income tax credit for expenditures made to reconfigure work spaces last year (March 13, 2020- December 31, 2020)

  • Chip Rogers, president and CEO of the American Hotel & Lodging Association, stated, "The Healthy Workplace Tax Credit is critical legislation for industries like ours, to help offset these significant, but necessary operating costs at a time when hotel revenues remain down 40% or more across the country." (Sen. Portman news release, March 2, 2021)

  • A broad business coalition, including The Real Estate Roundtable, urged Congress last July to pass a “healthy workplaces” tax credit as part of coronavirus relief. (Coalition letter,  July 16, 2020 and Roundtable Weekly  July 17, 2020).   Sen. Portman originally introduced a Healthy Workplaces Tax Credit bill on July 20, 2020.

20% Deduction for Pass-Through Business Income (Section 199A)

  • Last week, Members of Congress in both the House and Senate introduced legislation to extend permanently the 20 percent deduction for qualified pass-through business income permanent. The bills are strongly supported by more than 80 stakeholder groups, including The Real Estate Roundtable. (Rep Jason Smith news release, Feb. 26)

  • Sen. Steve Daines (R-MT), Rep. Jason Smith (R-MO), and Rep. Henry Cuellar (D-TX) introduced the Main Street Tax Certainty Act to support small businesses, help create jobs and strengthen the economy. Without congressional action, the deduction will expire at the end of 2025.

  • In a February 26 letter to the leadership of the Senate Finance and House Ways and Means committees, The Roundtable and other stakeholders stated that making the section 199A deduction permanent would provide certainty to small businesses affected by the COVID-19 pandemic. (Tax Notes, March 1)

Real Estate Industry Requests Rental Housing Cost Recovery Guidance

  • On March 2 a coalition of real estate industry organizations requested the Treasury Department and IRS issue guidance that would allow taxpayers to automatically change their method of accounting in order to benefit from the technical correction to the rental housing recovery period that was in the end-of-year omnibus spending bill enacted in December (Roundtable Policy Alert, Dec 22, 2020)

  • The 2020 law clarified that properties placed in service before 2018 are eligible for the new 30-year cost recovery period under the Alternative Dispute System (ADS).

  • The industry letter was led by the National Multifamily Housing Council and joined by The Real Estate Roundtable, International Council of Shopping Centers, Nareit, and others.

  • The letter also requests transition relief that would allow real estate partnerships to file amended returns to opt out of the limitation of business interest deductibility now that the penalty for opting out is a 30-year cost recovery period, rather than the prior 40-year ADS recovery period.

The Roundtable and its Tax Policy Advisory Committee (TPAC) will continue to work with policymakers in Congress and regulatory agencies on the fair and equitable tax treatment of real estate.

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Federal Judge Rules CDC’s Tenant Eviction Ban is Unconstitutional; Justice Department Vows Appeal

Campus sign for U.S. Centers for Disease Control and Prevention (CDC)

A national eviction moratorium issued by the U.S. Centers for Disease Control and Prevention (CDC) is unconstitutional, according to a Feb. 25 ruling by a federal judge in Texas. The ruling does not address similar state-level bans, but raises key questions on the extent of the federal government’s power to prevent residential tenant evictions during the pandemic. (National Multifamily Housing Council and GlobeSt, Feb. 26)

  • The federal eviction moratorium – first enacted by Congress almost a year ago in the CARES Act, and since extended by both the Trump and Biden Administrations by executive orders, currently expires on March 31.

  • Biden might further prolong the CDC’s eviction ban though another executive order. (Washington Post and NBC News, Feb. 26)  The $1.9 trillion COVID relief bill passed by the House last week and pending before the Senate does not include a federal eviction ban due to procedures moving the package through “reconciliation” rules. (CNBC, March 2.)
  • In striking the CDC’s action, Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas ruled in favor of an individual landlord and six property management companies that claimed the moratorium exceeds the federal government’s power to regulate “commerce” under Article I of the U.S. Constitution. (BGov, Feb. 25)

  • He wrote: "Here, the regulated activity is not the production or use of a commodity that is traded in an interstate market. Rather, the challenged order regulates property rights in buildings—specifically, whether an owner may regain possession of property from an inhabitant." (Terkel v CDC, Feb. 25)

  • The Department of Justice (DOJ) on Feb. 27 announced it would appeal the decision. DOJ maintains the decision “does not extend beyond the particular plaintiffs in that case, and it does not prohibit the application of the CDC’s eviction moratorium to other parties. For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect.” (DOJ statement, Feb. 27)

The Roundtable & Rental Assistance

Jeffrey DeBoer testimony on behalf of The Real Estate Roundtable

  • Roundtable President and CEO Jeffrey DeBoer testified during a Senate Banking Committee hearing last year that the CDC moratorium underscores the need for a dedicated fund to help impacted tenants meet their rent payments.

  • He also testified that shoring-up a reliable stream of rent payments also provides apartment owners with the revenue they need to pay their property taxes, utility bills, employ their own workers, and invest in their building assets to keep them running safely and efficiently. (DeBoer Written Testimony, Sept. 9, 2020)

  • In Dec. 2020, Congress passed omnibus legislation that provided $25 billion in rental assistance.  Last week, the House passed a $1.9 trillion pandemic relief package that included an additional $19 billion for residential rental assistance through Sept. 30, 2027.  (See The Roundtable’s Summary and Analysis of Key Economic Provisions in The American Rescue Plan.)

  • The Wall Street Journal recently reported that small landlords who rely on rental income for their retirement are vulnerable to eviction bans – as millions of tenants are behind on rent, awaiting federal Covid-19 assistance. (WSJ, Feb. 26 and March 1)

Alston and Bird notes in an analysis of the Texas decision that “Absent a broad injunction, the decision has very limited effect. Nonetheless, the ultimate outcome of Terkel v. CDC could have important implications for other courts considering the scope of government action in response to the COVID-19 pandemic – particularly if it is upheld on appeal or ultimately heard by the U.S. Supreme Court.” (Alston & Bird, March 1)

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