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News

Bipartisan Tax Bill Would Incentivize Real Estate Conversions

July 16, 2024

Last week, Representatives Jimmy Gomez (D-CA) and Mike Carey (R-OH) announced the introduction of the Revitalizing Downtowns and Main Streets Act, which would encourage the conversion of vacant and underutilized commercial properties into housing.

Why it matters: The bill would provide $12 billion in federal funding to encourage conversions of offices and other CRE to market-rate and affordable housing. Policymakers and borrowers have touted the measure as a potential solution to some of the issues plaguing the CRE sector.

By the numbers: According to the bill fact sheet, the program would provide a federal tax credit for 20% to 35% of eligible costs of converting commercial real estate to housing.

  • The CRE conversions are not limited to office buildings, as any nonresidential real estate at least 20 years old can qualify.
  • No less than 20% of residential units created by the credit are reserved for individuals whose income is at or below 80% of area median income (AMI) for a minimum of 30 years (with an option for states to require a longer affordability period).
  • For difficult to develop and qualified low-income areas, affordability would be even deeper at or below 60% AMI. All of these units would be rent restricted to 30% or less of that income.

The bill is co-led by Representatives John Larson (D-CT) and Dan Kildee (D-MI), and cosponsored by Representatives Brian Fitzpatrick (R-PA), Claudia Tenney (R-NY), Terri Sewell (D-AL), David Kustoff (R-TN), Mike Kelly (R-PA), Don Beyer (D-VA), Carol Miller (R-WV), and Jimmy Panetta (D-CA). A Senate Companion bill is being led by Senator Debbie Stabenow (D-MI).

The big picture: The bipartisan House support from key members of the tax-writing Ways and Means Committee puts the bill in a strong position ahead of tax policy discussions in 2025. However, competing funding priorities and general concerns about government spending can be roadblocks to popular tax policies.

Please contact David McCarthy (dmccarthy@crefc.org) with any questions.

Contact  

David McCarthy
Managing Director, Chief Lobbyist, 
Head of Legislative Affairs
202.448.0855
dmccarthy@crefc.org
office building morphing into a house
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Bipartisan Tax Bill Would Incentivize Real Estate Conversions
July 16, 2024
Last week, Representatives Jimmy Gomez (D-CA) and Mike Carey (R-OH) announced the introduction of the Revitalizing Downtowns and Main Streets Act.

News

GSE Loan Agreements Will Require Notices and Grace Period

July 16, 2024

The Federal Housing Finance Agency on July 12 (FHFA) announced mandatory tenant protections, via loan agreements, for multifamily properties financed by Fannie Mae and Freddie Mac (the Enterprises).

The regulator’s press release notes this is “the first time that tenant protections will be a standard component of Enterprise multifamily financing.”

Effective February 28, 2025, covered housing providers will be required to provide tenants with the following

  • 30-day written notice of a rent increase;
  • 30-day written notice of a lease expiration; and
  • Five-day grace period for rent payments.

What's next. The Enterprises will monitor and enforce these protections, and failure to comply could result in penalties under the loan agreement. They are also expected to publish a detailed description of the tenant protection policies in August 2024.

Background. In 2023, FHFA published a Request for Input (RFI) regarding potential tenant protections. CREFC and several other real estate trades responded to the RFI with a joint trade letter that advised the FHFA to:

“Refrain from placing new or expanded federal obligations on private rental housing providers and instead focus on leveraging federal resources in the form of incentives to bolster new affordable housing.”

Why it matters. We expect this is the first tenant protection-related policy measure; additional tenant protections could arrive under a second Biden administration. As FHFA states in its press release and accompanying blog:

“FHFA and the Enterprises will continue to evaluate options for codifying additional tenant protections that advance sustainable housing in a manner that reflects the needs of both tenants and housing providers.”

CREFC meets with FHFA on a quarterly basis to discuss developments in the multifamily sector, including relevant data trends and policy concerns.

Please contact Sairah Burki (sburki@crefc.org) with any questions.
 

Contact 

Sairah Burki
Managing Director, Head of Regulatory
Affairs & Sustainability
703.201.4294
sburki@crefc.org
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
GSE Loan Agreements Will Require Notices and Grace Period
July 16, 2024
The Federal Housing Finance Agency on July 12 (FHFA) announced mandatory tenant protections, via loan agreements, for multifamily properties financed by Fannie Mae and Freddie Mac (the Enterprises).

News

Unprecedented Turmoil in Presidential Races

July 16, 2024

Both political campaigns paused their ad campaigns this weekend after the assassination attempt on former President Donald Trump. Ahead of this weekend, President Joe Biden and Democrats were trying to contain the fallout from his poor June 27 debate performance.

  • A flurry of post debate polls have shown Biden’s position slipping to Trump’s and many election forecasters have increased Trump’s chance of victory following the presidential debate.
  • 19 House Democrats have publicly called for President Biden to step aside while Senator Peter Welch from Vermont is the only Senate Democrat to urge Biden to quit.
  • Biden still has strong public support among many members of his party, despite reservations about his viability as presidential candidate raised in public and behind-the-scenes.

The bottom line: Biden has enough delegates to secure the nomination, so the decision to remain in the race is his alone.

  • 1,976 delegates are required to win the Democratic nomination, and Biden has 3,894. Two other candidates have a combined seven with another 36 uncommitted.
  • However, if Biden is convinced to drop out, there is little to no precedent for what will happen next. He could give a speech at the Democratic National Convention outlining who he would like his delegates to vote for and this would strongly inform their opinions and actions.

The delegates that Biden won during the primaries are only bound by their conscience to cast their votes for Biden. The key phrase in the DNC rules is below.

“All delegates to the National Convention pledged to a presidential candidate shall in all good conscience reflect the sentiments of those who elected them.”

Last Thursday, President Biden said delegates are “free to do whatever they want” at the Democratic National Convention, including nominating a different candidate. Shortly after, he mock-whispered into the microphone, “It’s not going to happen.”

To read more analysis from The Associated Press about the upcoming convention, click here.

What’s next: The Democratic Convention begins on August 19 in Chicago, While any change to the ticket beforehand will be disruptive, the process after the conventions becomes much more complex.

Please contact James Montfort (jmontfort@crefc.org) with any questions.
 

Contact 

James Montford
Manager, Government Relations
202.448.0857
jmontfort@crefc.org 

POTUS seal on an historic air force one.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Unprecedented Turmoil in Presidential Races
July 16, 2024
Both political campaigns paused their ad campaigns this weekend after the assassination attempt on former President Donald Trump.

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